|IN NEW YORK
Andrew Cuomo wants the state to consider legalizing casinos that are not run by Native Americans, even as two longstanding efforts by tribes inch forward.
Nearby states also push gambling
Potential rivals for Mass. dollars
As lawmakers on Beacon Hill consider authorizing three casinos and a slots parlor, government officials and casino interests in nearby states are aggressively trying to add to their own roster of gambling options - providing significant potential competition to Massachusetts.
In Maine, voters will be asked this November to approve two additional casinos, including one near the southern border, in Biddeford. Rhode Island has a ballot question pending next year to add table games to the Twin River slots parlor in Lincoln. Many industry observers predict New Hampshire officials will follow the trend and again consider authorizing a casino along the state’s southern border.
New York State has gambling developments on multiple fronts.
After years of anticipation, a huge slots parlor is scheduled to open next month at Aqueduct Racetrack in Queens, following a similar one at the nearby Yonkers track.
Moreover, Governor Andrew Cuomo wants the state to consider legalizing casinos not run by Native Americans, even as two longstanding efforts by tribes inch forward, including one on Long Island. New York has several Indian-run casinos.
The new gambling options in such a small region would probably cut into tax collections and trigger intense lobbying from casinos for concessions, such as expanding gambling options, say specialists in the field.
That has been the experience in other regions of the country where states have engaged in a kind of border war of escalating gambling options to keep their residents from driving to casinos elsewhere.
“Almost every legislature has said the same thing: “We’re holding our nose and regulating this industry and we’re not going to ever change,’ ’’ said Michael Hicks, an economics professor at Ball State University in Indiana who has studied competition between states.
“As soon as the business lags for some reason, there’s a rush for expanded gaming activities at the casinos,’’ he added. “The experience that Massachusetts is likely to see is something akin to that.’’
Hicks and several other industry specialists said the increased competition from other states will certainly pressure the Massachusetts casinos, but stressed that the overall success of any one facility is highly dependent on its location - its proximity to a large population center and to other casinos.
The debate in Massachusetts is scheduled to begin in the House of Representatives Wednesday.
Meanwhile, backers contend the state is experienced at competing with its neighbors for tourism and convention business, for example.
“If done correctly, expanded gaming can help us retain the revenue we are currently losing when our residents leave Massachusetts for gaming experiences that they cannot have here,’’ said Kimberly Haberlin, a spokeswoman for the Massachusetts Executive office of Housing and Economic Development.
Looked at from afar, the individual efforts by Northeastern states appear as links in a long chain of events that stretches from the Midwest to the Mid-Atlantic to Maine.
“There’s been almost a Newtonian reaction from states, that for every action one state makes,’’ its neighbor responds in kind, said Joseph Weinert, senior vice president at Spectrum Gaming, an industry consultant used by Massachusetts and other states for gambling legislation and regulatory matters.
“Effectively, many of these states are saying, ‘I want mine, I want my share,’ ’’ Weinert added.
In New Jersey, where Atlantic City has been hit hard by the introduction of gambling in Pennsylvania, lawmakers have put a constitutional amendment on the November ballot asking to legalize sports betting. Also, the state has provided $250 million to help restart a stalled casino in Atlantic City.
In Maryland, officials have offered concessions, including lower taxes and fees and the use of public subsidies, to lure developers to designated casino sites in Baltimore and the western part of the state, to stem the flow of gamblers to Pennsylvania.
West Virginia and Delaware responded to Pennsylvania’s entry into gambling with additional betting options; Delaware adopted sports betting and both states added table games to their racetracks’ slots parlors.
And in Indiana, which is bookended by major casino developments in Illinois and Ohio, state lawmakers are discussing a response that includes allowing riverboat casinos to relocate inland.
In Massachusetts, officials believe the state has several inherent advantages that will help insulate it from competition.
One is the state has a large population base that spends heavily on gambling - hundreds of millions by some estimates at the Connecticut casinos - who, given the choice, would probably patronize the closest facility.
The current Massachusetts legislation would locate a casino in the Eastern part of the state, in Southeastern Massachusetts, and in Central or Western Massachusetts.
Many industry analysts believe a casino in the Boston area would be hugely successful and, if anything, undermine the success of competitors in nearby states.
Another key factor is timing. If Massachusetts were to adopt legislation, it’s possible it could open its casinos sooner than neighboring states, and that lead alone may be enough to deter competitors.
Also, the current legislation in Massachusetts has financial requirements that state officials believe would weed out all but the most experienced and well-funded casino operators - major names in the business that are used to heavy competition and have the wherewithal to reinvest in facilities to continue attracting patrons.
Haberlin stressed the legislation would require developers to build resort-style casinos that offer more entertainment options than the slots parlors found in other states.
“These types of facilities create more jobs and spur more economic development, and they are much more likely to withstand competition from other states,’’ she said.
New casinos usually draw crowds due to the novelty factor but popularity wanes with time, and often a neighboring state responds with a newer or expanded facility.
Operators are then faced with a choice: reinvest in the enterprise, even as competitors are eating into their profits, or risk losing customers to the shinier casino down the road.
And because the government is so vested in the success of its casinos - its budget dependent on them for revenues - local officials become particularly susceptible to pressure from the industry for concessions.
William Thompson, a longtime industry analyst at the University of Nevada Las Vegas, said casinos often exert leverage over states by threatening to lay off workers if they don’t get a break.
“As soon as the casinos open and have the employees, they have the state’’ in a weak negotiating position, Thompson said.
However, Weinert said, casinos typically don’t succeed in persuading states to lower their tax rates on gambling revenue or their license fees.
More common, he and others said, is allowing additional gambling - more slot machines or table games -or relaxing operating restrictions, such as minimum employee counts, smoking bans, or closing hours.
Once a state ventures into gambling, it rarely stops; incrementally but inexorably, the limitations and protections that state officials first put into place as a promise to the public to keep gambling under a tight rein are whittled away, and in a few years the landscape can look considerably different.
“Once gaming gets in,’’ Weinert said, “it doesn’t shrink.’’
Andrew Caffrey can be reached at firstname.lastname@example.org