Our Opinion: Too many casinos spoil the windfall
When Claude Rains' Captain Renaud closes down Rick's in "Casablanca" he professes to be "shocked" that gambling has been going on — and then collects his winnings. Gambling advocates in Massachusetts profess to be shocked by casino revenues that are lagging below projections, but they should be no more shocked than the captain pretended to be.
Unrealistic projections and an overabundance of casinos have combined to produce a disappointing revenue stream. That is not to say that the casino industry is a bust as the state and communities are collecting tax revenues. But the casinos' impact was oversold, and that inevitable reality must be accepted.
MGM Springfield, which celebrated its first anniversary in August, fell about $100 million short of projected revenue for its first year in operation. Encore Boston Harbor is projected to be a little more than $100 million short in its first year. The state's third casino and the first one to open, the slots-only Plainridge Park, continues to disappoint.
The success of Foxwoods and Mohegan Sun in southeastern Connecticut generated casino envy in Massachusetts, but the belief that if two casinos were successful financially five casinos would be successful as well was fantasy. More casinos won't necessarily create more gamblers and gambling revenue. There is a ceiling on both somewhere and the industry may have bumped its head against it. Along with the gambling ceiling reality, industry observers quoted in the Boston Globe said that casino operators have to over-sell their casinos to get approval from state and local licensing agencies.
Springfield is about an hour and 20 minute drive from southeastern Connecticut and gamblers may prefer the wooded setting of the two casinos there to the urban casino off Route 91. The same may be true of the Boston casino, whose potential patrons must ask themselves if they want to deal with Boston traffic. Plainridge Park is located near a larger and well-established casino in Rhode Island. Meanwhile, over in New York State, its casino revenue projections are also falling short of expectations. Casinos in Schenectady and Saratoga Springs, separated by about 45 minutes of highway driving, seem destined to cannibalize one another.
These harsh realities have not appeared to translate into hard lessons, however. There is still talk of establishing a tribal casino in southeastern Massachusetts, as there has been for years. Foxwoods and Mohegan Sun have discussed teaming up on a joint casino venture in or near Hartford, Connecticut to spite MGM Springfield. If these two casinos are built they will inevitably disappoint residents and town officials who were sold on unrealistic revenue projections.
MGM did generate $293 million in its first year, which would seem more impressive if it hadn't projected $400 million. That's revenue that the struggling city could use — it's just not the kind of revenue that was supposed to transform the city. Communities will now have to live with more realistic revenue figures and hope that a recession doesn't strike that disposes of people's disposable income. And the states of New England and the Northeast should declare a moratorium on the construction of new casinos. This gold mine is going to get tapped out.
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