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Gaming in Pennsylvania has proved a resounding success – mostly. Sharon Harris looks under the covers
In 1687, the renowned mathematician and scientist Sir Isaac Newton proposed three Laws of Motion. The most famous claimed that "To every action there is an equal and opposite reaction." In other words, every event causes a reaction, which may be both positive and negative.
After several attempts, my home state of Pennsylvania opened its first casino in November 2006. Limited to electronics – no table games with live dealers – they have generated impressive revenues. It helps that tens of millions of people live within a few hours drive of any venue across the state.
Reports reveal that it has boosted the Pennsylvania economy. So, it should be a resounding success, right? Well, not so fast. For all the good, there have also been glaring negatives.
The seven Pennsylvania slot casinos have generated more than $1.8 billion for the state coffers. Much of that money, plus proceeds from the Pennsylvania Lottery, has provided tax relief for low-income seniors and school districts, reducing homeowners’ property tax bills. Pennsylvania’s population of more than 12 million includes one of the oldest senior populations in the US.
More than 6,500 jobs have been created, bringing employment, infrastructure upgrades and revenue to individual communities. The horseracing industry has benefitted by $288 million. Seven of 14 slot licenses went to racetracks, where six slot parlors have already been built.
On the flip side, during this same two-year period, players have lost more than $2.4 billion. That translates into an average $249 from every Pennsylvania adult, many who live on their pension or Social Security checks.
Thousands of seniors lament that gaming is now so convenient that they are spending way too much of their money and leisure time at nearby casinos. While true that not everyone is playing, enough people are, and often enough, to raise red flags of warning.
As zoning questions continue about the remaining planned casinos, neighborhood groups are actively opposing construction. Philadelphia is in the midst of a nasty citizen struggle. Along with the usual projected crime and traffic complaints, they cite a growing problem gambling scenario.
The Pennsylvania Council on Compulsive Gambling reports that helpline calls have jumped 39% per month this year. This problem gambler is often a white female, in her 40s to 50s. Others are older, and many are disabled. Depression about the economy may tempt the vulnerable to drown their sorrows by playing, or even worse, mistakenly believe they can better their bank accounts by gambling.
There is no upside to that. The Pennsylvania industry will have to work as hard as Atlantic City has to fight compulsive gambling. Everyone should monitor how the current economic situation affects gaming.
However, it is not just customers who are feeling the financial pinch. Casinos in Atlantic City have laid off hundreds of staff members since the summer. Las Vegas numbers are just as bad.
Now, the pain is coming full circle. Las Vegas and Atlantic City executives are also succumbing to conditions that will either cut salaries and/or eliminate bonuses. CEOs and senior management cannot realistically justify taking home extra cash when they are sending pink slips to thousands of working men and women.
For example, 22 Trump casino executives are taking a five percent pay cut, totaling $500,000. MGM Mirage is eliminating this year’s cash bonus program, based on specific levels of profitability. To further trim costs, MGM Mirage left the Nevada Resort Association. And, its $5 billion megaresort project for Atlantic City has been put on hold.
Those with money and the stomach to ride out the ebbs and flows of casino operation profits/losses may find it a good time to invest. International singer and musician Jimmy Buffett is part of a group that will buy Atlantic City’s Trump Marina from Donald Trump. Even “The Donald” has had to adjust for a changing market. The selling price was recently slashed from $316 million to $270 million.
Buffett applied for a services supplier license, but the New Jersey Casino Control Commission ruled that his company’s small role in management requires him to undergo a standard background investigation. The intensive examination reaches back to an applicant’s earliest associations and alliances. I have seen people rejected for just interacting with unsavory people.
I wish the same scrutiny were applied to our government leaders. It could change who gets elected, which might just clean up the mess they have made.
I’m heading out for the G2E, so look for my thoughts on the US election and the show next month – I will have plenty to say about both…
