Our Opinion: Reality sets in on casino revenue
The Baker administration's projection that gaming revenue will decline in fiscal 2021 is a wise and welcome acknowledgment that revenue projections for the three state casinos are unrealistic. They were from the beginning. Creating new casinos doesn't mean new patrons will be created as well, and there is clearly a ceiling on gambling revenue that Massachusetts and the Northeast have either reached or at rapidly approaching.
In his fiscal 2021 budget proposal, the governor is counting on $283 million in tax revenue, or about $11 million less than the revenue from the casinos assumed in the current budget. Casino proponents have long projected a minimum of $300 million a year in casino revenues for the state. In its first year in operation, MGM generated $274 million in total revenue, a figure that has declined since. MGM predicted that its casino would produce $418 million in gross revenue in its first year.
Earlier this month, Wynn Resorts' Encore Boston Harbor and MGM Springfield acknowledged continuing declines in revenue, with both casinos asserting that they were still going through growing pains. MGM Springfield head Michael Mathis told the State House News Service that the casino on Route 91 needed more time to prove itself but MGM did not give Mr. Mathis more time to prove himself — both he and Encore head Bob DeSalvio recently lost their jobs. The state's first casino, the slots parlor in Plainville, is expected to generate revenue that is 16 percent lower than the revenue it collected in 2019.
The financial success of the Foxwoods and Mohegan Sun casinos in southeastern Connecticut, their parking lots filled with Massachusetts license plates, fueled casino frenzy in Massachusetts, and New York State as well. The Eagle has pointed out over the years in editorials ("Too many casinos spoil the windfall," Nov. 10, 2019) that not every casino can duplicate the success of the Connecticut giants because the amount of gambling money is finite. Casinos welcome all patrons but out-of-state visitors empty their wallets while putting no demands on the state before heading home. When there is a casino glut, out of state money dries up and as revenue declines scars are left on the community and numbers are added to the unemployed. This is when the pie-in-the-sky projections unravel. Revenue from New York's states casinos are also falling short of projections, according to the Albany Times-Union.
Remarkably, in spite of all of these cold numbers, old rivals Mohegan Sun and Foxwoods continue their combined efforts to open a casino in East Windsor, Connecticut, a mere 17 miles south of MGM Springfield. This spiteful plot would further cripple MGM Springfield without guaranteeing success for the East Windsor casino. Because Foxwoods and Mohegan Sun are tribal casinos they must deal with an Interior Department skeptical of their right to build a casino in East Windsor on what is not tribal land.
Struggling Springfield has put a lot of its economic hopes in the MGM casino and ideally it will be of benefit to the city. But it is clear that it will not be the economic generator it was projected to be because those projections were based on high hopes not harsh reality. The same is sure to be true for all of the Northeast's many casinos, and whatever new casinos sprout up against all logic.
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