Friday, June 13, 2008

The Hollow Insides of Casinos

Ask Clyde Barrow and he'll talk about how Casinos will make this state billions of dollars. The casino lobby sock puppet "professor" has all sorts of crazy theories. But the truth is that casinos almost never live up to the hype - just ask Rhode Island.

PROVIDENCE — The owners of Twin River are offering the state upward of $500 million up front in return for slicing by more than half the percentage of money the state gets from the slot parlor.

The offer is part of Twin River’s plan to solve its own “dire” financial crisis. Twin River has missed loan payments to its bank and is in danger of falling into bankruptcy. “The situation is dire. We are standing on the edge of a precipice,” Twin River spokeswoman Patti Doyle said yesterday.

Deval Patrick's casino plan with numbers like that is certain to make billions, right? It certainly looks like a shaky bet. Why would casinos do any better here than there? Even Las Vegas is hitting rough times.

The fact is there's already too many casinos in New England. They each compete with each other for smaller and smaller pieces of the pie. Furthermore, casinos are not stable forms of revenue generation: when the economy goes bad, so too do casinos. They will not help Massachusetts; they very well could hurt it, given the fact that casinos suck up money from the rest of the economy (since our wallets are ultimately net-sum games).

That isn't to say Twin Rivers is quite as broke as it claims. The House always wins - it's just in Rhode Island, their share of the winnings isn't nearly as high as shareholders would like.

In the casino business, it's always good to know how to bluff. Twin Rivers has laid a big, juicy one on the table.
Meeting with House Speaker William J. Murphy earlier this week, the Twin River delegation offered the $500 million if the state would reduce its cut of the slot revenue from 61.45 percent to 25 percent.
Twin Rivers is in such dire straights that they have $500 million to give, the magic number and solution to all of Rhode Island's woes this year? Yeah, right. It's a cheap ploy to reduce casino taxes: the 61.45% made $240 million for Rhode Island last year. It doesn't take a card-counter to realize this deal wouldn't cut Rhode Island's way over the long - or medium - haul.

Rhode Island called the bluff - this time - but that doesn't mean the allure of the game hasn't caught Rhode Island off guard before, or that it won't again. How often is there a 'magic solution' like a 500 million offer that the state can't refuse? Casinos offer them every day, so long as in the fine print they work out in the casino's interests. Rhode Island's already given into 24-hour weekends and holidays, so they know the game and drill - they're probably just waiting for Twin Rivers to up the anti.

If Massachusetts builds any casinos, expect to hear about the "dire straights" within years - as they ask for more forms of gambling, smaller tax rates and less restrictions. Magic money will be freely offered, with consequences that are never inherently obvious. And, like Rhode Island, Connecticut and anywhere that's built casinos, if we allow them in the first place, we've already lost the big pot. Rhode Island's only staying in the game, playing from behind, because they think they can play catchup. If only they knew the most important thing about playing against the House: there's is no playing catchup. The only way to win is to not play.


Ari Herzog said...

If only they knew the most important thing about playing against the House: there's is no playing catchup. The only way to win is to not play.

Aside from your possessive duplication, you do realize Joshua said it best in WarGames:

A strange game. The only winning move is not to play. How about a nice game of chess?

I'm all for debating casino ideas for playing poker, blackjack, bingo, and chess, so how about building a green casino? Slot machines with LED or CFL light bulbs, corn-based chips, recycled cards, local farm-raised foods, LEED-certified building, the list goes on.

Anonymous said...

Gee the state made 240 million from the place last year, in voluntary contributions from people. Doesn't sound too bad. Not counting food taxes generated, wage taxes on the many people working there.

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