Wednesday, September 19, 2012

Is the gambling tsunami starting to crash?

Since New Hampshire started the first state lottery in 1964, gambling has spread well beyond Las Vegas to riverboats and reservations, racetracks and resorts. But gambling may be starting to decline, judging by faltering revenues at some tribal casinos in the Northeast and a troubled new casino in Atlantic City.

The problem: Pennsylvania is now grabbing some of the gambling dollars that have flowed to New Jersey and Connecticut. Massachusetts and New York may soon grab more.

In Connecticut's two casino resorts, Mohegan Sun and Foxwoods, revenue is falling. Reports the New Haven Register,
Foxwoods Resort Casino on Friday reported $50.5 million revenue on a “handle” of $592.5 million, which represents a 3.3 percent decline from the same month in 2011. 
Mohegan Sun’s August slot revenue, or “win,” was down almost 6 percent to $56.3 million. It was $59.9 million a year ago, although Tropical Storm Irene likely cut into that month’s revenues on the final weekend of August 2011 for both casinos.
David Cay Johnston, a Reuters columnist, warns that cities and towns shouldn't depend on gambling to solve their financial problems. He asks,
The liberties of the people, and all private wealth, depend on stable government that defines and protects rights and property alike. So why would we roll the dice on financing the foundation of our society? 
Johnston notes that gambling revenue is also falling in Atlantic City. Casino hotels at the seaside resort have cut their workforces, lowered wages and received huge property tax refunds because property values are falling. And Atlantic City's hot new casino resort, the Revel, isn't bringing in enough money to pay its mortgage. Writes Johnston,
Since opening April 2 it has lost more than $35 million. (Manager Kevin) DeSanctis is arranging a $100 million credit line to get through the cold months. 
Moody’s lowered the credit ratings on Revel debt, suggesting those who bought its bond may also have made a bad bet on this new model for Atlantic City. 
All these facts should prompt taxpayers to think carefully about embracing more gambling as a way to ease their tax burdens.