Our Opinion: Fragile casino bubble
Imagine a scenario in which Atlantic City, New Jersey’s once thriving industries manufacturing phone booths, audiocassettes and electric typewriters began closing shop, victims of changing times and economic circumstances. Surely neighboring states like New York and Massachusetts would take note and abort their fledgling efforts to build their economies around the manufacture of phone booths, audiocassettes and electric typewriters.
This scenario is actually unfolding, except casinos are the industry in question, not the three above-mentioned anachronisms. Yet all logic, indeed common sense, are absent, as New York and Massachusetts continue to blissfully forge ahead with their various casino plans, evidently oblivious to the collapse of casinos in Atlantic City and the struggles of southeastern Connecticut’s casino giants.
Last week, Revel Entertainment announced that it would close its two-year old casino -- the casino that was going to save the Atlantic City casino industry -- next month after two years in operation. The casino never turned a profit and never found a buyer for pennies on the dollar after filing for Chapter 11 protection. This will bring to four the number of Atlantic City casinos to be closed this year, eliminating 8,000 jobs. Seven casinos remain in the city, but for how long?
Revenues at Foxwoods and Mohegan Sun in southeastern Connecticut peaked at $1.7 billion eight years ago and declined to $1.17 billion last year, according to a study by the University of Las Vegas, resulting in layoffs and cutbacks. The money being gambled is stagnant or worse while the market is becoming saturated throughout the nation and the Northeast.
The underlying theory behind casino mania in New York and Massachusetts is that the states must stop watching gambling dollars gravitate to casinos in neighboring states. The casino model only works if visitors are drawn in from other states, and if every state, indeed every section of every state, has a casino, then no one needs to go anywhere to gamble. Rather than draw in visitor dollars the casinos will simply cannibalize the locals, eliminating the benefits of casinos while maintaining the many negatives, such as crime and increased gambling addictions.
According to a New York Times story August 10, more than half the population in the Northeast now lives within 25 miles of a casino, up from 10 percent only a decade ago. That chilling statistic alone should take the starch out of casino mania. Yet it hasn’t.
New York, which already has five Indian casinos and nine so-called "racinos" at racetracks, wants to add at least four more, with the communities of East Greenbush and Rensselear, each an hour or so from the Berkshires, said to be possible locations. Massachusetts continues to struggle through its lawsuit-riddled casino process, with nearby Springfield hoping to join MGM Resorts in building an $800 million casino along Route 91.
The casino referendum question on Election Day may end casino mania in the state, although overturning state law through the ballot box could set an unfortunate precedent while opening the state to lawsuits from casino companies. Springfield would be devastated.
There are no casino proposals for the Berkshires, but a casino in Springfield and/or casinos in neighboring New York state could have an impact on entertainment venues in the county. If built, of course, they could vanish as quickly as will Atlantic City’s state-of-the-art Revel.
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