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ARE THE NEW ENGLAND STATES IN A
GAMBLING ARMS RACE? Presentation to the New England Fiscal Leaders Meeting
Held at Federal Reserve Bank, Boston, MA
By
© 2013 Clyde W. Barrow, Ph.D., University of Massachusetts Dartmouth
February 22, 2013
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The U.S. Casino Industry
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North American Industrial Classification
System (NAICS)
The North American Industrial Classification System (NAICS)
is the statistical classification standard underlying all
establishment-based economic statistics in the U.S., Canada
& Mexico
NAICS classifies business establishments into
twenty different Sectors and assigns each
business establishment in North America a six-
digit classification code.
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NAICS Major Sector Code 71
Sector 71. Arts, Entertainment & Recreation
Subsector 711. Performing Arts, Spectator Sports and
Related Industries
Subsector 712. Museums, Historical Sites & Similar
Institutions
Subsector 713. Amusement, Gambling & Recreation
Industries
• Definition: The Arts, Entertainment and Recreation Sector includes a wide range
of establishments that operate facilities or provide services to meet varied
cultural, entertainment and recreational interests of their patrons.
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CASINOS AS ENTERTAINMENT
Casinos enjoy a high level of acceptance by the American public:
• 51% of the adult population view casino gambling as “perfectly acceptable for anyone” and another 30% viewing it as “acceptable for others,” but not for themselves.
• Only 16% of the American public views casino gaming as “not acceptable for anyone”
• 81% of the adult population agree that “casino gaming can be a fun night out”
Source: (AGA/Peter D. Hart 2012, 3).
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The U.S. Casino
Industry
1. Commercial Casinos
land-based, dockside, riverboat, cruise ships
2. Racetrack casinos or “racinos”
3. Native American or “Indian” Casinos
“Fundamentally, gaming is a business.”
-- Mass. Gov. Deval Patrick, Sept. 17, 2007
“Across the world casino gambling is becoming
increasingly mundane…in every instance casinos have
been around, they’ve operated for a long time, and they
have become entirely noncontroversial in the context of
people’s lives and their communities.’’
-- Gary Loveman, CEO Caesars Entertainment, Feb. 14,
2012
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Commercial Casinos & Racinos
In 2011, the U.S. commercial casino & racino sectors:
• Earned $35.6 billion in gross gaming revenue
• Employed 339,038 people
• Paid wages of $12.9 billion
• Contributed $7.93 billion in gaming taxes to states
$9.8 B GGR in
Northeast Gaming
Market
MD to WV to ME
Another $3.2B GGR
in Indian Gaming
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59 Class 3 Casinos
(2013) with 5 more
authorized
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STATE GAMBLING POLICY:
FROM REVENUES TO JOB CREATION
REVENUES
• 1990s – 2000s was
revenue driven reaction
to tax revolt
• Fast initial start up
• Low capital investment
• High tax rates
• Riverboats + Racinos
JOB CREATION
• Deindustrialization & the
intractable “blue-collar
recession”
• Great Recession High
Capital Investment
• Lower tax rates
• Casinos: Tables + Non-
Gaming Amenities
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JOBS PER $1M GGR
State
No. of
Casinos
No. of Casino
Employees
Gross Gaming
Revenue
(billions)
Employees per
$1 million GGR
Nevada 256 175,024 $10.405 16.8
New Jersey 11 34,145 $3.565 9.6
Mississippi 30 24,707 $2.390 10.3
Colorado 37 9,589 $0.760 12.6
South Dakota 34 1,512 $0.106 14.2
Iowa 17 8,915 $1.368 6.5
Michigan 3 8,067 $1.378 5.9
Louisiana 18 16,873 $2.374 7.1
Kansas 1 303 $0.038 8.0
Missouri 12 11,071 $1.788 6.2
Indiana 13 14,144 $2.794 5.1
Illinois 9 6,892 $1.374 5.0
Delaware 3 3,245 $0.571 5.7
West Virginia 5 4,528 $0.878 5.2
Pennsylvania 10 12,664 $2.486 5.1
Total 459 331,679 $32.275 10.3
Non-Traditional 192 122,510 $18.305 6.7
State
No. of
Casinos
No. of Casino
Employees
Gross Gaming
Revenue
(billions)
Employees per
$1 million GGR
Oklahoma 2 770 $0.100 7.7
Louisiana 4 1,257 $0.369 3.4
Iowa 3 1,172 $0.455 2.6
New Mexico 5 1,423 $0.247 5.8
Florida 5 2,533 $0.329 7.7
Maine 1 385 $0.062 6.2
Maryland 1 309 $0.062 5.0
New York 8 3,465 $1.088 3.2
Rhode Island 2 1,100 $0.477 2.3
Total 31 12,414 $3.189 3.9
Source: Calculated from data in AGA, State of the
States, 2012
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EFFECTIVE TAX RATES
State No. of Casinos
Gross Gaming
Revenue
(billions)
Gaming Tax
Revenue (billions)
Effective Gaming
Tax Rates
Nevada 256 $10.405 $0.84 8.0%
New Jersey 11 $3.565 $0.31 8.6%
Mississippi 30 $2.390 $0.29 11.9%
Colorado 37 $0.760 $0.11 14.1%
South Dakota 34 $0.106 $0.02 16.2%
Iowa 17 $1.368 $0.31 22.3%
Michigan 3 $1.378 $0.31 22.6%
Louisiana 18 $2.374 $0.57 24.1%
Kansas 1 $0.038 $0.01 25.1%
Missouri 12 $1.788 $0.49 27.2%
Indiana 13 $2.794 $0.87 31.3%
Illinois 9 $1.374 $0.47 33.9%
Delaware 3 $0.571 $0.24 42.5%
West Virginia 5 $0.878 $0.38 43.1%
Pennsylvania 10 $2.486 $1.33 53.4%
Total 459 $32.275 $6.53 20.2%
Non-Traditional 192 $18.305 $5.385 29.4%
Source: Calculated from data in AGA, State of the
States, 2012
State No. of Racinos
Gross Gaming
Revenue
(billions)
Gaming Tax
Revenue (billions)
Effective Gaming
Tax Rates
Oklahoma 2 $0.100 $0.02 16.6%
Louisiana 4 $0.369 $0.07 18.4%
Iowa 3 $0.455 $0.11 24.1%
New Mexico 5 $0.247 $0.06 26.0%
Florida 5 $0.329 $0.14 42.8%
Maine 1 $0.062 $0.03 48.9%
Maryland 1 $0.062 $0.03 48.9%
New York 8 $1.088 $0.50 46.3%
Rhode Island 2 $0.477 $0.30 62.1%
Total 31 $3.189 $1.26 39.5%
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EXPORTS TO RECAPTURE
CFPA POLLS FIND THAT „RECAPTURING‟ TAX
REVENUE IS ONE OF THE TOP TWO
RATIONALES THAT GENERAE SUPPORT FOR
EXPANDING GAMING
RECAPTURE WAS A PROMINENT LEGISLATIVE
RATIONALE IN PENNSYLVANIA &
MASSACHUSETTS GAMING EXPANSION
PLAYING A MAJOR ROLE IN NEW YORK AND
NEW HAMPSHIRE DEBATES
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RURAL TO URBAN
PHILADELPHIA (SUGAR HOUSE + 1)
PITTSBURGH
RESORTS WORLD (NY)
EMPIRE RACEWAY (NY)
BANGOR, ME
SPRINGFIELD AND BOSTON, MA
INCREASE PROPENSITY TO GAMBLE BY
MOVING FACILITIES CLOSER TO PEOPLE &
INCOME
GAIN COMPETITIVE ADVANTAGE WITH
CONVENIENCE
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INTEGRATED RESORT TO
URBAN INTEGRATION USE OF EXISTING ENTERTAINMENT & CONFERENCE
VENUES
COMP FREQUENT PLAYERS WITH TICKETS TO LOCAL
ENTERTAINMENT EVENTS
SMALLER HOTELS & PARTNERSHIPS WITH NEARBY
EXISTING HOTELS
PLAYER REWARDS USED AT LOCAL RETAIL OUTLETS &
RESTAURANTS
CROSS-MARKETING TO PROMOTE TOURISM &
HOSPITALITY INDUSTRY GENERALLY
LOCAL VENDOR PREFERENCE & LABOR AGREEMENTS
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IS THERE SATURATION?
DEF.: “The point of a product life
cycle where the market has been
completely filled so that no more
sales for goods and services can be
taken up.”
SOURCE: Shim & Siegel, Dictionary of Economics (1995), p. 306.
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THE GREAT RECESSION WAS A BUSY TIME
FOR GAMING IN THE NORTHEAST (2007-2011)
• West Virginia authorized table games at its four racetrack casinos
• Delaware authorized table games at its three racetrack casinos
• Delaware reauthorized a sports lottery
• Pennsylvania opened nine slot parlors and then added table
games
• Rhode Island authorized 24-hour gaming at its two slot parlors
• Maryland opened a racetrack casino (now two)
• New York opened 3 additional racinos, including Empire City
==================================
• Resorts World (Aqueduct) (2011)
• Revel (2012)
• Valley Forge (2012)
• Horseshoe Cleveland (2012)
• Oxford Casino (2012)
==================================
• $3.4 B in capital investment
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HOW MANY CASINOS IS TOO
MANY? State No. of Casinos
No. of Casino
Employees Gross Gaming Revenue
(billions) Employees per $1 million
GGR
South Dakota 35 1,647 $0.101 16.3
Nevada 256 174,381 $10.700 16.3
Colorado 40 9,263 $0.750 12.3
Mississippi 30 23,721 $2.240 10.6
New Jersey 11 32,823 $3.320 9.9
Louisiana 18 17,207 $2.370 7.3
Iowa 18 9,384 $1.368 6.9
Kansas 2 303 $0.048 6.3
Maine 1 364 $0.059 6.1
Missouri 12 10,435 $1.810 5.8
Illinois 10 7,911 $1.480 5.3
Indiana 13 14,079 $2.720 5.2
Michigan 3 7,303 $1.420 5.1
Delaware 3 2,730 $0.552 4.9
West Virginia 5 4,475 $0.959 4.7
Pennsylvania 10 13,050 $3.020 4.3
Total 467 329,076 $32.918 10.0
Non-Traditional 200 121,872 $18.898 6.4
Source: AGA, State of the States, 2012.
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Sources: Meister, Indian Gaming Industry Report, 2012; AGA, 2012 Survey of Casino Entertainment (Innovation Group);
U.S. Census 2010.
Note: Includes 529 slots at Oxford Casino (ME) + 400 additional slots in Phase II Oxford expansion (Fall 2012).
893
537
388
309
256 227 227
225 224 202
171 119 107
57
-
100
200
300
400
500
600
700
800
900
1,000
Adults (aged 21+) Per Slot Machine By Select States/Markets: Pre-Expansion Massachusetts
HOW MANY SLOT MACHINES ARE ENOUGH?
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Sources: Meister, Indian Gaming Industry Report, 2012; AGA, 2012 Survey of Casino Entertainment (Innovation Group); U.S. Census
2010; Center for Policy Analysis.
Note: Estimate assumes 2,850 slot reduction in CT & RI due to recapture + 5,000 slots in Region A, 2,500 slots in Region B, 2,500 slots in
Region C, and 1,250 slots at slot parlor + 1,929 slots in Maine.
893
377
483
388
309 256
227 227 225 224
202 171
119 107
57
-
100
200
300
400
500
600
700
800
900
1,000
Adults (aged 21+) Per Slot Machine By Select States/Markets: Post-Expansion Massachusetts
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MASSACHUSETTS
IS WHERE THE
PEOPLE ARE!
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MASSACHUSETTS
IS WHERE THE
MONEY IS!
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State DPI (2011) % New England
PDI NE Wager Wager/PDI
(2011)
RI $
41,478,215,000 6.5% $
397,677,799 0.96%
CT $
171,847,111,000 26.8% $
871,069,321 0.51%
MA $ 304,577,893,000 47.5%
755,919,190 0.25%
ME $
45,591,683,000 7.1% $
84,337,395 0.18%
NH $
54,669,172,000 8.5% $
54,600,074 0.10%
VT $
23,709,048,000 3.7% $
10,315,661 0.04%
*U.S. $ 11,700,000,000,000 $ 62,200,000,000 0.53%
New England $
641,873,122,000 100.0% $
2,495,262,980 0.39%
Sources: Bureau of Economic Analysis; CFPA, New England Casino Gaming Update, 2012.
PERSONAL DISPOSABLE INCOME &
PROPENSITY TO GAMBLE
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DEMAND FOR CASINO GAMING IN NEW ENGLAND U.S. Wager 0.00532
NE Market (GGR) $
3,412,351,127 Potential Avg.
Wager
Maine $
110,000,000 Includes Oxford
Connecticut $
1,663,656,201 Minus NY
Rhode Island $
513,000,000
Unmet Demand $
1,125,694,926
MA Recapture (.60) $ 454,000,000
N. NE States ReC (.750) $ 112,000,000
CT/RI/NY Capture $ 153,000,000 Distance + Non-Smoking
Mass Demand $ 1,844,694,926
Tourism Factor (.10) $ 184,469,493 250,000
Visitations
Total Mass Demand $ 2,029,164,419
GGR NGR TR
Return to Avg.
Propensity $ 2,680,083,609 $
616,419,230 $
3,296,502,839
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Center for Policy Analysis
University of Massachusetts Dartmouth
285 Old Westport Road
North Dartmouth, MA. 02747-2300
http://www.umassd.edu/seppce/centers/cfpa/