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'Resort casinos' give bigger bang for the buck
By CLYDE W. BARROW
As director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, and project manager for the New England Gaming Research Project, I have studied for many years the economic impacts of gaming on state and local revenues.
To date, the gaming debate in New Hampshire has focused almost entirely on the feasibility of allowing video lottery terminals, often called "slots," at the state's four racetracks, but it has not given much attention to the potential benefits of destination resort casinos.
Slots at the racetracks, or "racinos," have proven to be effective and quick revenue generators for state and local governments, but destination resort casinos have a substantially greater economic and employment impact over the long term. There are several limitations to a state gaming policy that relies exclusively on racinos.
First, racinos attract most of their customers from within a 30-mile radius. They typically do not attract overnight visitors, because they lack hotel, restaurant and entertainment amenities.
In my own modeling, the estimated gaming market for slots at New Hampshire's racetracks is approximately $584 million. A destination resort casino will expand that market by more than $600 million to $1.2 billion, because of its ability to attract customers from further distances, and for longer stays, which means more revenue to the state.
Customers who patronize destination resort casinos routinely travel 150 miles or more because of the size, quality and range of amenities, which include luxury hotels, convention and meeting space, upscale restaurants and entertainment, and recreation such as golf.
The results of our survey indicate that destination resort casinos attract a different type of clientele than racinos. Casinos attract a more upscale clientele, who in New England are generally college educated and earn well above the median income for the region. Racinos do not capture a significant portion of this upscale clientele.
The survey indicates that from 75 percent to 80 percent of all resort casino patrons never visit a racino, because they are attracted by the casino's physical attractiveness, general atmosphere, table games and non-gaming amenities.
Second, there is a significant difference in the long-term economic development impact of destination resort casinos and racinos. Resort casinos generate approximately twice as many jobs per $1 million dollars in gaming revenues as racinos, because table games require dealers, operators, floor managers and supervisors, while the non-gaming amenities, such as a hotel, retail outlets, and food and beverage services generate additional jobs that are not found at racinos.
Thus, U.S. racinos generate an average of three new jobs per $1 million in gaming revenue, while destination resort casinos (excluding Nevada) generate an average of 7.6 jobs per $1 million in gaming revenues. Moreover, destination resort casinos require a much greater initial capital investment and, as a result, the initial impact on construction jobs is much greater.
Third, destination resort casinos typically generate 20 percent to 30 percent of their total revenues from non-gaming amenities, while even upscale racinos such as Hollywood Slots in Maine generate only 8 percent to 12 percent of their total revenue from non-gaming sources. As a result, destination resorts also generate more non-gaming tax revenues in the form of property, lodging and meals taxes.
If New Hampshire fails to include at least one destination resort casino in future plans for expanded gaming, those customers and their upscale dollars will continue traveling to Connecticut.
Dr. Clyde W. Barrow is director of the Center for Policy Analysis and project manager for the New England Gaming Research Project at the University of Massachusetts Dartmouth. He was commissioned to conduct a study on behalf of the developers of a proposed casino in Hudson.
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