More States Compete for Pot of Gambling Revenue
Delaware, Ohio, and others look to challenge Pennsylvania and Atlantic City for a share of a shrinking pot.
States have increasingly turned to expanded gambling as a method to ease budget shortfalls. Twelve states currently feature commercial casinos, while 29 have tribal casinos.
Ohio recently legalized casinos, and Kansas plans to open its first commercial casino this week. However, analyst Lucy Dadayan said, “As gambling is becoming more widespread geographically, states are essentially looking into the same pot of money.”
Pennsylvania is happily raking in a precious pile of cash from its new casinos, with hundreds of millions of dollars stolen away from a now-struggling Atlantic City.
But soon it may be Pennsylvania’s pocket that is picked by a neighbor.
Ohio last month became the latest revenue-starved state to approve gaming, and thousands of Ohioans who now gamble in Pittsburgh and Erie County may instead stay home once casinos are built in 2012.
Connecticut, with tribal casinos, is fretting that its neighbor Massachusetts will approve gaming in January. Maine and New Hampshire are also exploring it. Kansas will open its first casino next week. And Delaware will have table games by spring.
“You can pretty much go anywhere,” observed Jim Salvador, 45, a suburban New Yorker working a slot machine on a half-empty gaming floor at Caesars Atlantic City.
“If I get a comped room and dinner, that’s all I care about.”
Facing dire budget shortfalls, growing numbers of states are fighting over a shrinking pot of gaming revenue, with economic consequences that few could have imagined.
Last year, casino gambling revenue in the 12 states with commercial casinos dropped for the first time since Nevada legalized it in 1931 – from $34.1 billion in 2007 to $32.5 billion.
A bigger drop is expected this year.
Las Vegas and Atlantic City have been hit by job cuts, stalled development, shuttered casinos, bankruptcies – and tens of millions of dollars less to fund community services and housing.
Meanwhile, Pennsylvania taxpayers are enjoying property-tax relief – with more to come – thanks to new slots gambling. Even so, three of the state’s nine casinos are struggling.
And as Gov. Rendell pushes legislators to legalize table games to help patch a $200 million budget hole, Pennsylvania’s newest and most expensive casino, in Pittsburgh, is failing to meet revenue projections.
So is the $743 million Sands Casino Resort, which opened May 22 in Bethlehem, Pa., and which is poaching revenue from the two-year-old Mount Airy Casino resort, 40 miles away, where November revenue dropped 20 percent.
The two Philadelphia waterfront casinos, SugarHouse and Foxwoods, have scaled back their designs because of stingy lending markets. Operators of Foxwoods last week postponed presenting their plan until details of a much-debated table games bill are finally resolved in Harrisburg. Rendell hopes to get that done this month.
And now Ohio looms.
“We don’t know if Ohio will have much of an impact,” Rendell said last week. “Our research indicates we get some business from Ohio but not very much.”
Lucy Dadayan, a senior policy analyst at the State University of New York’s Rockefeller Institute of Government, said states place risky bets when they rely on gambling to shore up budgets.
Gambling revenue, she said, usually doesn’t keep pace with the programs they’re supposed to fund.
“In addition, as gambling is becoming more widespread geographically, states are essentially looking into the same pot of money.”
Beyond the 12 states with commercial casinos, 12 others have “racinos,” or slot machines and other games at racetracks; 29 have Indian casinos; and at least 42 and the District of Columbia have lotteries.
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