The signs are everywhere these days. Twin River’s table game profits were off 34 percent in July. The gleaming new MGM casino in Springfield is performing below projections. Revenue at Connecticut’s two casinos –Mohegan Sun and Foxwoods—is down.
For years, gambling has been a gravy train for state and local governments. It’s now the third largest source of state revenue in Rhode Island, after the sales and income taxes. This river of sin taxes allowed the politicians to mask the true costs of providing money for schools, roads and medical care. And it all happened in an era of anti-government sentiment, when raising taxes was viewed as political suicide. Casinos separate people from their money, but they also generate jobs.
Rhode Island’s last anti-gambling governor was Lincoln Almond, a moderate Republican from the 1990s. Almond thought state-promoted legal gambling was a scam that preyed on the poor, created addicts and didn’t bring to a state anything of value like manufacturing jobs.
In those days, some politicians strolled through Smith Hill’s marble corridors sporting “No Casino” lapel buttons. But when a majority of lawmakers saw the pot of gold that legal gambling produces, that slogan was buried by Go Casino sentiment. Voters shrugged off anti-gambling arguments when the money rolled in.
Massachusetts and Rhode Island politicians birthed casino gambling to their states in markedly different ways. In Rhode Island, it was done in a haphazard manner, in one of those midnight deals in the waning hours of a General Assembly session. Slot machines were allowed at Lincoln Greyhound Park, a foundering dog racing track to prop up the track and the dog owners. It was seen a favor to the dog owners and their wily lobbyist, former Warwick mayor Joseph Walsh.
As is often the case, Massachusetts was smarter. A state gaming commission was set up to vet casino proposals. The commission took its time and established regional licenses. So far, the Springfield casino and Encore Boston Harbor, a $2.6 billion gambling Goliath in the Boston suburb of Everett, have opened. Rhode Island pols and Twin River executives have pointed to competition from new huge new Encore venue as the reason Ocean State casino revenue has dropped.
In Rhode Island the politicians’ solution to the decline is more gambling. The Assembly ushered in sports wagering that makes it easy to play the point spreads on mobile phones. Massachusetts is likely to soon follow.
This isn’t just a New England trend. In New York, four casinos have opened upstate within the past three years. All have fallen short of revenue expectations. And the ultimate red flag may be the Atlantic City experience. At the start of casino gambling on the east coast in 1978, there was only Atlantic City, then a faded New Jersey resort. Gambling peaked there in 2006 when the casino market harvested $5.2 billion. A decade later, competition sliced that figure to $2.6 billion.
Truth is, Massachusetts isn’t done with casinos. What Rhode Island should be worrying about is that the Bay State has another casino slated for the southeastern part of the state. Two thirds of Rhode Islanders live less than a half hour’s drive to Taunton, Fall River or New Bedford. A new casino there would obviously bite into Twin River’s Tiverton casino.
Short of installing video slots at Dunkin’ Donuts, there isn’t an easy answer for Rhode Island’s casino woes. What is needed quickly is for Raimondo and Assembly leaders to appoint a commission to study this market and suggest a way forward.
It’s never good when a state government acts like an addicted gambler. One thing we know –gamblers don’t die rich.
Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon.
