Casinos may open in Massachusetts, threatening neighbor states

BOSTON Fri Nov 4, 2011 1:25pm EDT

BOSTON (Reuters) - Resort casinos may finally be on their way to Massachusetts, bringing jobs but also threatening the tables and slots in neighboring Connecticut and Rhode Island that bank on visiting Bay State gamblers.

Massachusetts is inching closer to the approval of a bill that would allow for licensing of one slots parlor in the state and one resort-style casino in each of three designated regions.

A House version of the bill passed 123 to 32 earlier this month and debate began on Monday in the Senate. Governor Deval Patrick, who rejected the last effort to legalize casinos, has expressed support for the bill's main tenets.

Gambling in Massachusetts has been limited to some forms of horse racing and a lottery that funnels money to municipalities.

Critics say opening casinos could drive up gambling addictions, threaten small businesses and create a showdown with neighboring states for customers.

But supporters tout the measure as a jobs bill that also will stimulate a still faltering state economy, delivering millions in new revenue to support cities and towns.

Resort style casinos with tables, entertainment, hotels and amenities will help employ the state's workforce, especially those whose formal education ended with a high school diploma, said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth.

Research shows roughly 10,000 new jobs may be created across the three proposed resort casinos along with annual tax revenue of about $350 million to $400 million, he said.

"It's really Massachusetts residents that have fueled the expansion of gambling elsewhere in New England," said Barrow.

Gambling behavior suggests that given comparable facilities, people will choose the closest one, said Barrow, meaning Connecticut and Rhode Island could lose a significant chunk of their customer base that travels from the more populous Bay State.

The promise of smoke-free casinos, exclusive to Massachusetts, could also lure away another subset of more health conscious gamblers in the region.

Under the Massachusetts proposal, resort casinos would pay $85 million in licensing fees and be required to make a minimum capital investment of $500 million. Slots, however, would face a $25 million licensing fee and $125 million capital investment obligation.

The proposed bill calls for a resort casino tax rate of 25 percent, just about the average among the 35 states that currently host casino gambling, Barrow said.

Barrow said the gaming regulatory structure proposed in the bill was modeled largely on New Jersey, considered to have the most stringent in the country.

Critics of the expanded gaming said the proposed casinos and slots parlor could undermine local businesses, unduly benefit casino owners and drive up crime and addiction rates.

Some have called for further cost-benefit analysis.

State Representative Denise Provost said the slots worried her most. Calling the games "demonstrably addictive," she fears they will attract a less sophisticated player unaware of the potentially problematic habit.

Slots, too, are less desirable because they create fewer jobs, opponents say.

According to Barrow, table games featured at resort casinos create about 20 to 25 jobs per table at a 24-hour establishment including pit bosses, floor managers and dealers.

Non-gaming amenities like hotels and restaurants add to that tally, he said. Slots, on the other hand, are highly automated and result in very few new positions.

State Senator Jamie Eldridge, who plans to vote against the bill, is most concerned about the negative impact to the local restaurants, shops, museums and theaters that will lose customers' dollars to the new gaming. "While I acknowledge casinos will create some jobs, it will cause a lot of job loss among small businesses in downtown communities that are near casinos," he told Reuters.

Versions of casino bills have been batted around the Massachusetts state house for years, including a 2010 bill that passed both chambers, but was rejected by Governor Patrick.

The state Senate was expected to resume debate next week.

(Editing by Barbara Goldberg and Jerry Norton)