Capers Jones: Economic consequences of the new casino
01:00 AM EDT on Wednesday, August 23, 2006
The press releases and blogs of the opponents and supporters of a proposed casino to be put up by Harrah's and the Narragansett Indian Tribe are about as far apart as it is possible to be. Casino supporters are issuing statements that if it is built, taxes will be sharply reduced and the economy will improve. Opponents are issuing statements that if it is built, taxes will go up and both Lincoln Park and Newport Grand will go out of business.
A thoughtful analysis of the casino's economic possibilities indicates that both sides may be wrong. From analysis of the partial data available, the actual impact of a Harrah's-Narragansett Indian Tribe casino, proposed for West Warwick, could range from somewhat favorable to somewhat harmful. A more accurate analysis would need information not currently available from either side.
Here is how the situation looks:
Right now, about 85 percent of the customers at Lincoln Park and 80 percent at Newport Grand are from Rhode Island. Gambling wastes money, of course, but at least the money stays in Rhode Island and a little bit comes in from outside.
Only about 30 percent of the customers at Connecticut's Foxwoods and Mohegan Sun are from the Nutmeg State. The other 70 percent bring money into the state in larger volumes than the Connecticut people lose it.
On any given day, there are usually more gamblers from Rhode Island at Foxwoods and Mohegan Sun than at Lincoln Park and Newport Grand. This Rhode Island money leaves the state and never comes back.
If Harrah's and the Narragansetts open a casino, there are six possibilities:
1. The casino will attract new out-of-state gamblers, in which case money will come into Rhode Island from somewhere else (probably most of it from Massachusetts). Out-of-state money coming into Rhode Island will probably benefit our economy.
2. The casino will attract some gamblers from Newport Grand and Lincoln Park, but their money will stay in Rhode Island. This might hurt sales at the two existing casinos and hence might damage Rhode Island if the net effect is an overall loss of revenue.
3. The Harrah's-Narragansett Indian casino might attract Rhode Island gamblers who currently go to Foxwoods or Mohegan Sun. In this case, money that would leave Rhode Island will stay here. This can be viewed as beneficial to Rhode Island.
4. The new casino might attract people who don't gamble anywhere right now, although it's not very likely. This possibility is hard to predict, and in any case not many people would be totally new gamblers, except those just reaching gaming age.
5. All four of the preceding possibilities might occur simultaneously in varying degrees, and the results could range from a significant net gain for Rhode Island's economy to a significant net loss -- or the results could stay close to neutral. The outcome is unpredictable from the available information.
6. The last possibility is that the ever-expanding casinos in Connecticut overwhelm all of the Rhode Island casinos. In this case, Connecticut becomes the gambling mecca of New England, while Rhode Island's gaming business diminishes. This would be quite harmful to the Rhode Island economy.
There is not sufficient factual information to know which of these possibilities might occur. If a Harrah's-Narragansett Indian casino arranges chartered bus trips from Boston and other places outside Rhode Island (as do Foxwoods and Mohegan Sun), there would probably be an increase in out-of-state money into Rhode Island.
A Harrah's-Narragansett Indian casino would not be a panacea for our property taxes. But it is far from certain that such a casino would do the state any real harm.
The question hinges on these three issues:
1. Whether the new casino would attract out-of-state gamblers.
2. Whether the new casino would keep Rhode Island gamblers in the state rather than having them go to Connecticut.
3. Whether the new casino would significantly reduce the revenues of Lincoln Park and Newport Grand.
By doing exit interviews with people leaving the casinos in Connecticut and the two in Rhode Island, one could collect enough demographic information to do a pretty good projection of how many gamblers from each place would go to the Harrah's-Narragansett Indian casino. This would give the Narragansetts, Harrah's and the State of Rhode Island something solid to work with.
Unfortunately, this kind of demographic study has not been done. In the absence of any solid facts or accurate fiscal projections, Rhode Island voters are going to the polls essentially to vote on which side has run the better advertising campaign.
Capers Jones is a semi-retired businessman living in Narragansett. |
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