Say Yes to New Hampshire. Say NO to Casinos.

9- Revenue Promises Cannot be Trusted

Economic Damage

9. The gambling lobby’s tax revenue promises cannot be trusted.

Revenue to help fund the state budget, or specific programs or revenue sharing schemes, is usually the main reason cited for supporting casino gambling.

But when you factor in the regulatory, law enforcement, and the social and human costs of problem gambling, the costs come close to or exceed any revenue gained. The Legislature has always managed to prioritize the State’s needs and balance its budget with bringing casinos or slot machines to New Hampshire.

A key appeal to many legislators is the claim that state licensing of casinos is a way to bring in new revenue without imposing or raising a tax or fee. However, the state share of revenue is usually structured as a tax on the gross gambling receipts of the casino operator along with an annual fee or tax for each slot machine. There have never been any provisions in legislation that a casino developer would need to guarantee a particular level of revenue to the state. In Ohio, for just one example, actual revenue from casino development has come in at less than half of what was estimated by proponents at the time it was approved.

The fiscal note for SB 366, the last casino bill considered by the NH House in 2014, estimated annual total tax revenue from two casinos, starting in the fourth fiscal year after legislative approval, to be $139 million. This estimate was generated by the NH Lottery Commission assuming that there are no casinos in the Boston area or closer, which does not look like it going to be the case as Wynn Resort has been approved for a $1.6 billion casino development in Everett, MA.

To provide an alternative revenue estimate, former State Senator and PUC Commissioner Clifton Below did a market analysis using the only publicly available data on actual adult spending on slot machines and table games by distance from casino for hypothetical casinos in Salem and Loudon, NH. This analysis assumed new casinos in Everett (or Revere) and Springfield, Massachusetts along with the existing Oxford, Maine casino.

The result was an estimate of total gross tax revenue of about $84 million per year. After accounting for designated allocations of revenue (about $12.5 million excluding revenue sharing proposed in the bill), nearly $12 million in estimated annual regulatory costs (from the bill’s fiscal note), and another $6.5 to $12 million in lost lottery revenue (from the fiscal note), the net revenue estimate to the state is $47 to $53 million, $25 million of which would have been directed into revenue sharing by SB 366, leaving only about $25 million for other budget needs.

However, even this analysis does not account for potential lost revenue from charitable gaming and other business taxes, such as rooms and meals and the business profits tax that might result from shifting discretionary spending from other goods and services to casino gambling, nor most of the social and human costs from problem and pathological gambling, which could easily equal or exceed the net revenue.

 

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