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Consulting Firm Study Shows Casinos Would Benefit State

Posted on June 21st, 2010

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Massachusetts senators have hired a consulting firm to conduct a study on the effects of legalizing three casinos in the state. The senators commissioned The Innovation Group, a firm that provides expert advice on gambling. The consulting firm has for its clients big casino companies like Harrah’s Entertainment Inc., Trump Hotels and Casinos and Wynn Resorts, and also other states that have looked at the option of gambling expansion. According to projections of The Innovation Group report, the Senate’s version of the gambling proposal will produce 3,500 employment opportunities at each of the three casinos and 4,000 new jobs at adjoining hotels and restaurants.

Furthermore, the study estimates that the state will earn $360 million to $460 million a year from its 25 percent share of the casino revenue. The casino licenses issued to the developers will also yield at least $200 million for the state. Gambling proponents in the Senate said they are optimistic that legalizing casinos in Massachusetts will improve the economic situation in the state, and the study’s forecast had backed up their confidence. The casinos will also pull the plug on the exodus of Massachusetts money to casinos in other states, estimated to be $1 billion a year.

The Senate bill allows three casinos to be developed in the east, west and southeast parts of Massachusetts. Sen. Stanley C. Rosenberg from Amherst who helped craft the bill, said, “If we do it right and do not chop up the market, then we can grow large casinos. If we grow large casinos, then we can maximize our competitive ability within the region, and that leads to even more jobs and revenue.” Since the Senate proposal does not call for slot machines at the state’s four racetracks, the bill would provide the tracks’ workers a first choice to be hired at the casinos if their tracks close within one year after the granting of a casino license.

Critics of casinos questioned The Innovation Group’s conclusions because they said the study did not look into the negative effects of gambling such as ruined lives and finances, crimes and others. They also charged the firm of being closely connected to the gambling industry. Kathleen Conley Norbut, president of the group United to Stop Slots in Massachusetts said the report is not a reliable one and had no real basis, but was just made up to “justify the Senate leadership’s mania for casinos.” Rosenberg said that indeed the consulting firm has ties with the gambling industry, but said Senate leaders picked the firm because the developers who are after the casinos in Massachusetts are not currently among the firm’s clients.

Rosenberg said all consulting firms offer their services for both the industry and the regulator. He said the Senate paid The Innovation Group $80,000 for the study. The debates on the Senate bill will start on Wednesday and will go on for three days. If the proposal clears the Senate, a conference committee will attempt to reconcile the clashing bills of both chambers. The House passed a bill last April that calls for only two casinos, and no third one for an Indian tribe, and 750 slot machines at each of the state’s four racetracks.

Gov. Deval Patrick, like Senate President Therese Murray, is endorsing the legalizing of casinos and not racetrack slots because he says slots, unlike casino resorts, do not generate as many jobs because those machines do not require additional facilities like hotels and restaurants. Yesterday, Senate leaders changed a major detail in their proposal. Contrary to the previous draft which reserves one casino license for a federally-recognized Indian tribe, the bill now requires the tribes to submit competitive proposals as with all other interested casino developers. Doing so would produce more money for the state.

The Senate bill also specifies that smokers would be provided a fourth of the casinos’ gambling space to make the casinos competitive with gambling facilities in other states where smoking is allowed, since Massachusetts has a smoking ban in most establishments. The Senate bill bans anyone below the age of 21 to gamble or to enter the gambling area. The measure also allows people to file a formal request before a judge to have a family member denied entry to a casino if that person has gambling problems. The bill would set aside $12.5 million a year for programs that address gambling addiction.