Connecticut's long-running casino story takes an ominous turn
This year marks the 25th anniversary of the Indian Gaming Regulatory Act, which not only legalized Indian casinos, but also spurred the legalization of non-Indian commercial casinos, triggering an explosion of casino gambling across the United States.
In 1988, two states allowed casinos, Nevada and New Jersey. Today 39 states allow casinos and the nation now has nearly 1,000, almost evenly divided between tribal and commercial casinos. Casino gambling has literally become America's new national pastime, with more people going to casinos than to professional baseball, football, and basketball combined.
Nowhere was the new wave of casino gambling more spectacularly successful than in Connecticut.
Foxwoods, owned by the Mashantucket Pequots, and Mohegan Sun, owned by the Mohegans, were the first casinos in the Northeast outside Atlantic City. With no other competition, they quickly grew into the two largest casinos on the planet - drawing over half their combined customers from out of state, creating 20,000 casino jobs, and sending hundreds of millions of dollars a year in slot revenue to the Connecticut treasury.
But the story's not over and it's become clear that Connecticut's casinos also have a serious downside.
Their presence has created a pervasive gambling culture in southeastern Connecticut; they've skewed the region's economy heavily toward low-paying service jobs; and a sharp spike in the number of pathological gamblers followed them. One of the most remarkable findings from 2009 state-sponsored study was a 400 percent increase in arrests for embezzlement since Foxwoods opened, a rate of increase 10 times the national average.
Casino supporters and opponents are in violent disagreement over whether a typical casino's costs are ultimately greater than its benefits, but one leading economist estimates that the cost-to-benefit ratio from introducing a casino into a region - including the social costs as well as lost productivity - outweigh the benefits by at least 3-1.
Up to now, the cost-to-benefit ratio for Connecticut has presumably been more favorable than that because of the success Foxwoods and Mohegan sun have had in attracting out-of-state gamblers who leave their money in Connecticut and take their problems home with them.
The question now, however, is how long that success will last as casinos saturate the country and Foxwoods' and Mohegan Sun's former dominance continues to slip away, and along with the customers who once came from other states.
Maine now has its first two casinos; Rhode Island is turning one of its two slot parlors into a full-scale casino; and Massachusetts has approved building three new mega-casinos plus a slots barn. Meanwhile New York, which already allows extensive electronic casino-type gambling at its racetracks, is in the process of amending its constitution to permit up to seven full-scale commercial casinos in the state.
Because of the recession and growing competition from Rhode Island and particularly Aqueduct and Yonkers racetracks in New York, Foxwoods' and Mohegan Sun's slot revenues are already down more than 30 percent from their peak, with the state's take falling from $430 million to under $300 million.
Foxwoods and Mohegan Sun say they plan to compete and attract out-of-state patrons by upgrading their properties and aggressively marketing themselves as destination resorts. But, really, how many Bostonians or New Yorkers will continue traveling to eastern Connecticut to gamble if they have brand new casinos in their backyards?
It seems more likely Foxwoods and Mohegan Sun will increasingly turn inward and depend on attracting more local people to gamble in order to support the huge gambling complexes they've developed here. And that will mean more social costs for Connecticut.
The legislature's response has been to approve measures designed to help the tribal casinos attract more gamblers and to put the state itself directly in the casino gambling business in order to make up for the declining revenue.
The state recently increased the casinos' free play allowance so they can beef up promotions and entice more gamblers.
And in a late-night vote two weeks ago, the legislature snuck in a bill to legalize keno (essentially electronic bingo) in restaurants, bars and taverns in the hope of raising an additional $28 million next year. Legislative leaders did it without a hearing or any provision for dealing with increased problem gambling, and apparently made a secret deal with the tribes ahead of time to give them 12.5 percent of the winnings. All this despite polling that shows state residents are overwhelmingly opposed to legalizing keno.
As the executive director of the Connecticut Council on Problem Gambling commented, "It is astounding that, given the data the legislature has available to it, (it knows) legalizing keno will create as many problems as it will solve."
Then just a day later key legislators proposed legalizing video slot machines at the Bradley Teletheater, Sports Haven in New Haven and the former dog track in Bridgeport, which would clearly require further profit sharing with the two tribal casinos.
All of these moves pale, however, next to what may be in store for us.
Nevada and New Jersey recently approved in-state online gambling for their casinos, and Connecticut's governor is on record as saying that if other states allow Internet gambling, Connecticut should legalize online gambling for its casinos as well.
In other words, having brought physical casinos into Connecticut, we can now expect growing pressure to add Internet gambling, which the casinos see as a way to attract younger customers, and which experts view as particularly addictive because of the fast pace of the games, their constant availability, and the instant gratification aspect.
As one observer put it, legalizing online gambling would be the equivalent of opening a 24-hour casino in every house, apartment, and dorm room in the state.
So if you think the state is hooked on gambling now, just wait.
Robert H. Steele represented eastern Connecticut in Congress from 1970 to 1974 and was the Republican candidate for governor in 1974. He is the author of a new novel, "The Curse: Big-Time Gambling's Seduction of a Small New England Town."
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