ECONOMIC IMPACTS OF SLOT MACHINES FOR THE ERIE COUNTY AREA

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ECONOMIC IMPACTS OF SLOTMACHINES FOR THE ERIE
COUNTY AREA

• William N. (Bauschard) Thompson
• Professor of Public Administration
• University of Nevada, Las Vegas 89154
• wthompson_at_ccmail.nevada.edu
• 702-895-3319
• Pennsylvania State University, Erie
• Erie, Pennsylvania
• August 23, 2005
• Top Line
• Annual Economic loss of 104,929,356
• Bottom Line

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ECONOMIC IMPACTS OF SLOTMACHINES FOR THE ERIE
COUNTY AREA

• 1. It is About Trees. NOT!
• 2. A Frank Sinatra Story
• 3. Stonehenge, Rocket Science, Brain Surgery,
  Bath Tubs
• 4. Las Vegas is Economically Successful
• a. Inputs History, Synergy
• b. Outputs Eyes on the Prize
• 5. No Such Luck South Dakota
• 6. Will the Erie Bathtub Hold Water?
• 7. The Mathematics
• a. How Much Money?
• b. Whose Money? Where Do They Live?
• c. Where the Money Goes Taxes, Labor and
  Expenses, Profits
• d. Externalities Crime/Compulsives
• Bottom Line A Negative Number
• Annual Economic Loss -104,929,356

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ITS ABOUT TREES. NOT!!!!!!!!!!
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THE SOURCE
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PHD IN SCIENCE NOT REQUIRED
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EVERYONE UNDERSTANDS HOW A BATHTUB WORKS
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(No Transcript)
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LAS VEGAS ONE MODEL OF CASINO GAMBLING
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THE SOUTH DAKOTA MODEL OF CASINO GAMBLING
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WILL THE ERIE BATHTUB HOLD WATER?

• How much money?
• Gambling (only) revenues
• 4000 machines _at_75,000 300,000,000
• Five Million Visits_at_ 60 Per Visit

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WHERE THE MONEY COMES FROM

• Base population Adult
• Erie County 280,000 196,000
• Crawford/Warren 133,000 93,000
• Ashtabula 103,000 72,000
• Chautauqua 138,000 97,000
• TOTAL 654,000 458,000

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WHERE THE MONEY COMES FROM

• Casino Visits 6 for base 2,748,000
• 1 for surrounding area 2,252,000
• Play per visit 60
• Revenue Source
• Base Area 458T x 6 x 60164,880,000
  Surrounding 2,252 x 60 135,880,000

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WHERE THE MONEY COMES FROM

• TOTAL 5 mil visits x 60 300,000,000
  
• LOCAL DIRECT Discount 10 replacing current
  gambling
• 148,392,000 (49.7)
• EFFECTIVE NEW MONEY 151,608,000 (50.3)

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WHERE THE MONEY GOES

• Expenditures Stays/Area
  Leaves/Area
• Tax-State 34 0
  102,000,000
• Local Tax 17 51,000,000
  0
• Labor 16.8 34,632,000
  15,768,000
• Machines 6.7 0
  20,000,000
• Other Supl 5 7,500,000
  7,500,000
• Building 4 12,000,000
  0
• Admin/adv 4 8,000,000
  4,000,000
• TOTAL EXP 87.8 113,132,000 150,268,000

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WHERE THE MONEY GOES

• Total Expenses 263,400,000
  (87.8)
• Profits 36,600,000
  (12.2) LEAVES
• Stays
  Leaves
• Distrib 100 113,132,000
  186,868,000
• (37.7)
  (62.3)
• Local Money IN 148,392,000
  (49.7)
• Money RETAINED Local 113,132,000 (37.7)
• LOCAL LOSS (-35,260,000)
• New Money OUT/IN 151,608,000 (50.3)
• Money LEAVING 186,868,000
• LOSS TO OUTSIDE 35,260,000

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LABOR EXPENSE (NOTE)

• (Explanation Labor 16.8 50,400,000)
• 1200 jobs salary 30,000, fringes
• (include social security 12,000)
• minus 5,040,000 social security
• minus 3,600,000 1/2 of fringe 20
• minus 1,728,000 96 of 5 state tax
• minus 5,400,000 15 federal tax
• MINUS 15,768,000
• STAYS 34,632,000 LEAVES 15,768,000

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EXTERNALITIES

• The Proposed Slot Machines represent a DIRECT
  economic loss of
• 35,260,000 to a local area of Erie County and
  four surrounding counties.
• But Its Worse--There are Indirect Losses Too

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EXTERNALITIES

• Social Costs
• Crime _at_17x 458T 7,786,000 (Casino related
  crime costs local residents 17 per year)
• -----------------------
• Pathological (.006--x 458T2748 x 10,053)
  27,625,644
• Problem (.007--x 458T3206 X 4926)
  15,792,756
• ------------------------
• TOTAL............51,204,400
• (Econ.Loss 33.6 17,204,678 Govt.Loss 7.2
  3,686,717)
• A "Social" Cost represents a loss that a gambler
  imposes on an unwilling (non-gambling) fellow
  citizen. Some of the loss becomes a loss to
  governments, and some of the loss (33.6 of the
  social cost) becomes a loss for the entire
  society.

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DIRECT AND INDIRECT ECONOMIC LOSS

• -35,260,000
• -17,204,678
• LOSS to ECONOMY DIRECT 52,464,678
• But Its Worse, Isn't it? Proponents LOVE to
  talk about the multiplier effect of dollars as
  they spin around in the economy.
• Guess what? The economic loss represents money
  THAT WOULD HAVE SPUN AROUND if it would have
  remained in the Erie Area. A conservative
  multiplier of 2 tells us that by having a slot
  machine casino (again considering only the
  gambling revenue) in the Erie Area represents an
  annual economic loss of 104,929,356
• Economic Impact Loss -104,929,356

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IF THE BATHTUB DOESNT WORK, ITS FAREWELL CRUEL
WORLD.