A closer look at casinos

THE HOUSE may have killed Governor Patrick's casino gambling bill in March, but it didn't disprove the evidence that the licensing of three resort casinos would be a net benefit for Massachusetts. The latest forensic report comes from Spectrum Gaming Group, an independent research firm, which estimates Patrick's plan would generate about $1.5 billion in gross gambling revenues during the first year of operation.

Last winter's raucous debate on the issue pitted Patrick, a seemingly reluctant convert to the cause of casino gambling, against House Speaker Salvatore DiMasi, a passionate foe of casinos. At times, each side overstated its case. The Patrick administration exaggerated the potential number of construction jobs. DiMasi and casino opponents magnified the likely social costs, including compulsive gambling. But this month's Spectrum study and an earlier independent study sponsored by the Greater Boston Chamber of Commerce provide each side with plenty of objective analysis to consider. And with the Legislature out of formal session until January, members have plenty of time to digest the facts.

The Spectrum study supports the administration's basic assumption that casino gambling, if tightly regulated, deserves a place in the state's economy. Three well-placed destination casinos would attract $650 million to $900 million in casino spending from neighboring states and recover at least half of the $1.1 billion now spent by Massachusetts residents on casinos in Connecticut and Rhode Island, according to the study. The state could expect nearly $600 million in annual casino-related tax revenue, including meals and hotel taxes, and the creation of 20,000 new jobs. Social impacts, including traffic and other disruptions, are legitimate concerns. But they could be minimized with proper planning.

Mind the details
Patrick got the basics right, the report suggests. He sought to steer clear of undercapitalized slot machine parlors at racetracks and recognized the importance of including an Indian casino in his planning.

But the landscape keeps shifting. This week, for example, Suffolk Downs and Wonderland Greyhound Park formed a partnership that will be looking to build a resort-style casino in Boston. Such an urban casino could serve the city's convention trade. But it could also attract too many local "convenience" and problem gamblers instead of a broader and healthier demographic in search of destination casino amenities such as shows and restaurants.

If Patrick has any hope to convince the Legislature that casinos belong in Massachusetts, then he must gain lawmakers' confidence in his ability to negotiate the toughest deal with wily casino developers. The Spectrum study makes the essential point that public officials will enjoy a negotiating advantage only during the competitive bidding stage when industry officials will be anxious to prove that their presence will benefit the public. The study makes a powerful case that the state should insist up front on financial plans that advance job training and promote tourism and the convention business over convenience gambling. State officials should also stand firm on the need to protect the lottery, up to and including a requirement that casinos indemnify the lottery against any losses from casino competition.

Beware of false promises
The report issues another important warning - about casino operators who seek to win licenses by offering more than the proposed 27 percent tax rate on gambling proceeds set by the Patrick administration. Offers of higher rates are often a smokescreen for fewer jobs and other public benefits. When dealing with casinos, the most important skill is always to know when to walk away from the table.

The report's authors know all the angles played by casino developers. But the Patrick administration will need to show plenty of political skill to persuade DiMasi and other opponents that destination casinos can still be a good deal for Massachusetts. It's clear that Patrick's plan to use the tax proceeds from casino gambling for transportation infrastructure and modest property tax relief didn't resonate with the House. He will need a new strategy next year.

There are many unmet needs in state government, so Patrick has his pick of ways to show how the extra revenue would benefit Massachusetts. In June, for instance, he unveiled his Readiness Project - a major redesign of the state's public education system. The costs are still being worked out. But the prospect of generating hundreds of millions of dollars annually for education could alter the casino debate.

Patrick's casino effort failed this year, but a bill that offers clear benefits for Massachusetts while imposing strict discipline on casino developers might be the strong hand in 2009.