The big bet
If the “conservative” estimates by House Speaker Robert DeLeo’s casino bill hold up, Massachusetts would quickly be giving Las Vegas a run for its money.
According to the speaker’s calculations, Massachusetts could reap twice as much in gambling tax revenues as any other state in the country under his proposal. And the total spent on gambling in the state’s two proposed casinos and four racinos would dwarf gambling expenditures in every state but Nevada, which hosts 266 casinos.
State Rep. Brian Dempsey, chairman of the Joint Committee on Economic Development & Emerging Technologies and the author of the speaker’s bill, said at a State House rally on Thursday that the proposal would mean annual tax revenue for the state of between $1.4 billion and $1.9 billion. About $100 million a year of the total would come from taxes on the 3,000 proposed racetrack slots and the remainder from the casinos.
With a proposed tax rate of 25 percent on gross casino gambling revenues, that would mean somewhere between $5.6 billion and $7.2 billion would have to be wagered and lost in the two proposed casinos in Massachusetts.
Dempsey’s aides later confirmed the tax revenue estimates but could not say how the numbers were developed.
Some gambling opponents are aghast at the numbers “The amount of wagering that needs to happen is just physically impossible,” says Les Bernal of Lawrence, executive director of the national group Stop Predatory Gambling.
At the rally unveiling the casino proposal, DeLeo and Dempsey touted the expected riches as a key to the legislation. The proposal earmarks hundreds of millions of dollars for cities and towns, Massachusetts’s community colleges, and the fast-draining rainy day fund.
“We will reinvest the funds we garner through gaming licenses in our state,” said DeLeo. “We will distribute this money to fund manufacturing, workforce partnerships, tourism, and local capital projects.”
According to a summary of the bill, the measure will:
- Create a five-member gaming commission;
- Tax casino revenues at 25 percent;
- Tax slot revenue at between 40 percent and 50 percent;
- Collect a one-time $100 million license fee from each casino operator and a $15 million fee from each racetrack;
- Mandate a minimum investment of $500 million from each casino developer and $75 million from each racetrack owner;
- Earmark $5 million a year for treating compulsive gambling.
The one-time licensing fees would be split between a number of public functions including the state’s Manufacturer’s Fund, which would receive $50 million, and the state’s community colleges, which would be in line for a one-time infusion of $25 million.
Initially, the state would direct 100 percent of the slot tax revenue, about $100 million per year, to local aid until the casinos are up and running. After that, local aid, the state’s rainy day fund, and education would each receive 30 percent of the tax revenues — with the remainder split among a variety of line items, including a mitigation fund to offset costs of affected communities.
“You can’t do everything the proponents say they are going to do with this bill,” says Bosley, who is leaving the House this year to run for Berkshire sheriff. “This really is not a great economic strategy.
The tone of the rally and the framing of the bill were clearly designed to garner enough support to override a potential veto from Gov. Deval Patrick, who supports destination casinos but opposes slots.
“This is a bill, I believe, that should get the support from every member of the House,” said DeLeo, adding there will not be any public hearings on the proposal, which should come up for a vote in the next two weeks. DeLeo said the slots should be in motion six to nine months after passage but could not put a time frame on casino openings.
At a press availability after the rally, Patrick was noncommittal about a veto, saying he would work with DeLeo and Senate President Murray to fashion a gambling measure acceptable to all.
“There’s a right way and a wrong way to do this,” said Patrick, who said nothing has changed his mind about slots.
There’s another factor in DeLeo’s need to get 107 House votes. Bosley says DeLeo also needs the two-thirds vote to attach an emergency preamble to the bill to enact it right away. If not, then it would take 90 days before the measure becomes law. If opponents mount a campaign to put a referendum question on the ballot and certify the signatures before that period, the law would be in limbo until after the election.
“If there’s no emergency preamble, you’re not getting any revenue until after the next election,” said Bosley. “I don’t think he’s got the votes to do that.”
In case anyone doubted it, DeLeo said time and again his gaming bill is about jobs, and every speaker who followed the Speaker at the State House gathering took up the mantra.
Paul Guzzi, president of the Greater Boston Chamber of Commerce, threw his support behind the bill because “there is no way this state can have an economic recovery unless we have a jobs recovery.”
One of Guzzi’s strange bedfellows, AFL-CIO President Robert Haynes, pointed to all the out of work union members as a backdrop gathered on the State House Grand Staircase.“To me, this bill is about three things: jobs, jobs and jobs,” said Haynes.
Dempsey said the two proposed destination casinos and four racinos would mean 16,000 to 18,000 jobs, including construction and indirect jobs. Michigan, with three casinos, reports 8,500 permanent casino jobs and Pennsylvania, with one casino and six slots-only racinos, has about 5,800 jobs, according to the gaming association.