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OP-ED | As Go The Casinos, So Goes The State

by Terry D. Cowgill | Mar 22, 2013 5:30am
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Posted to: Opinion, State Budget, Taxes

State officials knew the day would come when Massachusetts gamblers would stop driving to eastern Connecticut. After all, when Gov. Deval Patrick signed a bill in November 2011 allowing for one full-scale casino each in eastern, southeastern and western portions of his state, it was obvious that Bay Staters would eventually stay home rather than make the drive to Foxwoods or Mohegan Sun.

But who could have predicted the Massachusetts gamblers would leave Connecticut in droves even before ground was broken for casinos to our north? Well, that’s precisely what’s happened, according to a study by the Center for Policy Analysis at the University of Massachusetts.

Since its peak in 2008 just before the great recession, the percentage of Massachusetts residents who visited the Connecticut casinos at least once a year has declined from 30 percent to 24 percent in 2011 and to 23 percent last year. Indeed, visits by gamblers from several surrounding states also have declined, but the Massachussets number is the most worrisome since it’s one of the most populous states in the region and has historically provided by far the greatest percentage of visitors. Massachusetts residents account for 66 percent of the decrease in the number of visitors to Foxwoods from 2008 to 2012 and 28 percent of the drop in visitors to Mohegan Sun.

Why the decline in visits from from Massachusetts? The answer appears to be the emergence of the Twin River Casino in Lincoln, R.I., which is considerably closer to eastern Massachusetts than Foxwoods or Mohegan. More than 65 percent of Twin River’s visitors are from the Bay State.

According to the survey, the number of visits by Massachusetts residents to Twin River increased by 261 percent from 2006 to 2012. And that number is bound to rise this summer when Twin River adds table games. Coupled with the feeble economy and the planned casinos in Massachusetts itself, Connecticut’s casinos are facing tough times that will no doubt grow bleaker in the years to come.

Under a deal first negotiated in 1993 by former Gov. Lowell Weicker with the Mashantucket Pequots and the Mohegans, the state receives 25 percent of gross slot machine revenues from the Foxwoods Resort Casino and Mohegan Sun. Since its inception, the deal has netted Connecticut more than $6 billion.

But slot revenue has dropped off significantly in the last few years. So far this fiscal year, the state’s take has dropped 12 percent from last year, which saw declines of 5 percent from the year before last. Revenue from this February alone is down more than 20 percent from the same month in 2012.

Strangely, the budget office of Gov. Dannel P. Malloy doesn’t forecast further significant drops in slot revenue over the next few years.

“If the economy picks up, we think we’ll be able to stabilize those numbers,” Malloy spokesman Gian-Carl Casa told the Courant.

That’s a big “if.” As we all know by now, Malloy’s budget officials have done such a poor job of forecasting revenue and economic growth that Comptroller Kevin Lembo has contradicted them at every turn. And the independent Connecticut Center for Economic Analysis predicts that a weak economic recovery in 2014 will be made worse by an aging workforce.

With the worst new job creation in the nation over the last couple of decades, Connecticut has seen an exodus of young people and the state hasn’t been able “to attract significant new population,” setting the stage for a soaring dependency ratio and a grim future, according to the center.

How should the state government — and, by extension, Connecticut’s 169 municipalities — be expected to cope? A broad-based tax hike is always a possibility, albeit a politically unbearable one, given the whopper of an increase we were hit with in 2011. Besides, if Malloy wants to maintain any hope of re-election next year, he can’t be seen as the tax man.

No. More likely, there will be additional gimmickry and borrowing, accompanied by more targeted revenue increases such as the new tax being contemplated for heating oil. Word is that the home heating oil tax was killed Thursday in committee, but there are 1,000 ways for a bill to come back to life as the General Assembly grapples with the budget down the stretch in May and June.

Meanwhile, young people and many in the business community — except, perhaps, those receiving corporate welfare — will continue to flee the state in search of greener pastures.

No matter how you slice it, it should be an ugly next few years. With luck, things will improve soon. But I’d say the odds are no better than you’d get at a Foxwoods blackjack table.

Terry Cowgill blogs at ctdevilsadvocate.com and was an editor and senior writer for The Lakeville Journal Company. He can be found on Twitter @terrycowgill.


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