Gaming – The Other Revenue

To give you a sense of my own frame of mind regarding gambling, I would describe myself as divided between my interest in the potential that gambling offered as a major revenue source and my concern for its damaging social impacts. I was determined to find out as much as I could about the pros and cons of bringing gambling to New Hampshire.  To that end, I have visited casinos in Connecticut, Pennsylvania and Las Vegas.  Consider the following and then you decide if casinos make sense for New Hampshire.

All but two states have legalized gambling.  Thirty-seven states have legalized some form of electronic gaming device, including traditional slot machines, video poker and bingo.  New Hampshire was the first state in the nation to introduce the lottery in 1963.  Fifty years ago, approximately one-fifth, possibly more, of the state’s budget was funded by horse racing at Rockingham Park which was established during the Great Depression in 1933.

Yearly, the citizens of New Hampshire and visitors to our state legally wager more than $700 million on the lottery, Instant Scratch Tickets, Powerball, Megabucks, Bingo, Lucky 7, poker, craps, roulette, Texas Hold ‘Em, horse and dog racing, and blackjack.  Of that, nearly $80 million was spent by New Hampshire residents visiting casinos in Connecticut, Rhode Island and Maine.  We don’t know how much more they spent in Las Vegas, Montreal or Atlantic City, nor how much more may have been wagered illegally on Super Bowl and March Madness office pools, internet betting, or on slot machines already in use at private clubs, restaurants and lounges throughout the state.

New Hampshire has more than 1,200 licensed lottery retailers.  That means that lottery tickets, Instant Scratch Tickets ranging from $1 to $30, are sold everywhere—displayed in vending machines at general stores, convenience stores, supermarkets, roadside liquor outlets, bowling alleys, restaurants, newsstands and gas stations.

While I have heard examples of wrong-doing within the gaming industry, I also know that U.S. gaming is a highly-regulated, transparent industry subject to significant state and federal regulation. All sources indicated that the key to minimizing corruption is to establish a strict and efficient regulatory and enforcement structure.

Annually, more than one-quarter of the American adult public visits casinos, about half of these on a regular basis.  Of this number, nearly half are seniors who spend $20-45 a visit; another third are middle-aged empty nesters with relatively high disposable incomes.

In spring 2009, the Innovation Group which provides feasibility studies and market analysis for the gaming, leisure and hospitality industries, estimated that, once the facilities were up and running, total distributed revenues would range between $193 million and $279 million, the lower figure reflecting the legalization of electronic gaming in Massachusetts.  In any case, Massachusetts residents represent nearly 80% of the anticipated patrons at Rockingham Park.

New Hampshire is a beautiful state, thanks both to its natural endowments and to the sense of community embraced by those who live here.  But it is also a state of parallel realities.  One reality evokes the traditional image of stone walls, covered bridges, maple syrup, white clapboard villages, apple orchards, broad lakes, tall mountains, and Thornton Wilder’s “Our Town.”  Yet at the same time we fear the damage expanded gambling could do to this image, many more tourists currently come to our state to enjoy NASCAR races and Bike Week than for hiking or skiing.  They are welcomed with highway liquor stores, $30 scratch tickets, 1,200 lottery vending machines, Rockingham Park and Seabrook racetracks at our borders, and a widespread reputation for Las Vegas-style games of chance in the guise of “charitable gaming.”

A further reality is that 30% of our population is urban and in 20 years, 30% of those living where we are standing will be over 65; some other counties, higher than that.   Our young people are leaving; our counties, municipalities and school districts are overwhelmed with trying to balance their budgets; and too many of the approximately 366,000 families who own property in the state are already desperate.  Now, our state government, which for decades has operated with a structural deficit, under funding maintenance of its facilities and services, or shifting these costs to local property taxpayers, finds itself with perhaps as much as a 250 million dollar shortfall.

I am convinced that the revenues projected by the industry are real and that while the societal ills predicted by gambling opponents are also real, I believe these numbers are overstated and, to be fair, their existence needs to be put into the greater context of preexisting problems, many of them ignored or untreated; too often, unfortunately, for lack of funds.  In a sense, this decision is about priorities:  whether to assist those who actually need help now or whether to worry about those who may need help later.  While I would never intend to minimize the immense financial and human costs to individuals and their families affected by pathological and problem gambling, I am also acutely aware of the need to put these in context.  In a certain sense, the foreclosures, divorces, robberies, —the whole array of ills—are anomalies that occur as the result of not only gambling but alcoholism, drug abuse or our current bad economy.

The 16 months of research conducted by a legislative study committee completed in November 2008 convinced me that the introduction of video lottery terminals (VLTs) with strict regulatory oversight would neither fundamentally damage our state nor solve all of its problems.   Practically and perhaps cynically, it seems to me that if New Hampshire does decide to approve VLTs, much of the revenue would come from citizens outside the state and many of the associated problems would likewise be exported beyond our borders.  The corollary to this is that if Massachusetts adopts VLTs and New Hampshire does not, New Hampshire residents will contribute to that state’s coffers while bringing their problems back home to our state to resolve.  Whether or not the benefits of expanding gambling outweigh the disadvantages seems greatly dependent on how the practice is implemented.  If well regulated, the concerns can be minimal as several other states can attest.  If not, (a legitimate concern in a state that does so much on the cheap), then, yes, again there are other states that have been models for disaster.  I would hope New Hampshire would be smart enough to learn from others’ successes and failures.

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