Governor Deval Patrick has repeatedly emphasized the creation of 30,000 construction jobs as he tries to sell Massachusetts on his proposal for three resort casinos. But a close look at the governor's assumptions reveal they are excessively optimistic when compared to other New England casinos and an industry standard.
In Connecticut, the ongoing $1.5 billion expansion of two casinos created 2,600 new construction jobs. At that rate, casino developers in Massachusetts would have to spend $16.7 billion to achieve Patrick's prediction of 30,000 new construction jobs - an amount more than five times as great as what most developers say is likely to be invested in casinos statewide.
Gus Faucher, director of macroeconomics for
Under that analysis, Patrick's prediction would be at least six times too high.
Even a group representing building trade unions - Patrick's major ally in the casino debate - now says Patrick's projection is 10,000 jobs too high.
"I don't know how 30,000 was arrived at, but it didn't come from me," said Frank Callahan, head of the Massachusetts Building Trades Council, an umbrella group of 15 trades such as laborers, carpenters, and electricians. "We're saying 20,000 jobs - and that's still a ton of jobs," he said, citing estimates he arrived at through his own discussions with labor leaders in Nevada and elsewhere.
Ray Kehrhahn, assistant director of the University of Connecticut's Center for Real Estate and Urban Economics, said he has long studied the impacts of that state's two casinos, including creation of new construction jobs.
"I don't know how anyone could come up with 30,000 jobs for three casinos in Massachusetts," he said. "It seems like a very high number."
Asked to explain Patrick's methodology, a spokeswoman for Daniel O'Connell, the state economic development secretary who has shepherded the casino proposal, said the governor's administration derived its job figures from a study by Suffolk Downs - a leading voice in the state's gambling industry and a would-be bidder for a state casino license.
The Suffolk Downs study, submitted to O'Connell's office last summer, says if a $1 billion casino is built on Suffolk Downs's East Boston site, it would generate 10,000 new construction jobs, almost double the number of workers on the Big Dig at the height of construction 10 years ago.
The Suffolk study did not indicate how it arrived at that estimate.
Assuming that study's jobs prediction to be accurate, Patrick simply multiplied by three - 10,000 new construction jobs for each of the three casinos he would license in Massachusetts, for a total of 30,000, said O'Connell's spokeswoman, Kofi Jones.
The administration has not performed any independent studies, but last month hired Spectrum Gaming Group of New Jersey to analyze financial benefits and job-creation potential of Patrick's plan to license three casinos. In response to detailed questions including, why Massachusetts has different job estimates from actual jobs at Connecticut casinos, Jones released a statement.
"We have confidence in our casino job projections and have hired an independent third-party firm with extensive expertise in the gaming industry to provide an analysis of the governor's plan," the statement said.
While that outside analysis is not yet complete, Patrick has nonetheless repeatedly trumpeted 30,000 new construction jobs, including in his first State of the State speech to the Legislature on Jan. 24.
"And with 20,000 good permanent jobs, 30,000 construction jobs, a $2 billion boost to our tourism industry . . . let's work together to pass the resort casinos bill," he thundered before a packed House chamber in the State House, eliciting a great torrent of cheers.
While Patrick has based his entire case on the Suffolk Downs prediction, there are indications that it is inaccurate.
Jones, spokeswoman for O'Connell, last week embraced it based on what she said was a construction industry "rule of thumb": 1,000 new jobs per 1 million square feet of newly constructed space.
Thus, 10 million square feet of new space at the Suffolk Downs would mean 10,000 new jobs, she said.
But much of that space would house parking garages, which require far fewer construction workers than building the actual casino, hotel, and other indoor space. Suffolk's plans call for development in two phases, the first of which would include 1.5 million square feet in casino and other finished space and 3 million square feet in parking garages. No detailed cost figures are provided for a second phase.
A 2-million-square-foot expansion at Foxwoods casino in Connecticut created 1,200 new jobs, not the 2,000 new jobs that Jones's rule of thumb predicts. That is because almost half of the new space is for parking garages.
The Suffolk Downs job projections also exceed those laid out by the Mohegan tribe in its proposal for a casino on a 150-acre tract in the western Massachusetts town of Palmer. The tribe, which owns the Mohegan Sun casino in Connecticut, wants to build a $1 billion casino, but projects that 1,500 construction jobs would be created, far fewer than Suffolk Downs's 10,000.
Chip Tuttle, Suffolk Downs chief executive officer, when asked to explain the predicted 10,000 new jobs in his group's study, calculates one new job for every $100,000 in construction expenditure. With a construction budget of $1 billion, he said, 10,000 construction jobs would be created.
Under that scenario, the labor cost in East Boston would consume an exceptionally high percentage of the total construction budget, about 50 percent. At Foxwoods, where $700 million is being spent on the ongoing expansion, labor costs are about 25 percent of the budget. At Mohegan Sun, where an expansion is costing $750 million, labor costs are about 28 percent.
Scott Fisher, an economist for the New Orleans gambling consulting firm The Innovation Group, said in an interview that labor costs for casino projects typically run from 27 percent to 33 percent. Those are the figures he used in a 39-page study for the Las Vegas Sands Corporation, headed by Sheldon Adelson, which is also proposing a casino in the Interstate 495 corridor of Boston's western suburbs.
In his study, Fisher looked at the $2.85 billion casino in Singapore being developed by Sands and projected the creation of about 6,900 new construction jobs. Adelson has not detailed how much money Sands would spend on a casino in Massachusetts, but Fisher's study said a casino in this state would be "comparable in scale" to the Singapore development. Under that formula, three casinos built at a cost of $2.85 billion each would create 20,700.
"I'd say the governor is overplaying his hand," said Fisher.
Sean Murphy can be reached at smurphy@globe.com.
