Some firms fear casino impact

Say large complexes would steal tourists

Governor Deval Patrick's proposal to introduce three resort-style casinos to Massachusetts triggered worries among some hospitality executives yesterday that large gambling and entertainment complexes would upset the state's economic balance, stripping a big share of the restaurant and tourism market from existing businesses.

Studies show that large casinos siphon discretionary spending, beyond gambling dollars, from the local economy into their self-contained environments, which are filled with restaurants, shops, hotel rooms, and live shows. Some gambling analysts say that as much as half of the $2 billion that the governor projects in casino revenue will be money that is merely redirected from existing spending.

But the casinos also produce significant spin-off effects throughout the economy, in construction and new employment, so the overall impact is difficult to measure, say specialists.

Roger Berkowitz, president of Legal Sea Foods, predicts that a major casino in Greater Boston would steal spending from existing businesses.

"We have a mature economy here," Berkowitz said. "A casino would potentially suck up a fair amount of the discretionary income. Las Vegas is a different scenario. It wasn't as if gaming went into a mature city. When that happens, it poses some real dangers."

The Massachusetts Restaurant Association is concerned about casinos and will closely scrutinize Patrick's plan, said Joseph Pignato, chairman of the association's board and owner of Joseph's Winter Street Cafe in Newburyport.

"We fear that it would interfere with our sales of food and beverages, in light of the fact that most casinos, if not all casinos, give away free food and free liquor," he said. "We do not support that."

But other Massachusetts business representatives said there was little cause for worry. Meg Mainzer-Cohen, president of the Back Bay Association, said that gamblers who strike it rich might decide to drop thousands of dollars on a diamond.

"If there was someone who landed a huge jackpot and went to Newbury Street to spend it, that would be a huge benefit," she said. "People can be very impulsive when they win a lot of money."

Economists who specialize in gambling said Patrick's projections for his casino proposal - 20,000 jobs created, gross proceeds of $2 billion - are realistic, given experience in other states, including Connecticut, New Jersey, and Mississippi. But much of the financial stimulus provided by casinos would be spending on goods and services by the casinos, and by employees, not the guests.

The Federal Reserve Bank of Boston, which studied the economic impact of casinos last year, said that employees' spending had a bigger direct impact on the surrounding economy than visitors'.

Tourists "don't spend much in the communities surrounding a resort-style casino," analyst Heather Brome said in the report.

William Thompson, a public administration professor at the University of Nevada at Las Vegas who has studied and written extensively on the casino industry, said that while the $2 billion in revenues from the Massachusetts casinos is achievable, potentially half of that will be from Massachusetts residents shifting entertainment or luxury spending from other areas.

Nonetheless, the Greater Boston Convention and Visitors Bureau reports that its 1,200 members have not complained since Patrick unveiled his casino plans, said Patrick Moscaritolo, the trade group's chief executive.

"I would have expected that I'd be hearing from a lot of my member visitor-industry companies about this," he said. "In the past, what I have heard is people in the food-service part of our industry - restaurants, and in particular high-end restaurants - feel the dollars would be siphoned off and people would go to the casino and grab a hot dog or hamburger."

As for conventions, a casino could entice Boston-bound convention attendees and their spouses to spend an additional day or two here, but it would be unlikely to heighten Boston's allure as a major conference destination, said James Rooney, executive director of the Massachusetts Convention Center Authority.

"The types of conventions that we generally attract are more white-collar professional in nature," said Rooney. For example, Boston in coming months will host the Cardiometabolic Health Congress, the Regulatory Affairs Professionals Society, and the Orthopaedic Trauma Association.

Those types of conventions are "not looking as much for that fun factor," Rooney said.

Patrick's estimate of $2 billion grossed by three casinos assumes that Bay State residents would, on average, be willing to gamble roughly as much as Connecticut residents now do at their state's two casinos. Last year, Connecticut residents spent $441 per capita at the two casinos, compared with $148 by Massachusetts residents at those casinos, according to a study by the University of Massachusetts at Dartmouth.

As an indication of what could await Massachusetts, restaurant operators, hoteliers, and tourism officials have no point of clear comparison, said Clyde W. Barrow, director of the UMass-Dartmouth policy center.

Atlantic City and Las Vegas have economies centered on gambling, rather than diversified - Nevada gets 43 percent of its state revenues from gambling - and most casinos west of the Mississippi are on Indian reservations outside the mainstream economy.

Detroit, which opened three casinos in 1999 and 2000, is the only major northern city with downtown casinos, but unlike Boston it was in dire economic straits. And the lasting economic effect of casinos on Mississippi's Gulf Coast, which by 2004 had grown into a $1.2 billion industry, is now obscured by the massive devastation of 2005's Hurricane Katrina. Discounting Katrina's effects, Mississippi has 27 casinos.