Remarks by Robert H. Steele at the Stop Predatory Gambling National Day of Action event in Geneva NY, 26 September 2015, Geneva is a few miles from Tyre, NY
“Although I’m from Connecticut, I should to tell you at the start that I feel a special connection to the Finger Lakes region for two reasons. First, because my wife went to Wells College on Lake Cayuga and I spent many, many enjoyable weekends here getting to know the area. And second, we in CT are very familiar with the Wilmorite group, because it financed an effort to open an Indian casino in Connecticut. That effort ultimately failed because the tribe in question could not prove it qualified for federal recognition.
I also appreciate your interest in my book – The Curse: Big-Time Gambling’s Seduction of a Small New England Town. The book is a fact-based novel set against the explosion of casino gambling in Connecticut during the 1990s, when Congress and the courts opened the door to the construction of the world’s two biggest casinos in the southeastern corner of my state.
In the end, The Curse is a cautionary tale about a small, quintessential Connecticut town that faces a Faustian dilemma in which it must choose between preserving its character and values or accepting an enormously seductive offer that would change the town forever – in other words, a story that has played out in one way or another in hundreds of communities across America and is playing out in Tyre today.
In 2013, the Institute for American Values, an independent think tank in New York, released a landmark report about the impact the spread of casino gambling is having on the nation.
The report began with this powerful statement:
“From time to time in American history, a new institution takes root across the country, and in doing so, changes the nation—changes the physical landscape of communities, impacts the patterns and habits of daily life, and affects citizens’ and communities’ economic outcomes…Something of this magnitude is now occurring in the United States. It is the spread of casinos.”
For many local people, the first thing that would probably come to mind in hearing this opening statement is the way Wilmorite’s proposed $425 million Tyre casino would impact the physical environment – including the nearby [Montezuma] National Wildlife refuge, federal and state protected species and habitat, as well as traffic congestion, noise, and air quality. The developer and key local officials evidently thought so little of these issues that they tried to get by with a slipshod environmental impact study, but in a stinging rebuff, the N.Y. State Court of Appeals ruled that their study did not meet state requirements.
As important as the environmental impact would be, however, I would like to zero in on the social and economic impact of what is being proposed for Tyre, using what is happening in Connecticut and elsewhere as background.
Connecticut’s two casinos, Foxwoods and Mohegan Sun, got off to blistering starts. With no significant competition other than in Atlantic City, 250 miles away, they quickly grew into the two biggest casinos on the planet, drawing more than half their combined customers from out of state, creating over 20,000 casino jobs, and sending hundreds of millions of dollars a year in slot revenues to the state treasury.
Today, however, the bloom is off the rose for Connecticut’s casinos as the Northeast fills up with competing casinos, fewer and fewer out-of-staters come to CT to gamble, and the out-of- state money that fueled CT’s gambling boom, and that of other early casino states, increasingly dries up.
Thanks to the growing competition, the combined revenue for CT’s two casinos is already down 38% from its peak. The casinos have eliminated 8,000 jobs and have been increasingly replacing full-time jobs with part-time jobs to reduce wage costs and eliminate medical benefits, while Foxwoods has stopped all profit-sharing payments to its tribal owners and is mired in debt.
The story is similar elsewhere, with growing competition cutting into the profits of casinos and changing the dynamics of the casino business in more and more states. For example, Delaware has had to put millions of dollars toward bailing out its 3 casinos, while New Jersey has spent hundreds of millions trying to prop up its casinos, only to see a third of them close in the past 20 months. In Ohio and Maryland, casino revenue is roughly 40% below original projections.
As the casinos’ profits slide, we have also been getting a clearer picture of the overall economic and social downside of what has happened in Connecticut.
First, with less out of state money coming in, an increasing percentage of the casinos’ profits and resulting state revenue is coming from the gambling losses of Connecticut residents, resulting in what Nobel Prize-winning economist Paul Samuelson called “the sterile transfer of money” from one group to another without creating any net new value.
Second, even with all the out-of-state money that came in in the past, the Connecticut casinos did little to create spin-off businesses, but did cannibalize other businesses.
One example of cannibalization actually involved a good friend of mine who owned one of the region’s most successful restaurants and who I never saw more excited than when one of the casinos opened nearby. He thought the casino would be great for his business, that with all the people coming down from Boston and up from New York, surely hundreds of them would stop at his restaurant every week.
Unfortunately, it didn’t work out that way, and I remember what he told me when he closed his restaurant because of competition from the casinos. “I have to admit,” he said sadly, “that I had no idea how the casinos actually work. But now I understand. People drive to the casinos, play at the casinos, go to shows at the casinos, stay at the casino hotels, eat at the casino restaurants, and then fill up their gas tanks at the casino gas stations and drive home. We as local merchants rarely see any of them.”
As casino mogul Steve Wynn once told a group of Connecticut businessmen when he was trying to put a casino in Bridgeport: “Get it straight, there is no reason on earth for any of you to expect for more than one second that just because (people come to my casino) they are going to run into your store or restaurant.”
And third, there is little evidence that casinos ultimately strengthen state or local government finances. Connecticut receives 25% of its casinos’ slots profits, which has provided the state with over $6 ½ billion in revenue in the past 22 years. Yet CT today is in the worst financial shape in its history, with a lagging economy and the third worst debt and unfunded liability ratio of any state.
And then there are the social issues.
For starters, the casinos have created a pervasive gambling culture in southeastern CT and they were followed by a steep increase in the number of CT residents seeking treatment for gambling addiction, with an attendant increase in debt, bankruptcies, broken families and crime.
One of the most remarkable findings from a 2009 state-sponsored study was that there had been a 400% increase in arrests for embezzlements in Connecticut since the casinos opened, a rate of increase 10 times the national average.
One of the embezzlers, incidentally, was my tax collector in the town of Ledyard, where Foxwoods is located. She stole $302,000 from tax receipts to play the slots at Foxwoods. And of course she didn’t win. Indeed, statistically it is almost impossible to win when the casino takes up to 10% of everything you bet over time. I should note that the embezzler, who was sentenced to prison, had a pristine record as an individual and public servant before she became hooked on slots.
There were so many embezzlement cases in southeastern Connecticut, in fact, that a columnist for the New London Day newspaper described the region as the embezzlement capital of America.
Recent embezzlement stories range from a Bridgeport elementary school principal charged with taking $10 thousand in student funds to gamble at Mohegan Sun to the chief financial officer of the town of Winchester, Connecticut stealing over $2 million from that town and losing much of it at the state’s casinos. The Winchester embezzlement was so serious that there was talk of the town having to temporarily close its school system.
Looking at crime overall, a 2014 study from Western CT State University shows that the number of violent crimes (including murder, rape, robbery and aggravated assault) increased in nearby towns after the casinos opened DESPITE A SHARP DROP in violent crime nationally and CT as a whole, while interviews with local police and judicial officials indicated increases in non-violent crimes such as prostitution and illicit drug use.
As far back as 1997, Congress became so concerned about the spread of casino gambling that it set up a National Commission to study the issue. Based on its findings, the Commission recommended that there be a moratorium on opening new casinos until the government could get a better handle on their social and economic costs.
But the recommendation was never implemented, and casinos have continued to multiply as state governments have invited them into their states to raise revenue without having to openly raise taxes.
In the process, casino gambling has become a $67 billion industry, with casinos arguing that they spur economic development and provide state and local governments with much-needed money.
But both economic studies and experience refute those arguments.
In fact, looking at all the evidence, the 2013 Institute for American Values report concludes that the regional and local casinos springing up across the nation drain wealth from communities, weaken nearby businesses, hurt property values, and reduce civic participation, family stability, and other forms of social capital that are at the heart of a successful society.
At this point, one might think states would begin to recognize the shortsightedness of depending on casino revenue. But that’s not what’s happening. Instead, state after state has become so hooked on casino money that it is seeking to expand gambling either to increase gambling revenue or replace the gambling revenue it is losing to cross-border competition.
And that is precisely what is happening in CT. The state began by increasing Foxwoods’ and Mohegan Sun’s FREE PLAY ALLOWANCE so they could beef up promotions and attract more customers; the state legalized the casino game KENO for restaurants, bars, and convenience stores, and the legislature has passed a bill which would allow construction of the state’s third casino and which could quickly lead to two more casinos after that.
Casino expansion advocates argue that the so called “convenience” casinos would help keep CT gamblers from going to MA and NY to gamble and thereby protect CT casino jobs and revenue. What they carefully avoid discussing, is that one or more new casinos would create thousands of new Connecticut gamblers and encourage current Connecticut gamblers to gamble more frequently, leaving CT residents with even less money for other goods and services and further adding to the state’s social problems.
Moreover, with both government and investors constantly pushing for new ways to make money from gambling, there is no reason to think that CT’s gambling expansion would stop there.
Video slots are beginning to spread beyond casinos into local neighborhoods in many states. There are now some 12,000 video slot machines at so-called “lottery delis” in Oregon, and more than 20,000 video slots at bars, restaurants, truck stops, fraternal clubs, gaming cafes, and even 2 flower shops in Illinois.
Next, there is a strong effort underway to expand legalized sports betting in the United States, including on daily Fantasy Sports.
And finally, thanks to a 2011 U.S. Justice Department ruling, New Jersey, Delaware, and Nevada have legalized in-state online betting for their casinos, and other states, including NY, are considering legalizing Internet gambling as well.
In short, the lesson across the country, and the lesson we are increasingly learning in Connecticut, is that each new expansion of legalized gambling is followed by increased pressure for still more gambling, and the only way to stop it is for individual citizens like you and me to stand up and say to our government leaders: STOP!
STOP trying to expand gambling in my state and trying to bring it into my community.
Stopping it is admittedly an enormous challenge – a true David and Goliath fight. The casino developers and gambling promoters have enormous financial resources which they use to dominate the public debate, gain political and government support, and overwhelm the opposition, while average citizens typically have little money with which to fight back.
For instance, in last fall’s statewide referendum in Massachusetts on whether to repeal the law allowing casinos in that state, casino interests ran a reported 4,000 TV ads in the last month of the campaign in a successful effort to kill repeal, while those supporting repeal were unable to afford any TV time. Then this summer, the developer seeking to put a casino in Brockton, MA reportedly outspent a coalition of churches, civic groups and individuals by 450-1 in order to win a narrow victory there.
Yet, remarkably, casino opponents have recently won important victories in which they (1) stopped casinos from being legalized in New Hampshire, (2) defeated efforts to expand casino gambling in Rhode Island and (3) beat back casino proposals in Newport, RI; in West Springfield, Palmer, Milford, Tewksbury, Worcester, and East Boston, MA; and in Albany, East Greenbush, and Tuxedo, NY.
One of the saddest aspects about your battle against the proposed Tyre casino is the extent to which the developer has gone to try to keep you from speaking out against its proposal. Here is a giant real estate corporation which is spending a fortune on an army of designers, engineers, lawyers, consultants and publicists to break into Tyre to further enrich itself, yet criticizes Casino Free Tyre for trying to raise a modicum of money to defend its town.
It is truly an act of monumental hypocrisy and demonstrates how worried the developer is about your ability to persuade others to actively join your fight and demonstrate to the State Gaming Commission how strong the opposition among everyday citizens is to the proposed casino. Hopefully the casino advocates’ tactics will encourage you to redouble your efforts to speak out, to recruit your neighbors, to reiterate your opposition to the casino to the Gaming Commission and town and county officials, and to support Town Board candidates who oppose the casino.
In defeating the casino in Palmer, MA, opponents used the slogan “The more you know about casinos, the less you’ll like them,” and used every possible means to explain to the community what casinos are really all about.
The opponents did a particularly good job of getting across the predatory nature of casinos, pointing out that multiple independent studies show that roughly half of a typical casino’s gambling profits come via problem gamblers, whether the money is their own, or they have begged, borrowed, or taken it from others. In other words, that the casino industry’s very business model is dependent upon preying on addicted gamblers.
That’s the nature of the business they want to bring to your community.
Palmer’s slogan pretty much said it all. “The more you know about casinos, the less you’ll like them.”
Thanks very much.”
Permission is hereby granted to reproduce the above text in whole or in part as long as the permalink is cited and the speaker, Robert H. Steele, is credited.
Mr. Steele, a Connecticut businessman, is a former Representative to Congress from Connecticut who recently joined the Board of Stop Predatory Gambling.