Posted tagged ‘gambling’

Can We Be Different Like Everyone Else?

January 4, 2013

I was surprised to see the number of states that have allowed casino gambling.  In a prior post I focused on what I thought were the states that are perhaps most identified with casino gambling (Nevada, New Jersey, and Connecticut).  Twenty three (23) states and five since 2005 (if you count Massachusetts) now allow some type of casino gambling.  As the map below shows, the Northeast region of the country is the king of casinos.  I don’t know what that says about the Northeast but Vermont and New Hampshire are now the only states in the region that do not have some form of casino gambling. (a note about the data in the charts below:  I have taken reasonable steps in the limited time I allocate to this blog to provide accurate information – if anything appears inaccurate please let me know).

Note: Map is Updated thanks Curtis!

 Competitive Casino Map

I think whether or not to become more like other states in the region is an important and ongoing debate in New Hampshire, whether it be about our revenue structure, which stands out in the region, or our political, legislative, and regulatory structures which to a lesser degree do as well.  I’ve long argued that the state was able to buck the region’s unfavorable demographic and  economic trends because it was somewhat unique in the region.  Some who disagree with me on that argue that the state should, in the case of casino gambling, refuse to become more like the rest of the Northeast region.  While others who agree with me on the benefits of NH’s uniqueness are arguing that NH should have casino gambling because other states in the region are doing it.  Consistency isn’t what it used to be or perhaps I just confuse consistency with rigidity.  It is also possible that I am misreading the whole consistency and change aspect of the debate.  Could it be that gambling is consistent with NH’s fiscal traditions but inconsistent with its uniqueness in the region?  I don’t expect there will be a lot of testimony on that at any public hearings on casino proposals.  For those more interested in the pedestrian issue of how much state revenue we can expect, below is a chart that shows how much states currently take in from casinos (in very broad categories).  Interesting to see that Pennsylvania is now the champion in terms of state revenues from casinos.  That state is, in large part, responsible for the decline in revenues in New Jersey.  Things are definitely changing in NH and the upcoming debates over whether or not to allow casino gambling will, I think, tell us a lot about the direction of that change.

State Revenue from Casinos

The Odds on Gambling Have Gone Up?

December 4, 2012

(Update:  An astute reader has suggested that if gambling is more likely then, in fact, the “odds have gone down”  – I’ve added a question mark to the title to reflect my uncertainty.)

With a newly elected governor open to this possibility of introducing casino gambling in NH and a state senate that has been similarly inclined in recent years, by all accounts casino gambling will be a hot topic in the legislature this year.    Because this blog attempts to address timely issues, this is the first of what will be a number of posts that take an empirical (as opposed to moral or ideological) look at the fiscal and economic impacts of casino gambling in NH.  First, a disclosure:  I am not now nor have I ever been involved in debates regarding expanded gambling in New Hampshire or anywhere, either professionally or personally.  I only point this out because so much of the debate is framed by advocates or opponents, the information from each is often discounted by some percentage because of their advocacy.  There may be other reasons to discount the information I offer here but my position as an advocate or opponent ought not be one.  Most of what I will be posting here are aspects of casino gambling that interest me, and thus may not be the most important or most relevant from a public policy perspective.   If there are issues you think I ought to examine,  feel free to let me know.

casino tax revenues

Looking at the basics, casino gambling provides substantial revenues to the three states I examined for this post.  The chart above shows the state government revenues provided by casino gambling revenues of CT, NJ, and Nevada.  For Nevada, the  revenues do not include casino gambling related revenues such as taxes on rooms or meals and for each state the figures do not include any licensing revenues.  Revenues in Connecticut are the “cleanest” to interpret, they represent the state’s 25% share of the “win” from slot machines at both Foxwoods and Mohegan Sun.  I don’t know (yet) the revenue formula for Nevada or New Jersey but I do know that slots are important regardless.  In Nevada, slot machines represent about 65% of casino revenue (61% at publicly traded – larger- casinos).  A key question from the chart is whether the decline in state revenues is cyclical, or structural.  Cyclical involves changes resulting from economic conditions, while structural involves issues such as competition (the increase in gambling locations) and perhaps the 800 pound gorilla, internet gambling.  Either way, the decline in gambling revenue has been especially dramatic in New Jersey, which likely reflects a combination of increased competition (especially from new Pennsylvania casinos) as well as economic conditions.  It will be interesting to see how CT and NJ fare with the impending opening of casinos in Massachusetts.

Casino gambling revenues come from the discretionary spending of consumers.  Discretionary income suffered significantly during the recent recession.  In NH, the revenue source probably most dependent on discretionary spending is the state’s meals and rooms tax.  A significant percentage of the meals and rooms tax is related to entertainment and recreation spending, similar to casino gambling (although the meals and rooms tax is also a function of business conditions and expenditures).  A quick comparison of gambling and meals and rooms tax revenues shows that the meals and rooms tax (adjusted for rate changes) declined during the recession but has been a more stable source of revenue for NH than has casino gambling revenues has been for other states.  Another interesting fact is that revenue from NH’s meals and rooms tax was about $237 million in FY 2012, while casino gambling revenues in NJ were about $238 million.Casino vs meals and rooms

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