Gaming Commission Update 12-1-09

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Gaming Commission Update12-1-09
Board of Directors Donna Sytek, Chair John B.
Andrews John D. Crosier, Sr. William H.
Dunlap Sheila T. Francoeur Chuck Morse Todd I.
Selig Stuart V. Smith, Jr. Brian F. Walsh Kimon
S. Zachos Martin L. Gross, Chair
Emeritus Staff Steve Norton, Executive
Director Ryan Tappin Cathy Arredondo
to raise new ideas and improve policy debates
through quality information and analysis on
issues shaping New Hampshires future.
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Prudent Calculations Cost-Benefit

• Negatives ?
• Revenue to State Decrease in Meals and Rooms
  (cannibalization)
• Revenue to State Gambling/ Lottery Substitution
• State Expenditures New Regulatory structures
• State Expenditures Competition for funds
• Economic Development Branding
• Economic Development Cannibalization
• Gov Expenditures Policing
• Social Costs New Crime
• Social Costs Pathological/ Problem Gaming

• Positive ?
• Revenue to State License Fees
• Revenue to State Tax on Gambling
• Revenue to State BPT and BET
• Revenue to State Increase in Meals and Rooms
• Revenue to Local Property Tax
• Economic Development Local Construction Job
• Economic Development New Jobs

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Gaming as a Field of Study

• Focus on gaming has intensified during the 90s ?
  a young literature.
• Attempt to find peer reviewed work in journals
  with no specific ties to pro- or anti-gaming
  interests.
• In the end, will have to rely on triangulation
  method, using multiple sources, not always peer
  reviewed.

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The Extent of Gaming in New Hampshire
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Propensity to Gamble

• National Data
• Gallup (2007) 66 of the population gambled
  in some fashion in the last 12 months.
• Lottery Ticket 46
• Visited Casino 24
• ESRI Data
• Gambled at a Casino 17
• Propensity to gamble seems to have declined over
  the past 4 years.

• New Hampshire
• New Hampshire (Barrow)
• Any in last 12 months 56
• Lottery Ticket 42
• Casino 21
• ESRI Data
• Gambled at a Casino in last 12 months 17.3

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Whos Gambling?

• Slots
• Female (61 of all)
• 50 to 59 (21 of all) 21 to 29 (20 of all) 40
  to 49 (16 of all)
• Some high-school education (35)
• 75,000 to 150,000 (29) 45,000 to 75,000
  (28).

• Table Games
• Males (85)
• 21 to 29 (28) 30 to 39 (24)
• Bachelors (43)
• 75,000 to 150,000 (39) 45,000 to 75,000
  (20)

Clyde Barrow Playing the Odds II
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Average Visits to Local Casinos

• Massachusetts
• 1,133,564 visitors to Foxwoods (3.3 visits per
  year)
• 850,173 visitors to Mohegan Sun (2.7 visits per
  year)
• New Hampshire
• 95,667 people to Foxwoods (1.7 visits per year)
• 105,233 people to Mohegan Sun (2.0 visits per
  year)

Barrow Playing the Odds II
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NH Residents gambling outside of NH

• In 2007, estimates suggested that New Hampshire
  residents spent 79.3 million at New Englands
  Gambling facilities, indirectly paying 11.3
  million in Gambling and sales taxes to CT, RI and
  ME (source UMASS/Dartmouth 9/16/2008)
• 46 million at Foxwoods
• 30 million at Mohegan Sun
• 2.5 million at Twin River (RI)
• 0.2 million at Newport Grand (RI)
• 0.8 million at Hollywood (ME)
• Does not include Gambling outside of New England
  (Atlantic City, Las Vegas)

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Legal Wagering by New Hampshire Residents
Estimate
NE Casinos data based on analysis by Barrow
(University of Massachusetts Dartmouth) Remainder
from Lottery, Pari-Mutuel Commissions
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Estimate of Existing Problem Gaming

• Pathological, Problem, At-Risk ? primary vehicle
  through which social ills occur.
• NORC (2000)
• National estimate
• Pathological 1.2
• Problem1.5
• At-Risk 7.7
• Schaeffer and Hall (2001)
• National estimate
• Pathological 1.7
• Problem 3.7
• Barrow (New England, 2007)
• Pathological 0.6
• Problem 1.0
• At-Risk 6.1

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Current Gambling Revenues
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Revenues to State

• NH Lottery
• 75 million (261 wagered -186 in prizes and
  expenses) was distributed to education trust fund
  in FY2008.
• NH Lottery Revenue declined by 1.1 from 2007 to
  2008.
• Charitable Gaming/Racing after expenses
  collected.
• State Simulcast wagering - 2.1m Live Racing
  - 0.2m Bingo - 1.3m Games of Chance 0.6m
• New Hampshire charities received over 11.6
  million dollars (including Bingo and Lucky 7) to
  further their causes in 2008 from all charitable
  gaming.
• Gambling Tax (2009) - The Gambling Winnings tax
  is estimated to yield 5.9 million in FY2010,
  7.9 million in FY2011 (from HB1)

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Charitable Games of Chance
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Gaming Revenues
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Gaming Revenue as a of State Unrestricted
Revenue
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Stability of Revenues in New Hampshire
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The Northern New England Market
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Future Revenues

• Industry methods for generating revenue estimates
  are sophisticated.
• Recent declines reflect market saturation or
  economic decline?
• New vs. Old gambling NHs ability to
  cannibalize existing gambling in Mass, etc
• Whats the market?
• Varies depending on the type of facility
• How nice is the facility ? Capital investment
• Casino vs. Racino ? Casinos have a broader draw
• A function of action of other players
  (Massachusetts)
• Implications of possible change in federal law
  regarding internet
• Impact of Less Aggressive Machines
• Impact on Meals and Rooms (cannibalization)

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Gaming Facilities in the Northeast
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• Total population in circle is 2.6 million. 
• Total NH population in circle is 678,000. (about
  half states total population).
• 26 of total population in circle is NH
  residents.

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Drive Times From Salem, NH
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Drive Times for Berlin, NH
Lincoln, RI
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Drive Times for Seabrook, NH
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Overlapping Markets of Existing Proposals (30
Mile)
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Further Work
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Social Costs

• Crime
• Grinols and Mustards is the gold-standard though
  not without methodological issues as noted by
  Walker.
• Triangulate?
• Grinols and Mustards (8 increase)
• Edmonton study (4 increase)
• Social Costs
• What is a social cost and who bears the burden of
  that social cost (family, economy, community,
  government)
• Pathological gaming increase occurs
• Geographically isolated
• Who bears the burden?
• Massachusetts and New Hampshire (and VT and Maine)

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Economic Development

• How big?
• Hosp?
• Manufacturing?
• Gaming ?
• Short term
• Simulations a function of initial capital
  investment
• 130 m ? fewer jobs
• 250 m ? more jobs
• Long term
• More jobs
• 75 not high paying
• Cannibalization of other (retail) activities
• Direct competition (e.g. new restaurant)
• Indirect competition (e.g. competing for each
  discretionary dollar)

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NHs Brand

• More information needed.
• What effect would a 5 increase in crime have on
  the quality of life in NH?
• Move us from 1 to 2? Or from 1 to 10?
• Is it possible to have Casinos without losing
  NHs brand?

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Regulatory Environment

• Local Referendums (only town or surrounding
  towns)?
• Existing Regulation
• What rules are there about restriction on
  political contributions?
• Lottery Commission
• Pari-Mutuel Gaming Commission
• New Structures
• State owned
• Is the existing regulatory structure sufficient
• Regulation of slot machines
• Less Aggressive machines
• Controlling Proliferation

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Critical Variables

• Economic activity, discretionary spending and
  consumer confidence.
• Decisions made by Massachusetts and Maine
• Phasing
• Do we really have sufficient information to
  estimate cost/benefit?