On Nov. 22, 2011, Gov. Deval Patrick signed “An Act Establishing Expanded Gaming in the Commonwealth,” which authorized the licensing of three resort casinos and one slot parlor in Massachusetts.
Massachusetts will soon become the 36th state in the nation with Class III “Las Vegas style” casinos. The U.S. casino industry, which includes commercial casinos, Indian casinos, racetrack casinos and slot parlors, reported $62.3 billion in gross gaming revenues in 2011 and more than $75 billion in total revenues, including on-site hotel, retail, food and beverage, spa, golf and entertainment revenues. The casino industry employs 641,000 people nationwide and last year paid $9.5 billion in gaming taxes alone to state and local governments. So what can we expect in Massachusetts?
First, I want to dispense with the “saturation” argument that has recently been circulating in various policy circles. It is true that in the Northeast – from Maryland to Ohio to Maine – there are currently 56 casinos, racinos, and slot parlors – with $14 billion in total revenues. Massachusetts, New Hampshire, and Vermont are the only three states in this region without Class III gaming facilities.
Too Many Casinos?
Does that mean there are already too many casinos in the region? It depends on the size and location of gaming facilities. There are 40 casinos in Colorado, 30 in Mississippi, 13 in Indiana, 12 in Missouri, and 18 in Iowa (with only 3 million residents).
Massachusetts has authorized three large resort casinos and a slot parlor. So, will there be “too many” slot machines? After all Massachusetts facilities are fully operational, there will be approximately 483 adult residents per slot machine in Massachusetts and 377 adult residents per slot machine in New England. This compares with about 250 residents per slot machine nationally, so New England will hardly be oversaturated with slot machines.
Moreover, New Englanders have $642 billion in disposable personal income (DPI) and Massachusetts residents account for $305 billion (48 percent) of that income. This translates into a $3.4 billion gaming market based on recessionary assumptions. Four strategically located facilities will have the ability to recapture Massachusetts residents traveling to Connecticut, Rhode Island and Atlantic City to gamble, while residents of Maine, New Hampshire, Vermont and even Connecticut will find it more convenient to gamble in Massachusetts. With even a small tourism capture, total demand for gaming in Massachusetts is approximately $2.03 billion per year, and if the propensity to gamble returns to pre-recessionary levels, it could reach $2.7 billion by the time new facilities are fully operational in 2017-2018. This will mean $400 to $500 million per year in new revenues for state government.
10,000 Permanent Jobs Expected
Second, the commonwealth’s expanded gaming legislation requires a minimum capital investment of $500 million in the resort casinos and $125 million in the slot parlor ($1.6 billion). However, the existing proposals suggest that total capital investment could reach $2.5 billion. These new investments have the potential to generate at least 10,000 construction jobs over the next few years and another 10,000 permanent jobs at the casinos and slot parlor. Approximately 73 percent of casino jobs require a high school diploma or associate’s degree, but these jobs pay an average of $35,000 to $45,000 per year, while providing a full package of fringe benefits. Thus, the casino industry will play a significant role in addressing the state’s “blue collar recession.” It is an important new departure in the state’s economic development strategy that will create a diverse array of comparatively well-paying full-time jobs to individuals with low and middle-range skills in the service sector.
Casino gaming does not need to come at the expense of other initiatives, such as those in the life sciences, education reform, or research and development, but as parallel strategies, should complement, rather than compete with each other, in promoting job growth in the commonwealth. In fact, when measured by their ability to attract venture capital investment, eight of the top 10 “high-tech” states already have casinos.
The state’s policymakers have finally recognized that even though Massachusetts has one of the most highly educated populations in the nation – 38.3 percent with a bachelor’s degree or higher – it is also true that 61.7 percent of the state’s adult residents do not have a bachelor’s degree. A comprehensive statewide economic development strategy should include industries that provide tangible opportunities for higher incomes and career advancement for individuals working in this segment of the labor market.
Clyde W. Barrow, Ph.D., is director of the Center for Policy Analysis at UMass Dartmouth.
