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Casino Math Workbook for Beacon Hill

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1 Casino Math Workbook for Beacon Hill

2 The Net Effect of Casinos on Revenues The Massachusetts Lottery funds Local Aid The Lottery is expected to lose a minimum 10% net revenue with the introduction of class III gambling, slots and casinos (See Appendix 1, Appendix 2) Graph Sources: Grinols, Earl L., Mustard, David B. and Dilley, Cynthia Hunt, Casinos, Crime and Community Costs. June 2000. Fiscal Impacts of Foxwoods Casino on the Town of Ledyard, Connecticut. Mayor Wesley J. Johnson, December, 2001. Cost of Gaming Commission Estimated between 20 and 80 Million Dollars 2

3 When Casinos win, Communities lose Casino revenue will not increase Massachusetts NET revenue Funds to Local Aid based on average. 2009 Aid was 23% 3

4 Government sponsored predatory gambling is a permanent regressive Tax 4 “While excessive gambling affects members of all social classes, its greatest social concern comes from its prevalence among poor economic groups.”

5 5 Slots and Casinos are a “backdoor” Tax For every $1 generated by casinos, it costs tax payers $3 to address increased crime, bankruptcies and other adverse affects No state that has legalized slots and casinos has adequately mitigated the impacted host region $1 Billion dollar cost to California taxpayers for impacts of slots/casinos $4.5 Billion dollar cost to Australian taxpayers for impacts of slots “pokies”/casinos

6 Slots/casinos send money out of the local economy and out of state When money is not spent on household items, groceries, dinner out with the family and is instead dropped into a slot machine, it leaves the economy Massachusetts has significant levels of legalized gambling, the major difference is that lottery revenues stay in state Slots/casinos benefit wealthy investors and developers while draining individuals, families and local economies 6

7 Racinos and Casinos are not reliable revenue When compared to other forms of gambling and the sales tax, Casinos are by far the most volatile form of revenue. 7

8 Racinos and Casinos will not create 30,000 construction jobs “I don’t know how 30,000 was arrived at, but it didn’t come from me.” -Frank Callahan, President of Massachusetts Building Trades Council Source: Gus Faucher. Director of Macroeconomics, Moody’s 8 An independent cost-benefit analysis is needed

9 Casinos will not solve the unemployment crisis Because the areas could not support the low wage jobs the casino was looking to fill in Connecticut, it brought in workers that would work for minimum wage Source: “Mayor: Casino Costly”: Sun Journal. Lewiston ME 10.22.08. By Leslie Dixon Many of the “new” jobs simply replace jobs destroyed when existing businesses lose their customer base to casino malls. (See Appendix 4 ) 9 A study commissioned by the Governor of New York concluded that 1,208 more jobs would be lost rather than gained with gambling expansion due to a change in residents spending habits. Source:Jerry Zremski, :Doubts Raised on Casino Job Gains” The Buffalo News, 8/18/02

10 Casinos and racinos cannibalize small businesses 83% of retailers went out of business within the first 7 years of legalized gambling in Cripple Creek Colorado 70% of independent restaurants shut down in Atlantic City within the first year casinos opened 10

11 Primary gamblers live locally Rhode Island residents have the highest per capita spending at studied gambling sites. Connecticut residents have the second highest per capita spending at studied gambling sites. Page Source: New England Public Policy Center. September 14, 2006 11

12 Casinos are more problematic than other forms of legalized gambling.*  People become addicted to Slot Machines 5 times faster than other forms of legalized gambling  80-90% of calls to help lines for gambling addiction now concern Slot Machines *Source: Rapid Onset of Pathological Gambling in Machine Gamblers. By – Robert Breen. 2002 12

13 ANATOMY OF A SLOT MACHINE Computerized machines allow faster bets. On average a gambler make a bet every 5 seconds. Slots are programmed to display frequent near- win combinations to keep gamblers “playing to extinction.” Experts state that computerized slot machines create a faster and more addictive game experience than original slot machines. ( Appendix 6 ) “Every feature of a slot machine-its mathematical structure, visual graphics, sound dynamics, seating and screen ergonomics is calibrated to increase a gambler’s ‘time on device’ and to encourage play to extinction”. -Dr. Natasha Dow Schull Assistant Professor, MIT Slot machines and social gambling are not the same 13

14 Casinos rely on problem gamblers to make profits Based on data of 40,000 daily visitors to Foxwoods Casino Resort (See Appendix 5) 14 Much like the tobacco industry, racinos and Casinos need to attract new addicted users to bring in revenue.

15 The role of Government Is to protect the People 15 Not to exploit them United to Stop Slots in Massachusetts (USS Mass) and our citizens coalition calls upon our elected officials for an independent cost-benefit analysis before legalizing expanded gambling, slots/casinos. USS Mass is joined by Governor Patrick, Attorney General Martha Coakley, Governor Dukakis, Mrs. Kitty Dukakis, former Attorney General Scott Harshbarger, Congressman Michael Capuano, Governor’s Councilor Tom Foley, John Merrigan, Register of Probate, Sheriff Guy Glodis, Alan Khazei, Mass Chiefs of Police Association, Mass Council of Churches, League of Women Voters, National Association of Social Workers – MA Chapter, Western MA Substance Abuse Providers Association, Western MA Casino Task Force, Mass Family Institute, dozens of legislators and hundreds of Massachusetts taxpayers. For more information visit:

16 Appendices Appendix: 1: Figures based on October 2009 public hearing at the State House. 700 Million is estimated out of State gambling. 90 Million is the estimated net recapture after gambling industry deducts it’s allowable expenses (ANGR). Appendix: 2 Cost of Gaming commission is estimated between 20 million and 80 Million dollars. The 80 Million estimate is based on the creation of a gaming commission relative to 16% of Revenue, which would be the approximately equal to the gaming commission in New Jersey, and be the best regulation in the country. Appendix: 3 Statistics based on total monies gambled at a 26% tax rate: Money gambled$100 Payout$93 Gross profit$7 Taxable26% of $7 = $1.82 Appendix: 4 According to municipal officials in Ledyard, Preston, and North Stonington Connecticut, each town has suffered significant reductions in their business sectors due to the casinos building malls that contain restaurants, clothing stores and other businesses similar to local enterprises. Casinos use these non- gaming activities to stimulate demand while cannibalizing the local retail market. Appendix: 5 Data is based on an average of 40,000 daily visitors to Foxwoods Casino, as compared to findings in the 1999 National Impact Gambling Study stating the percent of problem gamblers and at-risk gamblers that visit casinos daily. Appendix: 6 Dr. Natasha Schull states in her book Machine Life: Control and Compulsion in Las Vegas. Slot machines are designed to for quicker game play allowing a gambler to make a bet every 5 seconds. Information is based on an average Slot Machine payout of 93% and an average time per game of 5 seconds.

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