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“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”

Board of DirectorsDonna Sytek, Chair

John B. Andrews

John D. Crosier, Sr.

William H. Dunlap

Sheila T. Francoeur

Chuck Morse

Todd I. Selig

Stuart V. Smith, Jr.

Brian F. Walsh

Kimon S. Zachos

Martin L. Gross, Chair Emeritus

StaffSteve Norton, Executive Director

Ryan Tappin

Cathy Arredondo

Gaming Commission Update12-1-09

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Prudent Calculations: Cost-Benefit

• Positive + Revenue to State: License

Fees+ Revenue to State: Tax on

Gambling+ Revenue to State: BPT

and BET+ Revenue to State:

Increase in Meals and Rooms

+ Revenue to Local: Property Tax

+ Economic Development Local: Construction Job

+ Economic Development: New Jobs

• Negatives – Revenue to State: Decrease

in Meals and Rooms (cannibalization)

– Revenue to State: Gambling/ Lottery Substitution

– State Expenditures: New Regulatory structures

– State Expenditures: Competition for funds

– Economic Development: Branding

– Economic Development: Cannibalization

– Gov Expenditures: Policing– Social Costs: New Crime– Social Costs: Pathological/

Problem Gaming

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Gaming as a Field of Study

• Focus on gaming has intensified during the 90s a ‘young’ literature.

• Attempt to find peer reviewed work in journals with no specific ties to pro- or anti-gaming interests.

• In the end, will have to rely on triangulation method, using multiple sources, not always peer reviewed.

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The Extent of Gaming in New Hampshire

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Propensity to Gamble

National Data• Gallup (2007) – 66% of

the population ‘gambled’ in some fashion in the last 12 months. – Lottery Ticket: 46%– Visited Casino: 24%

• ESRI Data– Gambled at a Casino: 17%

• Propensity to gamble seems to have declined over the past 4 years.

New Hampshire• New Hampshire

(Barrow)– Any in last 12 months:

56%– Lottery Ticket: 42%– Casino: 21%

• ESRI Data– Gambled at a Casino

in last 12 months: 17.3%

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Who’s Gambling?

• Slots– Female (61% of all)– 50 to 59 (21% of all);

21 to 29 (20% of all); 40 to 49 (16% of all)

– Some high-school education (35%)

– $75,000 to $150,000 (29%); $45,000 to $75,000 (28%).

• Table Games– Males (85%)– 21 to 29 (28%);

30 to 39 (24%)– Bachelors + (43%)– $75,000 to $150,000

(39%); $45,000 to $75,000 (20%)

Clyde Barrow: “Playing the Odds II”

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Average Visits to ‘Local’ Casinos

• Massachusetts– 1,133,564 visitors to Foxwoods (3.3 visits per

year)– 850,173 visitors to Mohegan Sun (2.7 visits

per year)

• New Hampshire– 95,667 people to Foxwoods (1.7 visits per

year) – 105,233 people to Mohegan Sun (2.0 visits

per year)

Barrow: Playing the Odds II

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NH Residents gambling outside of NH

• In 2007, estimates suggested that New Hampshire residents spent $79.3 million at New England’s Gambling facilities, indirectly paying $11.3 million in Gambling and sales taxes to CT, RI and ME (source: UMASS/Dartmouth 9/16/2008)– $46 million at Foxwoods– $30 million at Mohegan Sun– $2.5 million at Twin River (RI)– $0.2 million at Newport Grand (RI)– $0.8 million at Hollywood (ME)

• Does not include Gambling outside of New England (Atlantic City, Las Vegas)

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Legal Wagering by New Hampshire Residents

$261

$225

$128

$80

NH Lottery NH Racing NH Charitable NE Casinos

Millions o

f 2008 D

ollars

NE Casinos data based on analysis by Barrow (University of Massachusetts Dartmouth)Remainder from Lottery, Pari-Mutuel Commissions

Estimate

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Estimate of Existing Problem Gaming

• Pathological, Problem, At-Risk primary vehicle through which social ills occur.

• NORC (2000)– National estimate– Pathological: 1.2%– Problem:1.5%– At-Risk 7.7%

• Schaeffer and Hall (2001)– National estimate– Pathological: 1.7%– Problem: 3.7%

• Barrow (New England, 2007)– Pathological: 0.6%– Problem: 1.0%– At-Risk: 6.1%

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Current Gambling Revenues

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Revenues to State

• NH Lottery• $75 million ($261 wagered -$186 in prizes and expenses)

was distributed to education trust fund in FY2008.• NH Lottery Revenue declined by 1.1% from 2007 to 2008.

• Charitable Gaming/Racing after expenses collected.• State: Simulcast wagering - $2.1m; Live Racing - $0.2m;

Bingo - $1.3m; Games of Chance – $0.6m • New Hampshire charities received over $11.6 million

dollars (including Bingo and Lucky 7) to further their causes in 2008 from all charitable gaming.

• Gambling Tax (2009) - The Gambling Winnings tax is estimated to yield $5.9 million in FY2010, $7.9 million in FY2011 (from HB1)

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Charitable: Games of Chance

LIC. NUMBER GAME OPERATORTOTAL

WAGERINGRETURNED TO

PLAYERSSTATE

REVENUE CHARITIES

OPERATOR FEES AND

OTHER EXPENSES

E0005 GRANITE STATE POKER $20,270,970 $15,132,389 $332,420 $1,805,541 $3,010,680E0002 SEACOAST FUNDRAISING $14,147,047 $10,167,166 $245,438 $1,395,451 $2,341,191E0009 UNIVERSAL GAMING $6,652,903 $4,285,863 $114,857 $857,011 $1,421,214E0010 NEW HAMPSHIRE CHARITABLE GAMING, LLC $1,572,481 $1,018,337 $37,659 $197,860 $328,175E0003 CASINO GAME RENTALS $1,467,492 $1,068,263 $23,596 $139,853 $235,280E0001 BELMONT GAMING $1,210,653 $750,367 $29,733 $161,388 $269,165E0006 LOCAL YOKEL $124,149 $72,285 $2,383 $34,022 $15,509E0018 NEW ENGLAND GAMING & CONSULTING, LLC $113,214 $74,188 $4,315 $13,679 $21,033E0011 VAL'S VEGAS VISIONS $74,445 $57,925 $974 $10,960 $4,586E0016 NH POKER, LLC $1,856 $881 $104 $341 $531

OTHERS $153,164 $88,717 $2,035 $21,289 $6,206 Total $45,788,374 $32,716,381 $793,514 $4,637,395 $7,653,570

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Gaming Revenues

NH State Revenue from Gambling

0

10

20

30

40

50

60

70

80

90

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Mill

ion

s o

f $

LotteryRacing

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Gaming Revenue as a % of State Unrestricted Revenue

New Hampshire Lottery and Racing Revenue as Percent of Total Revenue

10.6%

9.7%

8.6%

7.1%

7.9%

6.9%

7.6%7.6%

5.5%

6.1%6.4%

7.0%7.0%

5.9%5.9%

4.5%

5.3%

6.6%6.6%6.2%

6.6%

3.7%3.5%3.6%3.4%3.6%

3.4%

3.9%3.7%

3.4%3.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Education Trust Fund Created

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Stability of Revenues in New Hampshire

Year Over Year Change in Revenue Sources (By Month)

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Jul-0

6

Sep-0

6

Nov-0

6

Jan-

07

Mar

-07

May

-07

Jul-0

7

Sep-0

7

Nov-0

7

Jan-

08

Mar

-08

May

-08

Jul-0

8

Sep-0

8

Nov-0

8

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-0

9

Month

% C

ha

ng

e R

ela

tive

to P

rio

r Y

ea

r's M

on

th

General FundsBusiness TaxesMeals and RoomsSweepstakes

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The Northern New England Market

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Future Revenues

• Industry methods for generating revenue estimates are sophisticated.

• Recent declines reflect market saturation or economic decline? • New vs. Old gambling: NH’s ability to cannibalize existing

gambling in Mass, etc…• What’s the market?

– Varies depending on the type of facility• How nice is the facility Capital investment • Casino vs. Racino Casino’s have a broader draw

– A function of action of other players (Massachusetts)– Implications of possible change in federal law regarding

internet• Impact of ‘Less Aggressive Machines’ • Impact on Meals and Rooms (cannibalization)

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Gaming Facilities in the Northeast

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• Total population in circle is 2.6 million. 

• Total NH population in circle is 678,000. (about half state’s total population).

• ~26% of total population in circle is NH residents.

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Drive Times From Salem, NH

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Drive Times for Berlin, NH

Lincoln, RI

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Drive Times for Seabrook, NH

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Overlapping Markets of Existing Proposals (30 Mile)

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Further Work

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Social Costs

• Crime– Grinols and Mustards is the gold-standard though not without

methodological issues as noted by Walker. – Triangulate?

• Grinols and Mustards (8% increase)• Edmonton study (4% increase)

• Social Costs – What is a social cost and who bears the burden of that social

cost (family, economy, community, government)– Pathological gaming increase occurs– Geographically isolated

• Who bears the burden? – Massachusetts and New Hampshire (and VT and Maine)

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Economic Development

• How big? – Hosp? – Manufacturing?– Gaming ?

• Short term– Simulations a function of initial capital investment

• $130 m fewer jobs• $250 m more jobs

• Long term– More jobs– 75% not high paying

• Cannibalization of other (retail) activities– Direct competition (e.g. new restaurant)– Indirect competition (e.g. competing for each discretionary dollar)

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NH’s Brand

• More information needed.

• What effect would a 5% increase in crime have on the quality of life in NH? – Move us from #1 to #2? Or from #1 to #10?

• Is it possible to have Casinos without losing NH’s brand?

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Regulatory Environment

• Local Referendums: (only town or surrounding towns)? • Existing Regulation

– What rules are there about restriction on political contributions? – Lottery Commission– Pari-Mutuel Gaming Commission

• New Structures– State owned– Is the existing regulatory structure sufficient

• Regulation of slot machines– ‘Less Aggressive’ machines

• Controlling Proliferation

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Critical Variables

• Economic activity, discretionary spending and consumer confidence.

• Decisions made by Massachusetts and Maine

• Phasing

• Do we really have sufficient information to estimate cost/benefit?