Worth the gamble?

By DAVID SCHARFENBERG  |  December 16, 2009

And when the Great Recession recedes, analysts say, even the bigger casinos are expected to return to health; America's gambling itch is not going away. But if the industry is confident of a rebound, executives seem poised to emerge from the downturn with slimmed-down ambitions.

The $1 billion resort projects of just a few years ago seem unthinkable today. Prospective casino developers in Massachusetts are already talking about "right-sizing" their ventures. And if a full-scale casino sprouts in Rhode Island, it will be something less than a sprawling Foxwoods-style destination. "The 'if you build it, they will come' adage has been thrown out the window," Berman says.

Part of the reason for caution in these parts: an increasingly crowded marketplace along the eastern seaboard. There are the casinos of Connecticut and the slot parlors of Rhode Island, of course. There is Atlantic City, attempting to recast a tired façade, and Massachusetts, which seems destined to join the fray.

But there is also a "racino" in Maine. Six slot parlors and a resort casino in Pennsylvania. New York claims three upstate Indian casinos and some 13,000 video lottery terminals at eight racinos. West Virginia is now offering table games at several of its gambling venues. And last year, Maryland voters approved a constitutional amendment legalizing slot machines.

With mounting competition, the double-digit gains of the recent past seem unlikely to return. "I don't think I'd characterize it as a growth industry going forward," says Clyde W. Barrow, a gambling expert who is the director of the Center for Policy Analysis at the University of Massachusetts-Dartmouth. "It's near maturity."

And for individual venues, the precise geography of gaming can be a make-or-break proposition. Until recently, for instance, Massachusetts lawmakers talked of licensing three casinos, with one in the southeastern part of the state that would be a direct competitor to Twin River and Newport Grand. But House Speaker Robert A. DeLeo recently spoke of a two-casino plan that would presumably axe the southeastern Massachusetts project.

The path the Bay State legislature takes — two casinos or three — could have serious implications for the viability of Twin River and Newport Grand, Barrow says. Indeed, he argues, Rhode Island voters may have lost the opportunity to control the fate of the state's gaming industry when it rejected full-scale casino gambling — and the opportunity to effectively block a casino in southeastern Massachusetts — three years ago.

But even before the marketplace grew so crowded, even before the recession struck, it was far from clear that casinos meant much in the way of economic development for the communities that hosted them. Studies going back a decade or more found employment gains, sometimes significant and sometimes not, coupled with hard-to-quantify increases in personal bankruptcy and pathological gambling.

"Most of the people I know who are legit would say it's a wash," says Richard McGowan, a Jesuit priest and professor at Boston College who specializes in gambling. "The big winners," he says, "are state governments."


Indeed, it is Smith Hill's dependence on gaming dollars — and its desire to protect one of its most important assets going forward — that will drive the push for casinos in this state.

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