AMHERST — Massachusetts’ three resort casinos are largely having a positive impact on the state’s economy, even as a downturn in business for restaurants and bars in and around Springfield may be attributed to visitors who are playing the slot machines and gaming tables at MGM Springfield are also drinking and dining there.
“In aggregate, this was a very smart decision to create domestic casinos,” Robert Williams, a clinical psychologist and professor of health sciences at the University of Lethbridge in Alberta, Canada, told the Massachusetts Gaming Commission at a virtual meeting Thursday.
Williams and Rachel Volberg, research professor of epidemiology in the School of Public Health and Health Sciences at the University of Massachusetts, are the principal investigators for an initiative called Social and Economic Impacts of Gambling in Massachusetts, with a summary of a 194-page report titled “Social and Economic Impacts of Casino Introduction to Massachusetts” presented to the commission.
“It’s rare: Usually it’s a mix of negative social impacts plus positive economic impact, and here we have really negligible social impacts and really significant economic impacts,” Williams said. “So this is a good news story for Massachusetts.”
The latest report from SEIGMA, research that so far has received $17.5 million in funding, synthesizes the findings from 55 interim reports and academic publications, beginning in 2013, two years before the arrival of Plainridge Park Casino and five years before MGM Springfield opened. The third casino is Encore Boston Harbor.
“We wanted to do a comprehensive look back and try to understand 10 years of impacts that we’ve been monitoring, with an eye to setting the groundwork for looking at sports betting going into the future,” Volberg said in a statement.
Impact on local businesses, jobs
What is concerning for Volberg are the economic challenges identified in the report, which show that between 46% and 80% of casino patrons said they spent less on other goods and services, particularly in restaurants and bars. “So (casinos) have had a negative impact for other businesses in terms of where leisure dollars are being spent,” Volberg said.
Mark Melnik, who leads the SEIGMA economic team at the UMass Donahue Institute, is also worried about this aspect, as the report shows about three-quarters of casino employees left other full-time jobs, resulting in a loss of workforce in other sectors. Also, only 39% of casino employees earn a living wage for their county, though this is higher than typical for the accommodations and food services sector.
“Businesses in the recreation and leisure sectors of the economy always compete for the disposable income of consumers,” Melnik said. “While the Massachusetts casinos attract new consumers from outside of the state, it is not surprising to see some level of competition for both labor and customers in this industry sector.”
Williams told the commissioners that these impacts are “potentially due to cannabilization.”
The report notes that overall casino patronage in Massachusetts appears to be declining, mirroring a nationwide trend, and Williams said the researchers have also found attitudes toward gambling growing more negative among residents, with 68% of respondents saying gambling is too widely available.
“A much larger proportion of Massachusetts residents in more recent years believe that gambling is too widely available,” Volberg said. “So the message to the Legislature would be to slow their roll on legalizing any other type of gambling.”
In fact, a recommendation in the report suggests that while legislation allows for an additional casino property to be licensed, Massachusetts may have reached casino saturation.
Revenues
The positive impacts of casinos that Volberg and the SEIGMA team identified were primarily economic, including employment opportunities and tax and other revenues.
Construction costs for the three casinos totaled $2.8 billion, and more than 8,000 workers were employed full time. The casinos employ about 5,000 people and generate about $1.15 billion in annual gross gaming revenue, as well as about $321 million in annual non-gaming revenue.
State revenue from gaming taxes has increased from $78 million in budget year 2016 to $330 million in budget year 2023. And that revenue supports 12 funds, the largest of which is passed on to Massachusetts’ 351 municipalities.
The report notes the state had been seeing a net loss of $665 million in revenue to out-of-state casinos, which has been reduced to $360 million, so the state is recapturing money that had been lost, with MGM Springfield being a main driver of this.
“Overall, the three casinos have generated a significant amount of economic activity, both during the construction and operational phases of the casinos,” Melnik said. “Further, the facilities provided resilience during the post-COVID recovery period.”
The report notes one positive social and health impact as the new recreational opportunities associated with the casinos.
Negatives
“We also identified a number of significant negative impacts,” Volberg said. “And, as we anticipated, these were primarily not monetary.”
Negative social and health impacts include an increase in vehicle traffic volume, accidents and impaired driving near the casinos, though not generally Springfield, as well a small increase in certain crimes at and near the casinos, and a “small but significant” statewide increase in illegal gambling.
In Springfield and surrounding communities, there was a drop in both property crime and violent crime between 2014 and 2019, which fell by by 26.7% and 9.3%, respectively.
One key finding from the 10 years of research is that the prevalence of problem gambling has shown no significant increase since casinos opened in Massachusetts. However, the report does reveal that the percentage of casino revenues derived from problem and at-risk gamblers rose from 74% in 2013-14 to 90% in 2021-22.
“The biggest negative impact from our perspective is that most of the revenues generated by the casinos come from people who are at risk for or experiencing gambling problems,” Volberg said.
The research team developed its recommendations based on the overall findings, including ways to reduce the reliance on 10% of the population, problem gamblers or those at risk of becoming problem gamblers, for 90% of the casino revenue.
Still, Williams said the researchers are not alarmed by this. “By any measure, problem gambling has not changed and has probably gone down, despite having three new casinos,” Williams said.
“They’ve been inoculated and exposed to it before, and that’s likely why there’s been no major impact on problem gambling,” Williams added.
More money, though, may be needed to research into how legalized sports betting is affecting gambling, a topic that hasn’t been fully explored yet.
“The Massachusetts Gaming Commission is committed to funding research that examines the impact of casinos and gambling on Massachusetts and helps guide policy decisions we make in the commonwealth,” said Jordan Maynard, the interim chairman of the gaming commission. “The research produced by the SEIGMA team is impactful and essential to the comprehensive and growing body of research supported by the MGC.”
Scott Merzbach can be reached at smerzbach@gazettenet.com.
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