GREG TORRES, MASSINC PRESIDENT: We have a lot to discuss this morning. Some might wonder, MassINC, casino gambling, what’s this all about? A non-partisan think tank? The reason is simple. Three months ago when we planned this we were struck by the lack of debate around this issue other than what will the governor do and where will it go. We thought, this is something near and dear to MassINC’s heart – that a higher level of discourse will lead to better public policy. It’s not that we are for or against.
MICHAEL JONAS, COMMONWEALTH MAGAZINE (MODERATOR): They say timing is everything in life. Ours appear to be pretty good. Another cliché is I’d rather be lucky than good. This is largely a stroke of luck to be here a day after Gov. Patrick revealed his position. Luck aside, we have had a sense for some time that this is an important debate that we’d like to facilitate. The debate is now clearly front and center. Some think of casinos as the next chapter in our experience with games of chance. It is a jump from scratch tickets to huge destination casinos that casts gambling in a much brighter light. Casinos would become part of the state’s identity. It creates economic activity, but is it a true gain? There is some dispute. Are we depending on the losses of gamblers to fund the state’s needs? We don’t take a position on the issue other than the best public policy comes from open and honest debate about improving the lives of Massachusetts residents. Treasurer Cahill, Massachusetts treasurers have long been wary of casino gambling, rooted in the treasurer overseeing the productive state Lottery. The concern with casinos is they muscle in on the action. In May you parted with that position of treasurers and said we should authorize casinos. It seems like a plan that has a lot of parallels with what the governor unveiled.
TIM CAHILL, STATE TREASURER: I understand the point on the historic opposition to gambling and protecting the monopoly and money that goes back to cities and towns for local aid. The debate changed when the Wampanoag tribe got recognized and made it clear they would push hard to get a casino. The previous tribe made a half effort. From a realistic point of view we have to try to address it. We can minimize the negative impacts and maximize the positive impacts. Because we are a mature Lottery and are everywhere in Massachusetts and people spend an average of $600 a year, it’s really hard to find growth opportunities. The reality is the cities and towns need more revenue and I think this is the best way to do that. A challenge we see is many young people see the Lottery as their father’s game. They are not excited by scratch tickets. I think casinos reach out to a younger more technologically advanced society that is coming up through the ranks. Casinos appeal to them more. That reality is that people are going to casinos whether we legalize them or not. It’s time that we capture some of that money.
JONAS: Dan Bosley, you called the governor’s decision profoundly disappointing? Jobs, money for infrastructure, money for tax relief. What’s not to like?
STATE REP. DAN BOSLEY: I can’t tell you how may times I have added up what the revenue stream is supposed to pay for. I have a different perspective than the treasurer. He is charged with maximizing the Lottery. Last year, when we saw revenues not growing by as much as in the past, people said we have to fix the Lottery. There is nothing wrong with the Lottery. That’s the way it is. Gas prices had gone up. We didn’t have a lot of big games. But he is charged with doing that. We take a look at this and the Lottery is an excellent cautionary tale as to why we shouldn’t be doing casinos. We started with the little green ticket in the 1980s, a daily number to pay for education. We’d never have to worry about paying for education again. Well, after the ticket didn’t pay for education, we decided to put in Megabucks, then MassCash, then Megamillions. Then we went to Sunday drawings. Now we have 40 scratch tickets and keno firing off every four minutes for most of the day. And there are still cries for more revenue from the Lottery. The same thing will happen with casinos and it’s happened in every other state. They have either added casinos or grown those casinos. A lot of that money is economic transfer. A Federal Reserve study said 35 percent is economic transfer of money already spent in the economy. That’s what happens when a new department store comes to town. They are going to make $17 million a year. If Kmart then closes down, we can’t count that as new revenue. We are already a top tourist destination and get a fair share of tourism revenues. Suffolk Downs is playing for a casino and wants to be here because of the tourism base. The Wampanoag in Middleborough are close to the tourism base on Cape Cod. You have to discount that from the new revenues that everyone points to. Then discount the new spending because you deduct the social costs to get that money. That’s not a moral argument. If someone spends all their money and then comes to the state and says help me out here, there is a cost. There is a cost to roads. There are public safety costs. If you start to add up all the costs, it’s clear that even though you create a new revenue source, it’s not new revenue and it costs you more to get it. If something then happens to that one source, you are in a dangerous position. If you add everything up, it is disappointing that the governor has decided to do this. I don’t think it’s a good idea.
JONAS: Father McGowan, you deal with the issues of absolute right and wrong. On gaming, you think more in shades of gray. Give us your take. I know you met once with the governor’s team.
REV. RICHARD McGOWAN, BOSTON COLLEGE: One thing about this whole issue, once you are on the medicine you can’t go off it and we are on it already with the Lottery. Do you want to change the medicine and make it different? I do think it will add more revenue to the state. How big that is going to be, I think it’s bigger than what Rep. Bosley says. If you look at Lottery sales, they are seasonal. The winter months do the best. Casinos do best in the summer. The other thing is there are already people going to Connecticut who are addicted and are bringing their problems back to Massachusetts. How do we pay for that? I don’t think we are going to go to the Connecticut Legislature.
JONAS: We will take questions from the audience at the end. We reserve the right to cut off people who are more interested in making a speech than asking a question. In the Herald this morning, the folks have a way of cutting to the chase. They say “Pick Your Poison,” and show slot machines or a tollbooth. We had an interesting day of dueling announcement and there is talk about conspiracy theories on the timing. As the governor was announcing his plan, the transportation finance commission issued a report on the dire need for billions in transportation infrastructure spending. They included a hike in the gas tax, electronically magically recording everyone’s travels and charging them, and reforms to police details at construction sites and MBTA benefits restructuring. Is the casino plan a way out of those choices presented by the commission? The governor rejected the idea of a gas tax increase as he has previously. Are we shifting the conversation and avoiding an honest conversation about the collective needs of the commonwealth and coming up with a rational tax policy? Is this a something-for-nothing point of view? We do have a lack of appetite for taxes and may be turning to the bright lights of casinos.
CAHILL: A smart person once told me there are no coincidences on Beacon Hill. It was not coincidental. It’s true that you don’t want to ever have to go on medication, but if you do have to and it improves your quality of life and you can do the things you want to do, then you do it. If it helps you get through, and that’s what medicine does for us – we beat up on pharmacy companies a lot – but we have a good standard of life here. We are not in a perfect world. But we are not relying in state government on all of our revenues from gaming. The Lottery brought back less than a billion dollars out of a $26 billion budget. The governor is talking about maybe $400 million or $500 million more in annual revenue. If we talk about the best quality health care and education, we have to diversify where we get our money. It’s just the reality. We can’t just go back to the taxpayers and ask for more. Casinos are not the end-all-be-all but they are part of the solution. They’ve worked very well in some states and very poorly in some states. We need to find the best model to grow the economy in a measured way and not put all the pressure on the taxpayer. The reality is: unless Dan Bosley or the speaker can get a majority of people to support a tax increase, we’re not going to get the revenue. Think about where we would be if we had not done 128 and the turnpike, we would be split. The only way to do that was with an unpopular toll road. The reality is how do you get the votes and how do you make it happen. We are not overly reliant on revenue from gaming and we won’t be if we have casinos in the mix.
JONAS: Are you and your colleagues part of the chief avoiders here?
BOSLEY: Let me ask a question. What two things do Rhode Island, Connecticut, New Jersey and New York have in common? We have seen a tremendous growth in casinos and they all have a higher tax burden than we do. We have been set up with a false premise, you either have to do this or you have to do that. The governor did that yesterday. By the way, the governor said yesterday that Atlantic City has seen economic growth since casinos have been there. Absolutely wrong. Atlantic City in 1978 had 238 bars, restaurants and taverns. Today they have less than 50. It does eat up other forms of revenue in those states. Is it the end of civilization? Absolutely not. It changes civilization. It changes the way we do business in this state. I spent my entire day on the phone yesterday with reporters. A couple said if you are not in favor, what is the quick fix for money? There is no quick fix. It takes a long time. It’s hard work. When you build an economy, it’s hard work. The problem is we are sucking all the oxygen out of the room to do those other kinds of economic development activities. My staff has been working on the biotech bill, the billion-dollar 13-page biotech bill from the governor, and we would like to be able to move that forward. Yesterday everyone started to work on casinos because we have to work on casinos. We have to do broadband, help defense manufacturing. It’s something we should do here. We are a high wage state with high costs but we do well because we are creative and innovative. We can’t get to long sustainable growth because we are always looking for that quick fix. There is no quick fix. This is too good to be true. It’s certainly not going to give us the revenue to do everything we have been promised.
JONAS: Have we avoided tough discussions on reforms on the spending side in transportation?
BOSLEY: Absolutely. Government has to reinvent itself all the time. We need to look at new ways to do things. There is no reason why we can’t do that. We need to cut the cost of doing business. We need to encourage those industries that can do very well here. The biotech industry does very well here. But they have 31,000 employees. The governor wants to close several loopholes for manufacturing industries that have 372,000 jobs in the Commonwealth, and create several loopholes for the biotech industry, which has 31,000 jobs. We shouldn’t focus on one industry, but what’s a good workforce development tool. We need to take that long-term view. We don’t do that, but we should.
JONAS: What does this say about our decision-making and sense of a commonwealth to structure revenue to pay for the collective needs based on gaming? Are we avoiding tough issues?
REV. RICHARD McGOWAN, BOSTON COLLEGE: We normally talk about tax policy in economics in terms of efficiency and equality. Tolls are an incredibly inefficient way, an incredibly stupid way to collect money to pay for a road. It would be much better to raise the excise tax, do away with all of the tolls. I will be driving to Philadelphia today. I won’t buy gas in Connecticut because it’s more expensive there but they don’t have tolls. Hypocritically I will buy gas in New Jersey but I will curse New Jersey as I pay the tolls on the Garden State parkway. In a way New Jersey is getting money from me and Connecticut is getting nothing. One of the things that has to happen is do we really want states to compete with one another on tax policy? I doubt they smoke a lot more in New Hampshire. We all know what’s going on. There is the real dilemma. You are competing with states for revenue. At the same time rationally speaking you would love to make the roads toll free but raise the excise tax. But you probably wouldn’t. One of the things we have to ask ourselves if this revenue will help. There is no doubt about that, unless the taxpayers are willing to pay for other things. By the way, it’s easy for me to say, I don’t pay taxes.
JONAS: I was struck at the governor’s press conference by his focus on the economic development impact of this. He had said earlier that he didn’t want to talk about this as part of the state budget. I detect a conscious effort to show we are not groveling for revenue to fund the needs of government. He wrapped in the casino plan yesterday with his initiatives in life sciences and ed reform. He suggested they are all part of an effort to promote economic vitality. Does that add up?
BOSLEY: It doesn’t for me. I have been looking at this for 11 years. I am a liberal Democrat. I love to spend money. I’d love to say this is a painless way to get revenue. It’s not. If you put something big in an area and plop it down, people will go there. Clyde Barrow (UMass Dartmouth) said there is $1.5 billion in revenues. There’s not a billion and a half dollars sitting in people’s pockets. It’s being spent elsewhere in the economy. It takes revenue from other things. There is only so much revenue in the economy. It alters people’s economic activity. I grew up in the Berkshires. In Connecticut, you used to talk about building boats along the coastline. Now it’s about gambling, it’s Mohegan Sun and Foxwoods. It does change economic activity and it does redirect things and we have so many cultural institutions and facilities and tourism opportunities and this does redirect activity. Every other state that has done this, bar none, has started with limits. Illinois put riverboats in. They restricted how many people could go out. No ATM’s. Maximum bets. Then they put ATM’s in and took off the $5 limit on games and the $500 limit and then they just anchored them. It continues to grow no matter where it is. New York was told $400 per day per machine for slots at the tracks so they put them in. Now they get $112 to $193 per day per machine. They said what’s up? The gambling interests said your tax is too high and we need more machines. They had just started this. That takes more money out of your economy. It sucks the oxygen out of investments in other things. It’s really the tipping point.
JONAS: Tim Cahill, can we set clear limits on it, like no other state has done? Can it be part of the economic development mix?
CAHILL: It’s imperative to do it right. I have trust and faith in the Legislature and the governor that it will be done right. We can learn from what other states have done. The governor has said three separate locations and said this is not a panacea. We should not promise that cities are going to be rejuvenated. It is not the whole answer. If people want to spend their money on gambling, who are we to tell them they can’t? We just want to provide a good setting, an upscale setting so we are not preying on the poor – we are not trying to attract low-income people. Obviously, if all this money is being spent at casinos and we have no casinos here, it’s new money if we have them. It’s definitely new money. The state and the city of Boston invested $800 million in the convention center. We’re attracting people. It still needs a subsidy but we are attracting people. This is a way to attract more people. The key is to get them to spend more money while they are here. I agree this is a great state for tourism and culture. Culture can only get you so many places. I worked at the Adams National Historic Site as a tour guide. History buffs would come by and would love it. Other people would say please get me out of here. It’s just not enough for everybody. What we are proposing is an entertainment complex in this gambling is a part of. I don’t see too many people outside the gambling interests looking to invest $1 billion in one part of the state. We don’t have that. We are talking about a billion-dollar investment in biotech. That’s state money. We are trying to foster the investment. I think it’s a good idea. That state made a big pitch to the film industry. They are making films here. I don’t know how much revenue we are getting. It’s a good idea, but if we are giving things out there has to be money coming back in. We have film and biotech industries and a gaming industry and they can all fit together. We in the 90s put all our eggs in the high tech basket and paid an enormous price by becoming overly reliant on one sector. We don’t do that in the pension fund. We invest in a diversified way. This is part of a regional economic development strategy. I think it makes sense. You have people willing to pay hundreds of millions of dollars in licensing fees, and willing to build hotels and shopping centers. We can’t get them to come to western Mass or southeastern Mass or north of Boston without the lure of casinos. We can learn from Illinois and Atlantic City. The beauty of not being the first out is you don’t have to make mistakes. Even if we say no, we have two Indian tribes that are pushing very hard. Connecticut was forced to act by the federal government and the courts. They have two Indian tribes where they get not revenue other than the slot revenue and they missed a huge opportunity. If we do nothing, it will be here and we won’t get the benefits we get under the governor’s proposal.
MCGOWAN: Indiana made their tax rate on casinos one half of the Illinois tax rate. Indiana said come over here. So there is a competition here. What’s really unique about Patrick’s proposal is he is really stressing the economic development. It’s something our friends in the Legislature will have to think about. Is there economic development? Yeah. The other thing to ask is are we going to use the money the right way? There is another proposal to privatize the turnpike. What would you do with that revenue to make sure that long term you’re just not paying off bills?
JONAS: What are we going to do with the revenue? Tim Cahill, in this morning’s Boston Globe, has a piece and talks about combining the revenues from gaming and dramatically reducing reliance on property taxes and delivering money to cities and towns. The governor is talking about taking half the proceeds and sending them to homeowners in a property tax credit. I heard $200 on the radio and he talked about preventing people from moving and attracting people. I wondered if the marketing was maybe overselling. It does nothing to change the stress on cities and towns and the cost structure and spiraling demands for dollars on health care, pensions, energy costs. There is no real reform there and it’s easy to imagine demands on money and cities and towns going back to taxpayers. Half of this revenue, it’s really hard to say it will be an investment.
CAHILL: I didn’t make a promise to get elected to reduce property taxes. The governor did. There is a danger of trying to split this money up too many different ways to satisfy too many constituencies to get the votes together. You can lose a lot of the impact. We have a long history of returning money to cities and towns. Overall it has been well spent. The majority goes to education, public safety and infrastructure. I have trust in elected mayors and city councilors and selectmen. They are at the ground level. I believe in local control. Cities and towns are what make us a strong community. You spread the money out to every community. The Middleborough piece took care of Middleborough but it ignored Carver and Plymouth. They can’t negotiate with everyone. That’s why the state has to take control so we can look out for the interests of all people. We can look out for the interests of all communities. Local aid has a built-in constituency. We can solve a lot of problems on local roads, on local education and on making sure we are safe by getting money back to cities and towns. The biggest challenge for treasurers is there will be an impact and a tradeoff as Dan said, but whatever impact it has, you add the money to cities and towns. Cities and towns can then decide do you want to cut taxes or do we want to provide more services. The more money we can give them the less they have to go back for those override to provide basic services and then we are doing our job. For 35 years, the commitment of money going to local aid has stayed constant because of the built-in pressures. I think that will stay constant with casinos. That’s the best way to broaden the positive impact on casinos. I understand the governor has different commitments and promises he made. The best chance for this to pass this in the Legislature is to make a commitment to 351 cities and towns. Then every elected legislator will have something to gain for his or her community. That’s important. That’s really, as much pressure is on the Legislature and state government, there’s more pressure on local communities. We have some high ideals and goals and they are all very good but to me, what makes this state work is the strength of cities and towns. If I had a vote, that’s the way I would vote. The best way to spread the economic wealth is to give money back to cities and towns.
BOSLEY: I don’t think a couple of hundred bucks is going to matter to most people. I think people will take a couple of hundred bucks and say thank you very much. Over 50 percent of the raw number of gamblers come from a 50-mile radius. Those are not new dollars. Everyone has a different choice of doing something with this money but you have to figure out if it’s real money or money being substituted for something else. It’s not new money. I see Rep. Brian Wallace is here. The film tax credits have been mentioned. That’s been extremely successful. Already we have films coming in here and we are going to make money off of that. I don’t know why we are calling this economic activity. The film industry is tremendous economic activity and it’s a clean industry. Those are the kinds of industries we should be encouraging. The Wampanoag has been mentioned. It’s mentioned that we will get them anyway. I disagree strongly with that. The sad thing about the governor’s statement yesterday was it indicates state support for casinos. That in and of itself hurts our arguments when we go to the federal government and say we don’t want to put land in trust in Middleborough. That’s not a done deal. It’s going to take them years. And for us to be able to say that we as a state don’t want that weighs heavily in what they do in the federal government. We’ve just blown that. We’ve blown that now. I don’t think it was inevitable to say that we are going to have Native American casinos in Massachusetts. I don’t think it was. It wasn’t in 1996, the first year we got involved in this. I don’t think the Aquinnah Wampanoags put on a full court press. Are Sol Kerzner and the investors going to stay in town for bingo slots in Middleborough? I would argue that they probably are not going to stay here if they can go someplace else.
JONAS: The governor acknowledged downsides of this, that people are harmed by this. Some issues in dispute emerge there. People talk about a tiny portion being subject to gambling addictions. Father McGowan, you said this is the Achilles heel of the industry. You have all positioned yourselves here as not moralizers. I want to force you to do that. Estimates show casinos derive a substantial amount of revenue from the small group of people who are problem or pathological gamblers. I see former Senate President Birmingham with us. He held the line on funding advertising for the Lottery. He saw it as almost ill gotten gains. Is there an inconvenient truth here that the industry can’t afford to reform these people who are the bread and butter or a sizeable chunk of what they are counting on?
MCGOWAN: The vast majority of a casino right now is slot machines. People like to, for some reason – I have no idea – to put money in them. That’s 80 percent of the space. There are people that in the industry they refer to as the whales who are big-time players and fly in and stay in hotel rooms. Whether Massachusetts can attract the whales, I tend to doubt that would be happening. Even in Foxwoods. Your typical player is in their 40s, with income a little higher. Casinos attract much more the middle class, much more than the Lottery. My father goes down to Atlantic City with $75. Is it a day of entertainment? Yes it is. Is that a bad thing? No. I am sure it’s part of the financial model . . . I am not downgrading the addiction problem but how we are dealing with that problem is going to be interesting.
CAHILL: It is a challenge. No question about it. I work with the Commission on Compulsive Gambling. I personally think the Lottery creates more problems for people who have addictions because we are right in front of people almost everywhere you go. There are almost 7,500 Lottery agents. This is more self-contained. We had this experiment when it came to alcohol. In the 20s, we tried to make it illegal – keep it away from people because of the problems people had – but realized we can’t force our people to live the lives we want them to live or would like them to live. We can’t force our own children. We just want to set up the right framework for them. Government’s job in this case is to regulate and to make available in a limited way for people who want to do it or are going to do it anyways. Even if we don’t do it, people are going to go to these places. They do it every day. They do it in enormous numbers. So we have an opportunity to control it in the way we want to control it. This is one way to bring in revenue to help solve a problem that already exists. Is it going to get worse? Absolutely. I am not denying it. I don’t think anyone is. We live in a free society. Gambling has been with us for thousands of years, illegally, legally. We funded the continental army back in the revolution with a lottery because we couldn’t get the taxpayers to pay for our soldiers. We can do it in a way that keeps us civilized and keeps the culture intact. We can try to keep some of the seedier and less positive elements out. We’re not going to keep them all out. We don’t do that with alcohol. We don’t ban cars even though they are one of the leading killers of people. People make the tradeoff in terms of convenience. The governor has laid out the best path for doing it right if we are going to do it. If we don’t do it, then we have to look for other alternatives. As finance officer, that’s what I have to look at is how do we pay for services that we have to provide, how do we meet the needs of our citizens without taxing them into New Hampshire or other states. There is a way to do it. We have come a long way since the days of the old Las Vegas. The challenge again is on all of us in elected office to do the right thing with everyone watching, with forums like this. I think we can. I know that the vast majority of people who are polled in the state want us to realize it, to allow it. They key for us is to do it right so we don’t hurt the state more than we help the state. It will in the end be a net benefit for the state of Massachusetts.
JONAS: Dan, what about folks who lose their shirt or their house? These are entertainment complexes, but when you drill down you find people funding these things with devastating consequences?
BOSLEY: The idea that we are going to structure this tightly and well . . . some day there will be a new treasurer and governor. Despite the best restraints we put on, we can’t bind future Legislatures to this model and the federal government. You can’t always control it. If I said let’s take speed limits off the roads, let people drive 100 miles per hour I know there will be more accidents, but let’s put more money into brain injury cases, people would say you’re nuts. We passed laws to say you can’t do that. To say some people are gaming in Connecticut and we have to deal with their addiction so let’s legalize it here – studies say compulsive gambling doubles within 50 miles of a casino. So we know there are going to be more cases. If that’s true, then why do that? About 70 percent of the take is slot machines. Those are not rich people going down there. You don’t have CEO’s from major corporations saying grab your coat we are going to play the slots tonight. It’s middle and low-income people playing those slots and providing up to 70 percent of the take. Those are people that naturally don’t have as much money and many become addiction. I got the reports they gave to the governor. I know most addictive behavior, according to chairman Ruth Balser, tops out at about 12 percent. Gambling addictions, they say around 3 percent. I don’t know if that’s true given that every other addictive behavior is higher than that. Even if you double the 3 to 6 percent, it’s a lot of money, forget the moral argument, to take care of a problem that you legislatively created.
JONAS: Dan, a little look ahead. All eyes are really on the House. The Senate president has voiced general support for casino gaming. Your position is clear and the Speaker is clear about his opposition. What’s going to happen? Are you going to see a groundswell? Are the members going to say they see it differently than folks like you or the Speaker?
BOSLEY: I can’t speak for the Speaker. We have been dealing with this in committee since 1996. We tear this apart. I take it very seriously. We need to tear the governor’s proposal apart, put it back together, see if it makes sense. We need to hold hearings, maybe one, maybe a series. We don’t know when the governor is going to file his bill. He hasn’t filed it yet. I don’t think there is a bill drawn up yet. He said he’s going to work on a proposal with the Legislature. It’s going to take a while for that to get hopefully to my committee. We will hold hearings and deliberate. Historically, every time we vote on casinos since 1996 in the House or slots, the opposition has grown in the House. We have done a tremendous job of educating members on all sides of this issue. We’ve tried to educate constituents on this. The treasurer is right – the majority of people want to have this but they are being told about property taxes and roads and that’s not a full discussion. We do that within the House. I think we had 101 no votes last time. There’s nothing new in this proposal. It’s always we will use this to pay for good things. For some reason, it always turns out that there will be three. Then the racetracks say we want some. Then it tops out at 12 before is collapses on its own weight. There will be a tremendous discussion in the House. There are people that don’t want casinos but want slots at the tracks. They are going to weigh in. I want to debate this as soon as we can because my position is very clear on this. There’s a lot of people we have to talk to. I don’t think it’s going to happen right away. I think it’s going to take months for us to deliberate, kind of chew on this, bring everybody in to talk to everybody involved.
SEN. SUSAN TUCKER: I want to thank MassINC so much for this important and engaging forum. I have a comment and question. The comment deals basically with the treasurer talking about this being like alcohol and people are going to drink. This is an industry that depends on addition for its resources. Why don’t we just promote smoking to use the extra tax on cigarettes to pay for public health problems? We are so worried about toys coming in from China. If two tires blow out, we recall them. If a medication harms three people, we take it off the shelves. This is a product that is designed to harm people and the state is not allowing it, the state is promoting it. That is the moral issue here. Not that gambling’s immoral. But how much are we going to depend on gambling in this state? We already get the second highest revenue from gambling than any state outside of Nevada. How much more are we going to have and in how many places? That is the argument. If an industry said we are going to set aside hundreds of millions of dollars to help the victims, we would say I am sorry, go away. That’s what they are doing here. That’s my comment. I have two racetracks on the border in New Hampshire that my constituents can walk to. They have purchase and sale agreements with casinos. New Hampshire has resisted casino gambling year after year after year but the legislators tell me that if we put them in, they are going to put them in, right on the Massachusetts border. What happens then to all that revenue that is supposed to go to Massachusetts when the people in the valley go to New Hampshire and feed those slots? Do we have to then lower the taxes? What are the dynamics of casinos on the border.
CAHILL: I don’t really want to touch it.
MCGOWAN: First of all, I don’t know where you got your facts that Massachusetts has the second most gambling revenue. That’s not even close. I’m just telling you right now. There are states . . .
AUDIENCE MEMBER: Name them. Name them then. Stop talking. Why don’t you name them?
SEN. TUCKER: New York has more.
MCGOWAN: What do you mean, by per capita?
SEN. TUCKER: I didn’t say per capita. We get almost a billion dollars in gambling revenue.
MCGOWAN: So what. Illinois gets almost $1.6 billion last year from casinos. How can you possibly say that Massachusetts gets the second most in gambling? That’s just totally wrong, totally wrong.
SEN. TUCKER: I have a chart.
MCGOWAN: It’s totally wrong.
BOSLEY: Part of a problem you have is the domino theory. Rhode Island made the argument that they had to recapture money that was going to Connecticut. The pressure really would be on New Hampshire if we act. This thing, it moves all the time. If other states get in because we are in, what does that do to the numbers on economic activity?
CAHILL: The reality is we do this all the time. We compete with states all the time. That’s why we are doing a billion dollars in biotech. We are trying to keep investors from going to California, which has a $3 billion biotech initiative. This is a reality we face. We face competitive pressures. They are taking our people in New Hampshire all the time by not charging an income tax. I understand the senator’s problem with it. It is what it is, to quote a very famous coach. The film industry got tax breaks because we are trying to get people to make films here. We do this all the time. We should not separate this because it’s gambling from other economic incentive activities, and the difference is here we are not giving anyone a tax break or committing any state money, at least we shouldn’t be. We shouldn’t have to invest state money.
AUDIENCE QUESTION: I am from Rowley. I hope part of the proposal will include an increase in the math curriculum to explain odds and statistics. If the bottom falls out of the biotech industry we have put money in to support, we will have buildings and infrastructure and another industry can go in there. If we don’t like this casino industry, we can’t get rid of it. It’s going to be there. How do we handle that?
CAHILL: I don’t know. Rep. Bosley is correct that this needs to be debated. We don’t have to rush to judgment. It should be heard by everyone. I grew up in Quincy and we went to Hull for entertainment, to Paragon Park, as adults and kids. It’s not there anymore. There are condos and other buildings. We don’t know what’s going to happen. When I grew up, again, people shopped downtown, in their city centers. Then they put them all in Braintree. Things change over time. We can look at how it’s worked and at Las Vegas and Illinois and states that have done it and where it has not gone away, like Connecticut. But there are no guarantees. There are no perfect solutions. It will change over time. Maybe there will be a Wal-Mart at the casino. There are people that don’t like that – the big box retailers have replaced the malls. It’s part of capitalism and the democracy we live in. We let the market determine and again, government is here to regulate to limit or control the adverse impacts like too much gambling and too many cars. There are no perfect solutions here.
AUDIENCE QUESTION: I am a city councilor from Taunton. We have Middleborough to the east and Taunton-Raynham to the north. On efficiency versus equality, it seems anecdotally that people of limited means spend more on the Lottery and casinos. Are we not taking money from my community and providing it for property tax relief to the Dovers and the Lexingtons?
MCGOWAN: It may very well be. It’s how the Legislature . . . You would think you would give property tax relief to towns who really really need it. The Lottery is a regressive tax.
JONAS: There really is not an appetite for taxes. That governor ran away from the idea of a gas tax. This is a form of bringing in new revenue. It’s a voluntary tax and that’s what makes it more palatable.
CAHILL: I am not running away from the revenue point. My job is to try to find revenue. It is a form of revenue and it is a voluntary tax. If people choose to go, no one is forcing them to go. Tolls don’t ask what your income is before they take. Sales tax is across the board and our income tax is flat. We are not choosing. There have been movements to make it more progressive and those movements have all failed. There is no perfect tax. If you asked the majority of people honestly they would say they just don’t want to pay any tax. It is a price we pay for a civilized society. Massachusetts is a very civilized state and we provide very good services on the whole. This is one part of the mix. It shouldn’t be dominant. We should not looking to become Las Vegas of the East. We are just looking to compete and to broaden the mix and get revenue from other sources and create some economic activity in parts of the state where we need to create economic activity, particularly southeastern Massachusetts and western Massachusetts.
AUDIENCE QUESTION: I am from Arlington and I am concerned about immense energy use at these casinos and the sprawl-inducing impact and all the cars driving to these things.
BOSLEY: Casinos in Las Vegas use as much power as Chicago does in one day. You can make them green but they still use tremendous amounts of energy. Look, I have been in the Legislature for 21 years and the first year we had 18.5 percent revenue growth. We were spending money like (someone in the audience said Democrats). I have been there for revenue decreases from the year before. When the economy goes very well and more people work, we make more money and there are more people paying taxes. There is no great mystery to this. If you want more revenue, have more people working. We need to grow that revenue. A lot of industries have sustained growth and if you want revenue growth, let’s put our emphasis on that.
CAHILL: I don’t think that it’s the right public policy to putting these on MBTA stops. We are trying not to entice people of modest or low incomes to play. I don’t know if you can make them green. There is no question that these are very big facilities that generate a lot of car traffic and use a lot of energy. It’s going to put more of a strain on those parts of the economy.
RICH ROGERS, GREATER BOSTON LABOR COUNCIL: Rep. Bosley, you contend there is no economic growth. I disagree. What about the money spent in other states and the 10,000 construction jobs that create tax revenue and the jobs with health benefits so many service workers don’t have to rely on indigent care?
BOSLEY: I think the auction fee alone is a very dangerous thing. The governor said we will use that to jumpstart infrastructure work and tax relief. It’s a one-time revenue, maybe every ten years, and you embed costs in the budget. That’s just bad economic policy no matter who you are. In so far as losing money to other states, of course we do but it’s not as simple as going down and counting cars in the parking lot. If we recapture every one of these people and count the costs too, it doesn’t make economic sense. Ten thousand jobs at Suffolk Downs would be important and I think we should do something over at Suffolk Down. But you can’t look at everything and say this is jobs so we have to do it. You have to think it through and how much it’s going to cost you.
GREG TORRES, MASSINC PRESIDENT: We have a lot to discuss this morning. Some might wonder, MassINC, casino gambling, what’s this all about? A non-partisan think tank? The reason is simple. Three months ago when we planned this we were struck by the lack of debate around this issue other than what will the governor do and where will it go. We thought, this is something near and dear to MassINC’s heart – that a higher level of discourse will lead to better public policy. It’s not that we are for or against.
MICHAEL JONAS, COMMONWEALTH MAGAZINE (MODERATOR): They say timing is everything in life. Ours appear to be pretty good. Another cliché is I’d rather be lucky than good. This is largely a stroke of luck to be here a day after Gov. Patrick revealed his position. Luck aside, we have had a sense for some time that this is an important debate that we’d like to facilitate. The debate is now clearly front and center. Some think of casinos as the next chapter in our experience with games of chance. It is a jump from scratch tickets to huge destination casinos that casts gambling in a much brighter light. Casinos would become part of the state’s identity. It creates economic activity, but is it a true gain? There is some dispute. Are we depending on the losses of gamblers to fund the state’s needs? We don’t take a position on the issue other than the best public policy comes from open and honest debate about improving the lives of Massachusetts residents. Treasurer Cahill, Massachusetts treasurers have long been wary of casino gambling, rooted in the treasurer overseeing the productive state Lottery. The concern with casinos is they muscle in on the action. In May you parted with that position of treasurers and said we should authorize casinos. It seems like a plan that has a lot of parallels with what the governor unveiled.
TIM CAHILL, STATE TREASURER: I understand the point on the historic opposition to gambling and protecting the monopoly and money that goes back to cities and towns for local aid. The debate changed when the Wampanoag tribe got recognized and made it clear they would push hard to get a casino. The previous tribe made a half effort. From a realistic point of view we have to try to address it. We can minimize the negative impacts and maximize the positive impacts. Because we are a mature Lottery and are everywhere in Massachusetts and people spend an average of $600 a year, it’s really hard to find growth opportunities. The reality is the cities and towns need more revenue and I think this is the best way to do that. A challenge we see is many young people see the Lottery as their father’s game. They are not excited by scratch tickets. I think casinos reach out to a younger more technologically advanced society that is coming up through the ranks. Casinos appeal to them more. That reality is that people are going to casinos whether we legalize them or not. It’s time that we capture some of that money.
JONAS: Dan Bosley, you called the governor’s decision profoundly disappointing? Jobs, money for infrastructure, money for tax relief. What’s not to like?
STATE REP. DAN BOSLEY: I can’t tell you how may times I have added up what the revenue stream is supposed to pay for. I have a different perspective than the treasurer. He is charged with maximizing the Lottery. Last year, when we saw revenues not growing by as much as in the past, people said we have to fix the Lottery. There is nothing wrong with the Lottery. That’s the way it is. Gas prices had gone up. We didn’t have a lot of big games. But he is charged with doing that. We take a look at this and the Lottery is an excellent cautionary tale as to why we shouldn’t be doing casinos. We started with the little green ticket in the 1980s, a daily number to pay for education. We’d never have to worry about paying for education again. Well, after the ticket didn’t pay for education, we decided to put in Megabucks, then MassCash, then Megamillions. Then we went to Sunday drawings. Now we have 40 scratch tickets and keno firing off every four minutes for most of the day. And there are still cries for more revenue from the Lottery. The same thing will happen with casinos and it’s happened in every other state. They have either added casinos or grown those casinos. A lot of that money is economic transfer. A Federal Reserve study said 35 percent is economic transfer of money already spent in the economy. That’s what happens when a new department store comes to town. They are going to make $17 million a year. If Kmart then closes down, we can’t count that as new revenue. We are already a top tourist destination and get a fair share of tourism revenues. Suffolk Downs is playing for a casino and wants to be here because of the tourism base. The Wampanoag in Middleborough are close to the tourism base on Cape Cod. You have to discount that from the new revenues that everyone points to. Then discount the new spending because you deduct the social costs to get that money. That’s not a moral argument. If someone spends all their money and then comes to the state and says help me out here, there is a cost. There is a cost to roads. There are public safety costs. If you start to add up all the costs, it’s clear that even though you create a new revenue source, it’s not new revenue and it costs you more to get it. If something then happens to that one source, you are in a dangerous position. If you add everything up, it is disappointing that the governor has decided to do this. I don’t think it’s a good idea.
JONAS: Father McGowan, you deal with the issues of absolute right and wrong. On gaming, you think more in shades of gray. Give us your take. I know you met once with the governor’s team.
REV. RICHARD McGOWAN, BOSTON COLLEGE: One thing about this whole issue, once you are on the medicine you can’t go off it and we are on it already with the Lottery. Do you want to change the medicine and make it different? I do think it will add more revenue to the state. How big that is going to be, I think it’s bigger than what Rep. Bosley says. If you look at Lottery sales, they are seasonal. The winter months do the best. Casinos do best in the summer. The other thing is there are already people going to Connecticut who are addicted and are bringing their problems back to Massachusetts. How do we pay for that? I don’t think we are going to go to the Connecticut Legislature.
JONAS: We will take questions from the audience at the end. We reserve the right to cut off people who are more interested in making a speech than asking a question. In the Herald this morning, the folks have a way of cutting to the chase. They say “Pick Your Poison,” and show slot machines or a tollbooth. We had an interesting day of dueling announcement and there is talk about conspiracy theories on the timing. As the governor was announcing his plan, the transportation finance commission issued a report on the dire need for billions in transportation infrastructure spending. They included a hike in the gas tax, electronically magically recording everyone’s travels and charging them, and reforms to police details at construction sites and MBTA benefits restructuring. Is the casino plan a way out of those choices presented by the commission? The governor rejected the idea of a gas tax increase as he has previously. Are we shifting the conversation and avoiding an honest conversation about the collective needs of the commonwealth and coming up with a rational tax policy? Is this a something-for-nothing point of view? We do have a lack of appetite for taxes and may be turning to the bright lights of casinos.
CAHILL: A smart person once told me there are no coincidences on Beacon Hill. It was not coincidental. It’s true that you don’t want to ever have to go on medication, but if you do have to and it improves your quality of life and you can do the things you want to do, then you do it. If it helps you get through, and that’s what medicine does for us – we beat up on pharmacy companies a lot – but we have a good standard of life here. We are not in a perfect world. But we are not relying in state government on all of our revenues from gaming. The Lottery brought back less than a billion dollars out of a $26 billion budget. The governor is talking about maybe $400 million or $500 million more in annual revenue. If we talk about the best quality health care and education, we have to diversify where we get our money. It’s just the reality. We can’t just go back to the taxpayers and ask for more. Casinos are not the end-all-be-all but they are part of the solution. They’ve worked very well in some states and very poorly in some states. We need to find the best model to grow the economy in a measured way and not put all the pressure on the taxpayer. The reality is: unless Dan Bosley or the speaker can get a majority of people to support a tax increase, we’re not going to get the revenue. Think about where we would be if we had not done 128 and the turnpike, we would be split. The only way to do that was with an unpopular toll road. The reality is how do you get the votes and how do you make it happen. We are not overly reliant on revenue from gaming and we won’t be if we have casinos in the mix.
JONAS: Are you and your colleagues part of the chief avoiders here?
BOSLEY: Let me ask a question. What two things do Rhode Island, Connecticut, New Jersey and New York have in common? We have seen a tremendous growth in casinos and they all have a higher tax burden than we do. We have been set up with a false premise, you either have to do this or you have to do that. The governor did that yesterday. By the way, the governor said yesterday that Atlantic City has seen economic growth since casinos have been there. Absolutely wrong. Atlantic City in 1978 had 238 bars, restaurants and taverns. Today they have less than 50. It does eat up other forms of revenue in those states. Is it the end of civilization? Absolutely not. It changes civilization. It changes the way we do business in this state. I spent my entire day on the phone yesterday with reporters. A couple said if you are not in favor, what is the quick fix for money? There is no quick fix. It takes a long time. It’s hard work. When you build an economy, it’s hard work. The problem is we are sucking all the oxygen out of the room to do those other kinds of economic development activities. My staff has been working on the biotech bill, the billion-dollar 13-page biotech bill from the governor, and we would like to be able to move that forward. Yesterday everyone started to work on casinos because we have to work on casinos. We have to do broadband, help defense manufacturing. It’s something we should do here. We are a high wage state with high costs but we do well because we are creative and innovative. We can’t get to long sustainable growth because we are always looking for that quick fix. There is no quick fix. This is too good to be true. It’s certainly not going to give us the revenue to do everything we have been promised.
JONAS: Have we avoided tough discussions on reforms on the spending side in transportation?
BOSLEY: Absolutely. Government has to reinvent itself all the time. We need to look at new ways to do things. There is no reason why we can’t do that. We need to cut the cost of doing business. We need to encourage those industries that can do very well here. The biotech industry does very well here. But they have 31,000 employees. The governor wants to close several loopholes for manufacturing industries that have 372,000 jobs in the Commonwealth, and create several loopholes for the biotech industry, which has 31,000 jobs. We shouldn’t focus on one industry, but what’s a good workforce development tool. We need to take that long-term view. We don’t do that, but we should.
JONAS: What does this say about our decision-making and sense of a commonwealth to structure revenue to pay for the collective needs based on gaming? Are we avoiding tough issues?
REV. RICHARD McGOWAN, BOSTON COLLEGE: We normally talk about tax policy in economics in terms of efficiency and equality. Tolls are an incredibly inefficient way, an incredibly stupid way to collect money to pay for a road. It would be much better to raise the excise tax, do away with all of the tolls. I will be driving to Philadelphia today. I won’t buy gas in Connecticut because it’s more expensive there but they don’t have tolls. Hypocritically I will buy gas in New Jersey but I will curse New Jersey as I pay the tolls on the Garden State parkway. In a way New Jersey is getting money from me and Connecticut is getting nothing. One of the things that has to happen is do we really want states to compete with one another on tax policy? I doubt they smoke a lot more in New Hampshire. We all know what’s going on. There is the real dilemma. You are competing with states for revenue. At the same time rationally speaking you would love to make the roads toll free but raise the excise tax. But you probably wouldn’t. One of the things we have to ask ourselves if this revenue will help. There is no doubt about that, unless the taxpayers are willing to pay for other things. By the way, it’s easy for me to say, I don’t pay taxes.
JONAS: I was struck at the governor’s press conference by his focus on the economic development impact of this. He had said earlier that he didn’t want to talk about this as part of the state budget. I detect a conscious effort to show we are not groveling for revenue to fund the needs of government. He wrapped in the casino plan yesterday with his initiatives in life sciences and ed reform. He suggested they are all part of an effort to promote economic vitality. Does that add up?
BOSLEY: It doesn’t for me. I have been looking at this for 11 years. I am a liberal Democrat. I love to spend money. I’d love to say this is a painless way to get revenue. It’s not. If you put something big in an area and plop it down, people will go there. Clyde Barrow (UMass Dartmouth) said there is $1.5 billion in revenues. There’s not a billion and a half dollars sitting in people’s pockets. It’s being spent elsewhere in the economy. It takes revenue from other things. There is only so much revenue in the economy. It alters people’s economic activity. I grew up in the Berkshires. In Connecticut, you used to talk about building boats along the coastline. Now it’s about gambling, it’s Mohegan Sun and Foxwoods. It does change economic activity and it does redirect things and we have so many cultural institutions and facilities and tourism opportunities and this does redirect activity. Every other state that has done this, bar none, has started with limits. Illinois put riverboats in. They restricted how many people could go out. No ATM’s. Maximum bets. Then they put ATM’s in and took off the $5 limit on games and the $500 limit and then they just anchored them. It continues to grow no matter where it is. New York was told $400 per day per machine for slots at the tracks so they put them in. Now they get $112 to $193 per day per machine. They said what’s up? The gambling interests said your tax is too high and we need more machines. They had just started this. That takes more money out of your economy. It sucks the oxygen out of investments in other things. It’s really the tipping point.
JONAS: Tim Cahill, can we set clear limits on it, like no other state has done? Can it be part of the economic development mix?
CAHILL: It’s imperative to do it right. I have trust and faith in the Legislature and the governor that it will be done right. We can learn from what other states have done. The governor has said three separate locations and said this is not a panacea. We should not promise that cities are going to be rejuvenated. It is not the whole answer. If people want to spend their money on gambling, who are we to tell them they can’t? We just want to provide a good setting, an upscale setting so we are not preying on the poor – we are not trying to attract low-income people. Obviously, if all this money is being spent at casinos and we have no casinos here, it’s new money if we have them. It’s definitely new money. The state and the city of Boston invested $800 million in the convention center. We’re attracting people. It still needs a subsidy but we are attracting people. This is a way to attract more people. The key is to get them to spend more money while they are here. I agree this is a great state for tourism and culture. Culture can only get you so many places. I worked at the Adams National Historic Site as a tour guide. History buffs would come by and would love it. Other people would say please get me out of here. It’s just not enough for everybody. What we are proposing is an entertainment complex in this gambling is a part of. I don’t see too many people outside the gambling interests looking to invest $1 billion in one part of the state. We don’t have that. We are talking about a billion-dollar investment in biotech. That’s state money. We are trying to foster the investment. I think it’s a good idea. That state made a big pitch to the film industry. They are making films here. I don’t know how much revenue we are getting. It’s a good idea, but if we are giving things out there has to be money coming back in. We have film and biotech industries and a gaming industry and they can all fit together. We in the 90s put all our eggs in the high tech basket and paid an enormous price by becoming overly reliant on one sector. We don’t do that in the pension fund. We invest in a diversified way. This is part of a regional economic development strategy. I think it makes sense. You have people willing to pay hundreds of millions of dollars in licensing fees, and willing to build hotels and shopping centers. We can’t get them to come to western Mass or southeastern Mass or north of Boston without the lure of casinos. We can learn from Illinois and Atlantic City. The beauty of not being the first out is you don’t have to make mistakes. Even if we say no, we have two Indian tribes that are pushing very hard. Connecticut was forced to act by the federal government and the courts. They have two Indian tribes where they get not revenue other than the slot revenue and they missed a huge opportunity. If we do nothing, it will be here and we won’t get the benefits we get under the governor’s proposal.
MCGOWAN: Indiana made their tax rate on casinos one half of the Illinois tax rate. Indiana said come over here. So there is a competition here. What’s really unique about Patrick’s proposal is he is really stressing the economic development. It’s something our friends in the Legislature will have to think about. Is there economic development? Yeah. The other thing to ask is are we going to use the money the right way? There is another proposal to privatize the turnpike. What would you do with that revenue to make sure that long term you’re just not paying off bills?
JONAS: What are we going to do with the revenue? Tim Cahill, in this morning’s Boston Globe, has a piece and talks about combining the revenues from gaming and dramatically reducing reliance on property taxes and delivering money to cities and towns. The governor is talking about taking half the proceeds and sending them to homeowners in a property tax credit. I heard $200 on the radio and he talked about preventing people from moving and attracting people. I wondered if the marketing was maybe overselling. It does nothing to change the stress on cities and towns and the cost structure and spiraling demands for dollars on health care, pensions, energy costs. There is no real reform there and it’s easy to imagine demands on money and cities and towns going back to taxpayers. Half of this revenue, it’s really hard to say it will be an investment.
CAHILL: I didn’t make a promise to get elected to reduce property taxes. The governor did. There is a danger of trying to split this money up too many different ways to satisfy too many constituencies to get the votes together. You can lose a lot of the impact. We have a long history of returning money to cities and towns. Overall it has been well spent. The majority goes to education, public safety and infrastructure. I have trust in elected mayors and city councilors and selectmen. They are at the ground level. I believe in local control. Cities and towns are what make us a strong community. You spread the money out to every community. The Middleborough piece took care of Middleborough but it ignored Carver and Plymouth. They can’t negotiate with everyone. That’s why the state has to take control so we can look out for the interests of all people. We can look out for the interests of all communities. Local aid has a built-in constituency. We can solve a lot of problems on local roads, on local education and on making sure we are safe by getting money back to cities and towns. The biggest challenge for treasurers is there will be an impact and a tradeoff as Dan said, but whatever impact it has, you add the money to cities and towns. Cities and towns can then decide do you want to cut taxes or do we want to provide more services. The more money we can give them the less they have to go back for those override to provide basic services and then we are doing our job. For 35 years, the commitment of money going to local aid has stayed constant because of the built-in pressures. I think that will stay constant with casinos. That’s the best way to broaden the positive impact on casinos. I understand the governor has different commitments and promises he made. The best chance for this to pass this in the Legislature is to make a commitment to 351 cities and towns. Then every elected legislator will have something to gain for his or her community. That’s important. That’s really, as much pressure is on the Legislature and state government, there’s more pressure on local communities. We have some high ideals and goals and they are all very good but to me, what makes this state work is the strength of cities and towns. If I had a vote, that’s the way I would vote. The best way to spread the economic wealth is to give money back to cities and towns.
BOSLEY: I don’t think a couple of hundred bucks is going to matter to most people. I think people will take a couple of hundred bucks and say thank you very much. Over 50 percent of the raw number of gamblers come from a 50-mile radius. Those are not new dollars. Everyone has a different choice of doing something with this money but you have to figure out if it’s real money or money being substituted for something else. It’s not new money. I see Rep. Brian Wallace is here. The film tax credits have been mentioned. That’s been extremely successful. Already we have films coming in here and we are going to make money off of that. I don’t know why we are calling this economic activity. The film industry is tremendous economic activity and it’s a clean industry. Those are the kinds of industries we should be encouraging. The Wampanoag has been mentioned. It’s mentioned that we will get them anyway. I disagree strongly with that. The sad thing about the governor’s statement yesterday was it indicates state support for casinos. That in and of itself hurts our arguments when we go to the federal government and say we don’t want to put land in trust in Middleborough. That’s not a done deal. It’s going to take them years. And for us to be able to say that we as a state don’t want that weighs heavily in what they do in the federal government. We’ve just blown that. We’ve blown that now. I don’t think it was inevitable to say that we are going to have Native American casinos in Massachusetts. I don’t think it was. It wasn’t in 1996, the first year we got involved in this. I don’t think the Aquinnah Wampanoags put on a full court press. Are Sol Kerzner and the investors going to stay in town for bingo slots in Middleborough? I would argue that they probably are not going to stay here if they can go someplace else.
JONAS: The governor acknowledged downsides of this, that people are harmed by this. Some issues in dispute emerge there. People talk about a tiny portion being subject to gambling addictions. Father McGowan, you said this is the Achilles heel of the industry. You have all positioned yourselves here as not moralizers. I want to force you to do that. Estimates show casinos derive a substantial amount of revenue from the small group of people who are problem or pathological gamblers. I see former Senate President Birmingham with us. He held the line on funding advertising for the Lottery. He saw it as almost ill gotten gains. Is there an inconvenient truth here that the industry can’t afford to reform these people who are the bread and butter or a sizeable chunk of what they are counting on?
MCGOWAN: The vast majority of a casino right now is slot machines. People like to, for some reason – I have no idea – to put money in them. That’s 80 percent of the space. There are people that in the industry they refer to as the whales who are big-time players and fly in and stay in hotel rooms. Whether Massachusetts can attract the whales, I tend to doubt that would be happening. Even in Foxwoods. Your typical player is in their 40s, with income a little higher. Casinos attract much more the middle class, much more than the Lottery. My father goes down to Atlantic City with $75. Is it a day of entertainment? Yes it is. Is that a bad thing? No. I am sure it’s part of the financial model . . . I am not downgrading the addiction problem but how we are dealing with that problem is going to be interesting.
CAHILL: It is a challenge. No question about it. I work with the Commission on Compulsive Gambling. I personally think the Lottery creates more problems for people who have addictions because we are right in front of people almost everywhere you go. There are almost 7,500 Lottery agents. This is more self-contained. We had this experiment when it came to alcohol. In the 20s, we tried to make it illegal – keep it away from people because of the problems people had – but realized we can’t force our people to live the lives we want them to live or would like them to live. We can’t force our own children. We just want to set up the right framework for them. Government’s job in this case is to regulate and to make available in a limited way for people who want to do it or are going to do it anyways. Even if we don’t do it, people are going to go to these places. They do it every day. They do it in enormous numbers. So we have an opportunity to control it in the way we want to control it. This is one way to bring in revenue to help solve a problem that already exists. Is it going to get worse? Absolutely. I am not denying it. I don’t think anyone is. We live in a free society. Gambling has been with us for thousands of years, illegally, legally. We funded the continental army back in the revolution with a lottery because we couldn’t get the taxpayers to pay for our soldiers. We can do it in a way that keeps us civilized and keeps the culture intact. We can try to keep some of the seedier and less positive elements out. We’re not going to keep them all out. We don’t do that with alcohol. We don’t ban cars even though they are one of the leading killers of people. People make the tradeoff in terms of convenience. The governor has laid out the best path for doing it right if we are going to do it. If we don’t do it, then we have to look for other alternatives. As finance officer, that’s what I have to look at is how do we pay for services that we have to provide, how do we meet the needs of our citizens without taxing them into New Hampshire or other states. There is a way to do it. We have come a long way since the days of the old Las Vegas. The challenge again is on all of us in elected office to do the right thing with everyone watching, with forums like this. I think we can. I know that the vast majority of people who are polled in the state want us to realize it, to allow it. They key for us is to do it right so we don’t hurt the state more than we help the state. It will in the end be a net benefit for the state of Massachusetts.
JONAS: Dan, what about folks who lose their shirt or their house? These are entertainment complexes, but when you drill down you find people funding these things with devastating consequences?
BOSLEY: The idea that we are going to structure this tightly and well . . . some day there will be a new treasurer and governor. Despite the best restraints we put on, we can’t bind future Legislatures to this model and the federal government. You can’t always control it. If I said let’s take speed limits off the roads, let people drive 100 miles per hour I know there will be more accidents, but let’s put more money into brain injury cases, people would say you’re nuts. We passed laws to say you can’t do that. To say some people are gaming in Connecticut and we have to deal with their addiction so let’s legalize it here – studies say compulsive gambling doubles within 50 miles of a casino. So we know there are going to be more cases. If that’s true, then why do that? About 70 percent of the take is slot machines. Those are not rich people going down there. You don’t have CEO’s from major corporations saying grab your coat we are going to play the slots tonight. It’s middle and low-income people playing those slots and providing up to 70 percent of the take. Those are people that naturally don’t have as much money and many become addiction. I got the reports they gave to the governor. I know most addictive behavior, according to chairman Ruth Balser, tops out at about 12 percent. Gambling addictions, they say around 3 percent. I don’t know if that’s true given that every other addictive behavior is higher than that. Even if you double the 3 to 6 percent, it’s a lot of money, forget the moral argument, to take care of a problem that you legislatively created.
JONAS: Dan, a little look ahead. All eyes are really on the House. The Senate president has voiced general support for casino gaming. Your position is clear and the Speaker is clear about his opposition. What’s going to happen? Are you going to see a groundswell? Are the members going to say they see it differently than folks like you or the Speaker?
BOSLEY: I can’t speak for the Speaker. We have been dealing with this in committee since 1996. We tear this apart. I take it very seriously. We need to tear the governor’s proposal apart, put it back together, see if it makes sense. We need to hold hearings, maybe one, maybe a series. We don’t know when the governor is going to file his bill. He hasn’t filed it yet. I don’t think there is a bill drawn up yet. He said he’s going to work on a proposal with the Legislature. It’s going to take a while for that to get hopefully to my committee. We will hold hearings and deliberate. Historically, every time we vote on casinos since 1996 in the House or slots, the opposition has grown in the House. We have done a tremendous job of educating members on all sides of this issue. We’ve tried to educate constituents on this. The treasurer is right – the majority of people want to have this but they are being told about property taxes and roads and that’s not a full discussion. We do that within the House. I think we had 101 no votes last time. There’s nothing new in this proposal. It’s always we will use this to pay for good things. For some reason, it always turns out that there will be three. Then the racetracks say we want some. Then it tops out at 12 before is collapses on its own weight. There will be a tremendous discussion in the House. There are people that don’t want casinos but want slots at the tracks. They are going to weigh in. I want to debate this as soon as we can because my position is very clear on this. There’s a lot of people we have to talk to. I don’t think it’s going to happen right away. I think it’s going to take months for us to deliberate, kind of chew on this, bring everybody in to talk to everybody involved.
SEN. SUSAN TUCKER: I want to thank MassINC so much for this important and engaging forum. I have a comment and question. The comment deals basically with the treasurer talking about this being like alcohol and people are going to drink. This is an industry that depends on addition for its resources. Why don’t we just promote smoking to use the extra tax on cigarettes to pay for public health problems? We are so worried about toys coming in from China. If two tires blow out, we recall them. If a medication harms three people, we take it off the shelves. This is a product that is designed to harm people and the state is not allowing it, the state is promoting it. That is the moral issue here. Not that gambling’s immoral. But how much are we going to depend on gambling in this state? We already get the second highest revenue from gambling than any state outside of Nevada. How much more are we going to have and in how many places? That is the argument. If an industry said we are going to set aside hundreds of millions of dollars to help the victims, we would say I am sorry, go away. That’s what they are doing here. That’s my comment. I have two racetracks on the border in New Hampshire that my constituents can walk to. They have purchase and sale agreements with casinos. New Hampshire has resisted casino gambling year after year after year but the legislators tell me that if we put them in, they are going to put them in, right on the Massachusetts border. What happens then to all that revenue that is supposed to go to Massachusetts when the people in the valley go to New Hampshire and feed those slots? Do we have to then lower the taxes? What are the dynamics of casinos on the border.
CAHILL: I don’t really want to touch it.
MCGOWAN: First of all, I don’t know where you got your facts that Massachusetts has the second most gambling revenue. That’s not even close. I’m just telling you right now. There are states . . .
AUDIENCE MEMBER: Name them. Name them then. Stop talking. Why don’t you name them?
SEN. TUCKER: New York has more.
MCGOWAN: What do you mean, by per capita?
SEN. TUCKER: I didn’t say per capita. We get almost a billion dollars in gambling revenue.
MCGOWAN: So what. Illinois gets almost $1.6 billion last year from casinos. How can you possibly say that Massachusetts gets the second most in gambling? That’s just totally wrong, totally wrong.
SEN. TUCKER: I have a chart.
MCGOWAN: It’s totally wrong.
BOSLEY: Part of a problem you have is the domino theory. Rhode Island made the argument that they had to recapture money that was going to Connecticut. The pressure really would be on New Hampshire if we act. This thing, it moves all the time. If other states get in because we are in, what does that do to the numbers on economic activity?
CAHILL: The reality is we do this all the time. We compete with states all the time. That’s why we are doing a billion dollars in biotech. We are trying to keep investors from going to California, which has a $3 billion biotech initiative. This is a reality we face. We face competitive pressures. They are taking our people in New Hampshire all the time by not charging an income tax. I understand the senator’s problem with it. It is what it is, to quote a very famous coach. The film industry got tax breaks because we are trying to get people to make films here. We do this all the time. We should not separate this because it’s gambling from other economic incentive activities, and the difference is here we are not giving anyone a tax break or committing any state money, at least we shouldn’t be. We shouldn’t have to invest state money.
AUDIENCE QUESTION: I am from Rowley. I hope part of the proposal will include an increase in the math curriculum to explain odds and statistics. If the bottom falls out of the biotech industry we have put money in to support, we will have buildings and infrastructure and another industry can go in there. If we don’t like this casino industry, we can’t get rid of it. It’s going to be there. How do we handle that?
CAHILL: I don’t know. Rep. Bosley is correct that this needs to be debated. We don’t have to rush to judgment. It should be heard by everyone. I grew up in Quincy and we went to Hull for entertainment, to Paragon Park, as adults and kids. It’s not there anymore. There are condos and other buildings. We don’t know what’s going to happen. When I grew up, again, people shopped downtown, in their city centers. Then they put them all in Braintree. Things change over time. We can look at how it’s worked and at Las Vegas and Illinois and states that have done it and where it has not gone away, like Connecticut. But there are no guarantees. There are no perfect solutions. It will change over time. Maybe there will be a Wal-Mart at the casino. There are people that don’t like that – the big box retailers have replaced the malls. It’s part of capitalism and the democracy we live in. We let the market determine and again, government is here to regulate to limit or control the adverse impacts like too much gambling and too many cars. There are no perfect solutions here.
AUDIENCE QUESTION: I am a city councilor from Taunton. We have Middleborough to the east and Taunton-Raynham to the north. On efficiency versus equality, it seems anecdotally that people of limited means spend more on the Lottery and casinos. Are we not taking money from my community and providing it for property tax relief to the Dovers and the Lexingtons?
MCGOWAN: It may very well be. It’s how the Legislature . . . You would think you would give property tax relief to towns who really really need it. The Lottery is a regressive tax.
JONAS: There really is not an appetite for taxes. That governor ran away from the idea of a gas tax. This is a form of bringing in new revenue. It’s a voluntary tax and that’s what makes it more palatable.
CAHILL: I am not running away from the revenue point. My job is to try to find revenue. It is a form of revenue and it is a voluntary tax. If people choose to go, no one is forcing them to go. Tolls don’t ask what your income is before they take. Sales tax is across the board and our income tax is flat. We are not choosing. There have been movements to make it more progressive and those movements have all failed. There is no perfect tax. If you asked the majority of people honestly they would say they just don’t want to pay any tax. It is a price we pay for a civilized society. Massachusetts is a very civilized state and we provide very good services on the whole. This is one part of the mix. It shouldn’t be dominant. We should not looking to become Las Vegas of the East. We are just looking to compete and to broaden the mix and get revenue from other sources and create some economic activity in parts of the state where we need to create economic activity, particularly southeastern Massachusetts and western Massachusetts.
AUDIENCE QUESTION: I am from Arlington and I am concerned about immense energy use at these casinos and the sprawl-inducing impact and all the cars driving to these things.
BOSLEY: Casinos in Las Vegas use as much power as Chicago does in one day. You can make them green but they still use tremendous amounts of energy. Look, I have been in the Legislature for 21 years and the first year we had 18.5 percent revenue growth. We were spending money like (someone in the audience said Democrats). I have been there for revenue decreases from the year before. When the economy goes very well and more people work, we make more money and there are more people paying taxes. There is no great mystery to this. If you want more revenue, have more people working. We need to grow that revenue. A lot of industries have sustained growth and if you want revenue growth, let’s put our emphasis on that.
CAHILL: I don’t think that it’s the right public policy to putting these on MBTA stops. We are trying not to entice people of modest or low incomes to play. I don’t know if you can make them green. There is no question that these are very big facilities that generate a lot of car traffic and use a lot of energy. It’s going to put more of a strain on those parts of the economy.
RICH ROGERS, GREATER BOSTON LABOR COUNCIL: Rep. Bosley, you contend there is no economic growth. I disagree. What about the money spent in other states and the 10,000 construction jobs that create tax revenue and the jobs with health benefits so many service workers don’t have to rely on indigent care?
BOSLEY: I think the auction fee alone is a very dangerous thing. The governor said we will use that to jumpstart infrastructure work and tax relief. It’s a one-time revenue, maybe every ten years, and you embed costs in the budget. That’s just bad economic policy no matter who you are. In so far as losing money to other states, of course we do but it’s not as simple as going down and counting cars in the parking lot. If we recapture every one of these people and count the costs too, it doesn’t make economic sense. Ten thousand jobs at Suffolk Downs would be important and I think we should do something over at Suffolk Down. But you can’t look at everything and say this is jobs so we have to do it. You have to think it through and how much it’s going to cost you.
GREG TORRES, MASSINC PRESIDENT: We have a lot to discuss this morning. Some might wonder, MassINC, casino gambling, what’s this all about? A non-partisan think tank? The reason is simple. Three months ago when we planned this we were struck by the lack of debate around this issue other than what will the governor do and where will it go. We thought, this is something near and dear to MassINC’s heart – that a higher level of discourse will lead to better public policy. It’s not that we are for or against.
MICHAEL JONAS, COMMONWEALTH MAGAZINE (MODERATOR): They say timing is everything in life. Ours appear to be pretty good. Another cliché is I’d rather be lucky than good. This is largely a stroke of luck to be here a day after Gov. Patrick revealed his position. Luck aside, we have had a sense for some time that this is an important debate that we’d like to facilitate. The debate is now clearly front and center. Some think of casinos as the next chapter in our experience with games of chance. It is a jump from scratch tickets to huge destination casinos that casts gambling in a much brighter light. Casinos would become part of the state’s identity. It creates economic activity, but is it a true gain? There is some dispute. Are we depending on the losses of gamblers to fund the state’s needs? We don’t take a position on the issue other than the best public policy comes from open and honest debate about improving the lives of Massachusetts residents. Treasurer Cahill, Massachusetts treasurers have long been wary of casino gambling, rooted in the treasurer overseeing the productive state Lottery. The concern with casinos is they muscle in on the action. In May you parted with that position of treasurers and said we should authorize casinos. It seems like a plan that has a lot of parallels with what the governor unveiled.
TIM CAHILL, STATE TREASURER: I understand the point on the historic opposition to gambling and protecting the monopoly and money that goes back to cities and towns for local aid. The debate changed when the Wampanoag tribe got recognized and made it clear they would push hard to get a casino. The previous tribe made a half effort. From a realistic point of view we have to try to address it. We can minimize the negative impacts and maximize the positive impacts. Because we are a mature Lottery and are everywhere in Massachusetts and people spend an average of $600 a year, it’s really hard to find growth opportunities. The reality is the cities and towns need more revenue and I think this is the best way to do that. A challenge we see is many young people see the Lottery as their father’s game. They are not excited by scratch tickets. I think casinos reach out to a younger more technologically advanced society that is coming up through the ranks. Casinos appeal to them more. That reality is that people are going to casinos whether we legalize them or not. It’s time that we capture some of that money.
JONAS: Dan Bosley, you called the governor’s decision profoundly disappointing? Jobs, money for infrastructure, money for tax relief. What’s not to like?
STATE REP. DAN BOSLEY: I can’t tell you how may times I have added up what the revenue stream is supposed to pay for. I have a different perspective than the treasurer. He is charged with maximizing the Lottery. Last year, when we saw revenues not growing by as much as in the past, people said we have to fix the Lottery. There is nothing wrong with the Lottery. That’s the way it is. Gas prices had gone up. We didn’t have a lot of big games. But he is charged with doing that. We take a look at this and the Lottery is an excellent cautionary tale as to why we shouldn’t be doing casinos. We started with the little green ticket in the 1980s, a daily number to pay for education. We’d never have to worry about paying for education again. Well, after the ticket didn’t pay for education, we decided to put in Megabucks, then MassCash, then Megamillions. Then we went to Sunday drawings. Now we have 40 scratch tickets and keno firing off every four minutes for most of the day. And there are still cries for more revenue from the Lottery. The same thing will happen with casinos and it’s happened in every other state. They have either added casinos or grown those casinos. A lot of that money is economic transfer. A Federal Reserve study said 35 percent is economic transfer of money already spent in the economy. That’s what happens when a new department store comes to town. They are going to make $17 million a year. If Kmart then closes down, we can’t count that as new revenue. We are already a top tourist destination and get a fair share of tourism revenues. Suffolk Downs is playing for a casino and wants to be here because of the tourism base. The Wampanoag in Middleborough are close to the tourism base on Cape Cod. You have to discount that from the new revenues that everyone points to. Then discount the new spending because you deduct the social costs to get that money. That’s not a moral argument. If someone spends all their money and then comes to the state and says help me out here, there is a cost. There is a cost to roads. There are public safety costs. If you start to add up all the costs, it’s clear that even though you create a new revenue source, it’s not new revenue and it costs you more to get it. If something then happens to that one source, you are in a dangerous position. If you add everything up, it is disappointing that the governor has decided to do this. I don’t think it’s a good idea.
JONAS: Father McGowan, you deal with the issues of absolute right and wrong. On gaming, you think more in shades of gray. Give us your take. I know you met once with the governor’s team.
REV. RICHARD McGOWAN, BOSTON COLLEGE: One thing about this whole issue, once you are on the medicine you can’t go off it and we are on it already with the Lottery. Do you want to change the medicine and make it different? I do think it will add more revenue to the state. How big that is going to be, I think it’s bigger than what Rep. Bosley says. If you look at Lottery sales, they are seasonal. The winter months do the best. Casinos do best in the summer. The other thing is there are already people going to Connecticut who are addicted and are bringing their problems back to Massachusetts. How do we pay for that? I don’t think we are going to go to the Connecticut Legislature.
JONAS: We will take questions from the audience at the end. We reserve the right to cut off people who are more interested in making a speech than asking a question. In the Herald this morning, the folks have a way of cutting to the chase. They say “Pick Your Poison,” and show slot machines or a tollbooth. We had an interesting day of dueling announcement and there is talk about conspiracy theories on the timing. As the governor was announcing his plan, the transportation finance commission issued a report on the dire need for billions in transportation infrastructure spending. They included a hike in the gas tax, electronically magically recording everyone’s travels and charging them, and reforms to police details at construction sites and MBTA benefits restructuring. Is the casino plan a way out of those choices presented by the commission? The governor rejected the idea of a gas tax increase as he has previously. Are we shifting the conversation and avoiding an honest conversation about the collective needs of the commonwealth and coming up with a rational tax policy? Is this a something-for-nothing point of view? We do have a lack of appetite for taxes and may be turning to the bright lights of casinos.
CAHILL: A smart person once told me there are no coincidences on Beacon Hill. It was not coincidental. It’s true that you don’t want to ever have to go on medication, but if you do have to and it improves your quality of life and you can do the things you want to do, then you do it. If it helps you get through, and that’s what medicine does for us – we beat up on pharmacy companies a lot – but we have a good standard of life here. We are not in a perfect world. But we are not relying in state government on all of our revenues from gaming. The Lottery brought back less than a billion dollars out of a $26 billion budget. The governor is talking about maybe $400 million or $500 million more in annual revenue. If we talk about the best quality health care and education, we have to diversify where we get our money. It’s just the reality. We can’t just go back to the taxpayers and ask for more. Casinos are not the end-all-be-all but they are part of the solution. They’ve worked very well in some states and very poorly in some states. We need to find the best model to grow the economy in a measured way and not put all the pressure on the taxpayer. The reality is: unless Dan Bosley or the speaker can get a majority of people to support a tax increase, we’re not going to get the revenue. Think about where we would be if we had not done 128 and the turnpike, we would be split. The only way to do that was with an unpopular toll road. The reality is how do you get the votes and how do you make it happen. We are not overly reliant on revenue from gaming and we won’t be if we have casinos in the mix.
JONAS: Are you and your colleagues part of the chief avoiders here?
BOSLEY: Let me ask a question. What two things do Rhode Island, Connecticut, New Jersey and New York have in common? We have seen a tremendous growth in casinos and they all have a higher tax burden than we do. We have been set up with a false premise, you either have to do this or you have to do that. The governor did that yesterday. By the way, the governor said yesterday that Atlantic City has seen economic growth since casinos have been there. Absolutely wrong. Atlantic City in 1978 had 238 bars, restaurants and taverns. Today they have less than 50. It does eat up other forms of revenue in those states. Is it the end of civilization? Absolutely not. It changes civilization. It changes the way we do business in this state. I spent my entire day on the phone yesterday with reporters. A couple said if you are not in favor, what is the quick fix for money? There is no quick fix. It takes a long time. It’s hard work. When you build an economy, it’s hard work. The problem is we are sucking all the oxygen out of the room to do those other kinds of economic development activities. My staff has been working on the biotech bill, the billion-dollar 13-page biotech bill from the governor, and we would like to be able to move that forward. Yesterday everyone started to work on casinos because we have to work on casinos. We have to do broadband, help defense manufacturing. It’s something we should do here. We are a high wage state with high costs but we do well because we are creative and innovative. We can’t get to long sustainable growth because we are always looking for that quick fix. There is no quick fix. This is too good to be true. It’s certainly not going to give us the revenue to do everything we have been promised.
JONAS: Have we avoided tough discussions on reforms on the spending side in transportation?
BOSLEY: Absolutely. Government has to reinvent itself all the time. We need to look at new ways to do things. There is no reason why we can’t do that. We need to cut the cost of doing business. We need to encourage those industries that can do very well here. The biotech industry does very well here. But they have 31,000 employees. The governor wants to close several loopholes for manufacturing industries that have 372,000 jobs in the Commonwealth, and create several loopholes for the biotech industry, which has 31,000 jobs. We shouldn’t focus on one industry, but what’s a good workforce development tool. We need to take that long-term view. We don’t do that, but we should.
JONAS: What does this say about our decision-making and sense of a commonwealth to structure revenue to pay for the collective needs based on gaming? Are we avoiding tough issues?
REV. RICHARD McGOWAN, BOSTON COLLEGE: We normally talk about tax policy in economics in terms of efficiency and equality. Tolls are an incredibly inefficient way, an incredibly stupid way to collect money to pay for a road. It would be much better to raise the excise tax, do away with all of the tolls. I will be driving to Philadelphia today. I won’t buy gas in Connecticut because it’s more expensive there but they don’t have tolls. Hypocritically I will buy gas in New Jersey but I will curse New Jersey as I pay the tolls on the Garden State parkway. In a way New Jersey is getting money from me and Connecticut is getting nothing. One of the things that has to happen is do we really want states to compete with one another on tax policy? I doubt they smoke a lot more in New Hampshire. We all know what’s going on. There is the real dilemma. You are competing with states for revenue. At the same time rationally speaking you would love to make the roads toll free but raise the excise tax. But you probably wouldn’t. One of the things we have to ask ourselves if this revenue will help. There is no doubt about that, unless the taxpayers are willing to pay for other things. By the way, it’s easy for me to say, I don’t pay taxes.
JONAS: I was struck at the governor’s press conference by his focus on the economic development impact of this. He had said earlier that he didn’t want to talk about this as part of the state budget. I detect a conscious effort to show we are not groveling for revenue to fund the needs of government. He wrapped in the casino plan yesterday with his initiatives in life sciences and ed reform. He suggested they are all part of an effort to promote economic vitality. Does that add up?
BOSLEY: It doesn’t for me. I have been looking at this for 11 years. I am a liberal Democrat. I love to spend money. I’d love to say this is a painless way to get revenue. It’s not. If you put something big in an area and plop it down, people will go there. Clyde Barrow (UMass Dartmouth) said there is $1.5 billion in revenues. There’s not a billion and a half dollars sitting in people’s pockets. It’s being spent elsewhere in the economy. It takes revenue from other things. There is only so much revenue in the economy. It alters people’s economic activity. I grew up in the Berkshires. In Connecticut, you used to talk about building boats along the coastline. Now it’s about gambling, it’s Mohegan Sun and Foxwoods. It does change economic activity and it does redirect things and we have so many cultural institutions and facilities and tourism opportunities and this does redirect activity. Every other state that has done this, bar none, has started with limits. Illinois put riverboats in. They restricted how many people could go out. No ATM’s. Maximum bets. Then they put ATM’s in and took off the $5 limit on games and the $500 limit and then they just anchored them. It continues to grow no matter where it is. New York was told $400 per day per machine for slots at the tracks so they put them in. Now they get $112 to $193 per day per machine. They said what’s up? The gambling interests said your tax is too high and we need more machines. They had just started this. That takes more money out of your economy. It sucks the oxygen out of investments in other things. It’s really the tipping point.
JONAS: Tim Cahill, can we set clear limits on it, like no other state has done? Can it be part of the economic development mix?
CAHILL: It’s imperative to do it right. I have trust and faith in the Legislature and the governor that it will be done right. We can learn from what other states have done. The governor has said three separate locations and said this is not a panacea. We should not promise that cities are going to be rejuvenated. It is not the whole answer. If people want to spend their money on gambling, who are we to tell them they can’t? We just want to provide a good setting, an upscale setting so we are not preying on the poor – we are not trying to attract low-income people. Obviously, if all this money is being spent at casinos and we have no casinos here, it’s new money if we have them. It’s definitely new money. The state and the city of Boston invested $800 million in the convention center. We’re attracting people. It still needs a subsidy but we are attracting people. This is a way to attract more people. The key is to get them to spend more money while they are here. I agree this is a great state for tourism and culture. Culture can only get you so many places. I worked at the Adams National Historic Site as a tour guide. History buffs would come by and would love it. Other people would say please get me out of here. It’s just not enough for everybody. What we are proposing is an entertainment complex in this gambling is a part of. I don’t see too many people outside the gambling interests looking to invest $1 billion in one part of the state. We don’t have that. We are talking about a billion-dollar investment in biotech. That’s state money. We are trying to foster the investment. I think it’s a good idea. That state made a big pitch to the film industry. They are making films here. I don’t know how much revenue we are getting. It’s a good idea, but if we are giving things out there has to be money coming back in. We have film and biotech industries and a gaming industry and they can all fit together. We in the 90s put all our eggs in the high tech basket and paid an enormous price by becoming overly reliant on one sector. We don’t do that in the pension fund. We invest in a diversified way. This is part of a regional economic development strategy. I think it makes sense. You have people willing to pay hundreds of millions of dollars in licensing fees, and willing to build hotels and shopping centers. We can’t get them to come to western Mass or southeastern Mass or north of Boston without the lure of casinos. We can learn from Illinois and Atlantic City. The beauty of not being the first out is you don’t have to make mistakes. Even if we say no, we have two Indian tribes that are pushing very hard. Connecticut was forced to act by the federal government and the courts. They have two Indian tribes where they get not revenue other than the slot revenue and they missed a huge opportunity. If we do nothing, it will be here and we won’t get the benefits we get under the governor’s proposal.
MCGOWAN: Indiana made their tax rate on casinos one half of the Illinois tax rate. Indiana said come over here. So there is a competition here. What’s really unique about Patrick’s proposal is he is really stressing the economic development. It’s something our friends in the Legislature will have to think about. Is there economic development? Yeah. The other thing to ask is are we going to use the money the right way? There is another proposal to privatize the turnpike. What would you do with that revenue to make sure that long term you’re just not paying off bills?
JONAS: What are we going to do with the revenue? Tim Cahill, in this morning’s Boston Globe, has a piece and talks about combining the revenues from gaming and dramatically reducing reliance on property taxes and delivering money to cities and towns. The governor is talking about taking half the proceeds and sending them to homeowners in a property tax credit. I heard $200 on the radio and he talked about preventing people from moving and attracting people. I wondered if the marketing was maybe overselling. It does nothing to change the stress on cities and towns and the cost structure and spiraling demands for dollars on health care, pensions, energy costs. There is no real reform there and it’s easy to imagine demands on money and cities and towns going back to taxpayers. Half of this revenue, it’s really hard to say it will be an investment.
CAHILL: I didn’t make a promise to get elected to reduce property taxes. The governor did. There is a danger of trying to split this money up too many different ways to satisfy too many constituencies to get the votes together. You can lose a lot of the impact. We have a long history of returning money to cities and towns. Overall it has been well spent. The majority goes to education, public safety and infrastructure. I have trust in elected mayors and city councilors and selectmen. They are at the ground level. I believe in local control. Cities and towns are what make us a strong community. You spread the money out to every community. The Middleborough piece took care of Middleborough but it ignored Carver and Plymouth. They can’t negotiate with everyone. That’s why the state has to take control so we can look out for the interests of all people. We can look out for the interests of all communities. Local aid has a built-in constituency. We can solve a lot of problems on local roads, on local education and on making sure we are safe by getting money back to cities and towns. The biggest challenge for treasurers is there will be an impact and a tradeoff as Dan said, but whatever impact it has, you add the money to cities and towns. Cities and towns can then decide do you want to cut taxes or do we want to provide more services. The more money we can give them the less they have to go back for those override to provide basic services and then we are doing our job. For 35 years, the commitment of money going to local aid has stayed constant because of the built-in pressures. I think that will stay constant with casinos. That’s the best way to broaden the positive impact on casinos. I understand the governor has different commitments and promises he made. The best chance for this to pass this in the Legislature is to make a commitment to 351 cities and towns. Then every elected legislator will have something to gain for his or her community. That’s important. That’s really, as much pressure is on the Legislature and state government, there’s more pressure on local communities. We have some high ideals and goals and they are all very good but to me, what makes this state work is the strength of cities and towns. If I had a vote, that’s the way I would vote. The best way to spread the economic wealth is to give money back to cities and towns.
BOSLEY: I don’t think a couple of hundred bucks is going to matter to most people. I think people will take a couple of hundred bucks and say thank you very much. Over 50 percent of the raw number of gamblers come from a 50-mile radius. Those are not new dollars. Everyone has a different choice of doing something with this money but you have to figure out if it’s real money or money being substituted for something else. It’s not new money. I see Rep. Brian Wallace is here. The film tax credits have been mentioned. That’s been extremely successful. Already we have films coming in here and we are going to make money off of that. I don’t know why we are calling this economic activity. The film industry is tremendous economic activity and it’s a clean industry. Those are the kinds of industries we should be encouraging. The Wampanoag has been mentioned. It’s mentioned that we will get them anyway. I disagree strongly with that. The sad thing about the governor’s statement yesterday was it indicates state support for casinos. That in and of itself hurts our arguments when we go to the federal government and say we don’t want to put land in trust in Middleborough. That’s not a done deal. It’s going to take them years. And for us to be able to say that we as a state don’t want that weighs heavily in what they do in the federal government. We’ve just blown that. We’ve blown that now. I don’t think it was inevitable to say that we are going to have Native American casinos in Massachusetts. I don’t think it was. It wasn’t in 1996, the first year we got involved in this. I don’t think the Aquinnah Wampanoags put on a full court press. Are Sol Kerzner and the investors going to stay in town for bingo slots in Middleborough? I would argue that they probably are not going to stay here if they can go someplace else.
JONAS: The governor acknowledged downsides of this, that people are harmed by this. Some issues in dispute emerge there. People talk about a tiny portion being subject to gambling addictions. Father McGowan, you said this is the Achilles heel of the industry. You have all positioned yourselves here as not moralizers. I want to force you to do that. Estimates show casinos derive a substantial amount of revenue from the small group of people who are problem or pathological gamblers. I see former Senate President Birmingham with us. He held the line on funding advertising for the Lottery. He saw it as almost ill gotten gains. Is there an inconvenient truth here that the industry can’t afford to reform these people who are the bread and butter or a sizeable chunk of what they are counting on?
MCGOWAN: The vast majority of a casino right now is slot machines. People like to, for some reason – I have no idea – to put money in them. That’s 80 percent of the space. There are people that in the industry they refer to as the whales who are big-time players and fly in and stay in hotel rooms. Whether Massachusetts can attract the whales, I tend to doubt that would be happening. Even in Foxwoods. Your typical player is in their 40s, with income a little higher. Casinos attract much more the middle class, much more than the Lottery. My father goes down to Atlantic City with $75. Is it a day of entertainment? Yes it is. Is that a bad thing? No. I am sure it’s part of the financial model . . . I am not downgrading the addiction problem but how we are dealing with that problem is going to be interesting.
CAHILL: It is a challenge. No question about it. I work with the Commission on Compulsive Gambling. I personally think the Lottery creates more problems for people who have addictions because we are right in front of people almost everywhere you go. There are almost 7,500 Lottery agents. This is more self-contained. We had this experiment when it came to alcohol. In the 20s, we tried to make it illegal – keep it away from people because of the problems people had – but realized we can’t force our people to live the lives we want them to live or would like them to live. We can’t force our own children. We just want to set up the right framework for them. Government’s job in this case is to regulate and to make available in a limited way for people who want to do it or are going to do it anyways. Even if we don’t do it, people are going to go to these places. They do it every day. They do it in enormous numbers. So we have an opportunity to control it in the way we want to control it. This is one way to bring in revenue to help solve a problem that already exists. Is it going to get worse? Absolutely. I am not denying it. I don’t think anyone is. We live in a free society. Gambling has been with us for thousands of years, illegally, legally. We funded the continental army back in the revolution with a lottery because we couldn’t get the taxpayers to pay for our soldiers. We can do it in a way that keeps us civilized and keeps the culture intact. We can try to keep some of the seedier and less positive elements out. We’re not going to keep them all out. We don’t do that with alcohol. We don’t ban cars even though they are one of the leading killers of people. People make the tradeoff in terms of convenience. The governor has laid out the best path for doing it right if we are going to do it. If we don’t do it, then we have to look for other alternatives. As finance officer, that’s what I have to look at is how do we pay for services that we have to provide, how do we meet the needs of our citizens without taxing them into New Hampshire or other states. There is a way to do it. We have come a long way since the days of the old Las Vegas. The challenge again is on all of us in elected office to do the right thing with everyone watching, with forums like this. I think we can. I know that the vast majority of people who are polled in the state want us to realize it, to allow it. They key for us is to do it right so we don’t hurt the state more than we help the state. It will in the end be a net benefit for the state of Massachusetts.
JONAS: Dan, what about folks who lose their shirt or their house? These are entertainment complexes, but when you drill down you find people funding these things with devastating consequences?
BOSLEY: The idea that we are going to structure this tightly and well . . . some day there will be a new treasurer and governor. Despite the best restraints we put on, we can’t bind future Legislatures to this model and the federal government. You can’t always control it. If I said let’s take speed limits off the roads, let people drive 100 miles per hour I know there will be more accidents, but let’s put more money into brain injury cases, people would say you’re nuts. We passed laws to say you can’t do that. To say some people are gaming in Connecticut and we have to deal with their addiction so let’s legalize it here – studies say compulsive gambling doubles within 50 miles of a casino. So we know there are going to be more cases. If that’s true, then why do that? About 70 percent of the take is slot machines. Those are not rich people going down there. You don’t have CEO’s from major corporations saying grab your coat we are going to play the slots tonight. It’s middle and low-income people playing those slots and providing up to 70 percent of the take. Those are people that naturally don’t have as much money and many become addiction. I got the reports they gave to the governor. I know most addictive behavior, according to chairman Ruth Balser, tops out at about 12 percent. Gambling addictions, they say around 3 percent. I don’t know if that’s true given that every other addictive behavior is higher than that. Even if you double the 3 to 6 percent, it’s a lot of money, forget the moral argument, to take care of a problem that you legislatively created.
JONAS: Dan, a little look ahead. All eyes are really on the House. The Senate president has voiced general support for casino gaming. Your position is clear and the Speaker is clear about his opposition. What’s going to happen? Are you going to see a groundswell? Are the members going to say they see it differently than folks like you or the Speaker?
BOSLEY: I can’t speak for the Speaker. We have been dealing with this in committee since 1996. We tear this apart. I take it very seriously. We need to tear the governor’s proposal apart, put it back together, see if it makes sense. We need to hold hearings, maybe one, maybe a series. We don’t know when the governor is going to file his bill. He hasn’t filed it yet. I don’t think there is a bill drawn up yet. He said he’s going to work on a proposal with the Legislature. It’s going to take a while for that to get hopefully to my committee. We will hold hearings and deliberate. Historically, every time we vote on casinos since 1996 in the House or slots, the opposition has grown in the House. We have done a tremendous job of educating members on all sides of this issue. We’ve tried to educate constituents on this. The treasurer is right – the majority of people want to have this but they are being told about property taxes and roads and that’s not a full discussion. We do that within the House. I think we had 101 no votes last time. There’s nothing new in this proposal. It’s always we will use this to pay for good things. For some reason, it always turns out that there will be three. Then the racetracks say we want some. Then it tops out at 12 before is collapses on its own weight. There will be a tremendous discussion in the House. There are people that don’t want casinos but want slots at the tracks. They are going to weigh in. I want to debate this as soon as we can because my position is very clear on this. There’s a lot of people we have to talk to. I don’t think it’s going to happen right away. I think it’s going to take months for us to deliberate, kind of chew on this, bring everybody in to talk to everybody involved.
SEN. SUSAN TUCKER: I want to thank MassINC so much for this important and engaging forum. I have a comment and question. The comment deals basically with the treasurer talking about this being like alcohol and people are going to drink. This is an industry that depends on addition for its resources. Why don’t we just promote smoking to use the extra tax on cigarettes to pay for public health problems? We are so worried about toys coming in from China. If two tires blow out, we recall them. If a medication harms three people, we take it off the shelves. This is a product that is designed to harm people and the state is not allowing it, the state is promoting it. That is the moral issue here. Not that gambling’s immoral. But how much are we going to depend on gambling in this state? We already get the second highest revenue from gambling than any state outside of Nevada. How much more are we going to have and in how many places? That is the argument. If an industry said we are going to set aside hundreds of millions of dollars to help the victims, we would say I am sorry, go away. That’s what they are doing here. That’s my comment. I have two racetracks on the border in New Hampshire that my constituents can walk to. They have purchase and sale agreements with casinos. New Hampshire has resisted casino gambling year after year after year but the legislators tell me that if we put them in, they are going to put them in, right on the Massachusetts border. What happens then to all that revenue that is supposed to go to Massachusetts when the people in the valley go to New Hampshire and feed those slots? Do we have to then lower the taxes? What are the dynamics of casinos on the border.
CAHILL: I don’t really want to touch it.
MCGOWAN: First of all, I don’t know where you got your facts that Massachusetts has the second most gambling revenue. That’s not even close. I’m just telling you right now. There are states . . .
AUDIENCE MEMBER: Name them. Name them then. Stop talking. Why don’t you name them?
SEN. TUCKER: New York has more.
MCGOWAN: What do you mean, by per capita?
SEN. TUCKER: I didn’t say per capita. We get almost a billion dollars in gambling revenue.
MCGOWAN: So what. Illinois gets almost $1.6 billion last year from casinos. How can you possibly say that Massachusetts gets the second most in gambling? That’s just totally wrong, totally wrong.
SEN. TUCKER: I have a chart.
MCGOWAN: It’s totally wrong.
BOSLEY: Part of a problem you have is the domino theory. Rhode Island made the argument that they had to recapture money that was going to Connecticut. The pressure really would be on New Hampshire if we act. This thing, it moves all the time. If other states get in because we are in, what does that do to the numbers on economic activity?
CAHILL: The reality is we do this all the time. We compete with states all the time. That’s why we are doing a billion dollars in biotech. We are trying to keep investors from going to California, which has a $3 billion biotech initiative. This is a reality we face. We face competitive pressures. They are taking our people in New Hampshire all the time by not charging an income tax. I understand the senator’s problem with it. It is what it is, to quote a very famous coach. The film industry got tax breaks because we are trying to get people to make films here. We do this all the time. We should not separate this because it’s gambling from other economic incentive activities, and the difference is here we are not giving anyone a tax break or committing any state money, at least we shouldn’t be. We shouldn’t have to invest state money.
AUDIENCE QUESTION: I am from Rowley. I hope part of the proposal will include an increase in the math curriculum to explain odds and statistics. If the bottom falls out of the biotech industry we have put money in to support, we will have buildings and infrastructure and another industry can go in there. If we don’t like this casino industry, we can’t get rid of it. It’s going to be there. How do we handle that?
CAHILL: I don’t know. Rep. Bosley is correct that this needs to be debated. We don’t have to rush to judgment. It should be heard by everyone. I grew up in Quincy and we went to Hull for entertainment, to Paragon Park, as adults and kids. It’s not there anymore. There are condos and other buildings. We don’t know what’s going to happen. When I grew up, again, people shopped downtown, in their city centers. Then they put them all in Braintree. Things change over time. We can look at how it’s worked and at Las Vegas and Illinois and states that have done it and where it has not gone away, like Connecticut. But there are no guarantees. There are no perfect solutions. It will change over time. Maybe there will be a Wal-Mart at the casino. There are people that don’t like that – the big box retailers have replaced the malls. It’s part of capitalism and the democracy we live in. We let the market determine and again, government is here to regulate to limit or control the adverse impacts like too much gambling and too many cars. There are no perfect solutions here.
AUDIENCE QUESTION: I am a city councilor from Taunton. We have Middleborough to the east and Taunton-Raynham to the north. On efficiency versus equality, it seems anecdotally that people of limited means spend more on the Lottery and casinos. Are we not taking money from my community and providing it for property tax relief to the Dovers and the Lexingtons?
MCGOWAN: It may very well be. It’s how the Legislature . . . You would think you would give property tax relief to towns who really really need it. The Lottery is a regressive tax.
JONAS: There really is not an appetite for taxes. That governor ran away from the idea of a gas tax. This is a form of bringing in new revenue. It’s a voluntary tax and that’s what makes it more palatable.
CAHILL: I am not running away from the revenue point. My job is to try to find revenue. It is a form of revenue and it is a voluntary tax. If people choose to go, no one is forcing them to go. Tolls don’t ask what your income is before they take. Sales tax is across the board and our income tax is flat. We are not choosing. There have been movements to make it more progressive and those movements have all failed. There is no perfect tax. If you asked the majority of people honestly they would say they just don’t want to pay any tax. It is a price we pay for a civilized society. Massachusetts is a very civilized state and we provide very good services on the whole. This is one part of the mix. It shouldn’t be dominant. We should not looking to become Las Vegas of the East. We are just looking to compete and to broaden the mix and get revenue from other sources and create some economic activity in parts of the state where we need to create economic activity, particularly southeastern Massachusetts and western Massachusetts.
AUDIENCE QUESTION: I am from Arlington and I am concerned about immense energy use at these casinos and the sprawl-inducing impact and all the cars driving to these things.
BOSLEY: Casinos in Las Vegas use as much power as Chicago does in one day. You can make them green but they still use tremendous amounts of energy. Look, I have been in the Legislature for 21 years and the first year we had 18.5 percent revenue growth. We were spending money like (someone in the audience said Democrats). I have been there for revenue decreases from the year before. When the economy goes very well and more people work, we make more money and there are more people paying taxes. There is no great mystery to this. If you want more revenue, have more people working. We need to grow that revenue. A lot of industries have sustained growth and if you want revenue growth, let’s put our emphasis on that.
CAHILL: I don’t think that it’s the right public policy to putting these on MBTA stops. We are trying not to entice people of modest or low incomes to play. I don’t know if you can make them green. There is no question that these are very big facilities that generate a lot of car traffic and use a lot of energy. It’s going to put more of a strain on those parts of the economy.
RICH ROGERS, GREATER BOSTON LABOR COUNCIL: Rep. Bosley, you contend there is no economic growth. I disagree. What about the money spent in other states and the 10,000 construction jobs that create tax revenue and the jobs with health benefits so many service workers don’t have to rely on indigent care?
BOSLEY: I think the auction fee alone is a very dangerous thing. The governor said we will use that to jumpstart infrastructure work and tax relief. It’s a one-time revenue, maybe every ten years, and you embed costs in the budget. That’s just bad economic policy no matter who you are. In so far as losing money to other states, of course we do but it’s not as simple as going down and counting cars in the parking lot. If we recapture every one of these people and count the costs too, it doesn’t make economic sense. Ten thousand jobs at Suffolk Downs would be important and I think we should do something over at Suffolk Down. But you can’t look at everything and say this is jobs so we have to do it. You have to think it through and how much it’s going to cost you.
