Friday, June 20, 2014

The foolish man builds his house upon the sand. (Tunica, Mississippi edition)

I’m one of those folks who cast a dubious eye on casino gambling as an economic panacea.

Not that I have any great moral objection to gambling. Even though I understand the odds, and would probably be embarrassed to admit I had a ticket if I ever ended up winning more than the seven dollar max payout I’ve hit on one occasion, I’ve been known to buy lottery tickets. At the gym, I buy a Super Bowl Square and always submit my March Madness ladder, which I will have either created based on whether I “like” one college or university better than its opponent, or borrowed from my friend Sean who actually thinks about the brackets. And, if I happen to be in a casino, I will be willing to blow a roll of quarters on the slots.

But that’s about it.

My lack of personal interest in gambling does not, however, translate into Carrie Nation-like disapproval of gambling.

Sure, it’s plenty unsettling and disagreeable to see “fixed income” seniors pushing their oxygen bottles around the floor at Foxwoods or Mohegan Sun, no doubt squandering their Social Security checks on keno or whatever. But that’s entertainment.

What I really don’t like about gambling is when people act as if it’s some fabulous sustainable job creator.

Massachusetts is now going through some casino-awarding contortions, which I haven’t paid much attention to. It’s not as if I’m going to be spending any time in these casinos, wherever they end up plunking them. As for New England’s existing casinos, I did go once to either Foxwoods or Mohegan Sun. I was passing by with my sister Trish and our friend Shelly, and we popped in, burned through our quarter roll, depressed ourselves at the sight of all those oxygen-cylinder-pushing seniors, and left after 15 minutes.

With this as backdrop, I certainly wasn’t surprised to read about the failure of Harrah’s Tunica Casino, which is located in northwestern Mississippi. In early June, after 18 years in operation, its last one-armed bandit swallowed a roll of quarters, the last chip was placed on red 31, the last croupier raked in the chips. Or whatever it is they do in casinos. (Most of what I know about what goes on in there comes from watching Casablanca.)

The Tunica Miracle — as boosters called the coming of gambling to what had been an isolated, economically moribund slice of the Mississippi Delta — is over. A boom that peaked with 13,000 jobs has slid into a struggle for survival.

The first casino opened on a riverboat docked at a remote river landing in 1992. With people lining up, more casinos came, building glitzy resorts in Tunica County’s northern end, as close to Memphis, Tennessee, as possible. In the first full year after Harrah’s began operation, casinos in Tunica County won $776 million from gamblers. The peak came in 2006, when revenue reached almost $1.2 billion.

But increased competition and a recession that drained patrons’ pocketbooks began to bite. In 2013, Tunica’s casinos took in about $700 million. (Source:

While a couple of smaller casinos will remain open, the overall casino-employment is less than half of what it was at the peak, and gambling tax revenues – which funded public service jobs and infrastructure improvements – are also getting sliced.

Yes, the recession didn’t help Tunica any. Nor, I suspect, did it’s location in the back ass of nowhere. Okay, it’s close to Memphis, but still... Casinos on the Gulf Coast – which also offers goodies like beach and shrimp – are doing well.

What really clobbered Tunica, and is the real crap shoot-ness behind the casino-as-an-economic-miracle fallacy, is that fact that casinos, with their easy money aura, tend to beget other casinos.


In the early days of Mississippi gambling, there was little competition, with patrons trekking from Oklahoma, Missouri and elsewhere. But those and many other states have casinos now. In recent years, competition has gotten even closer to home, with Southland Park Gaming and Racing in West Memphis, Arkansas, luring many traditional Tunica patrons. Southland won $142 million from gamblers last year, more than an average Tunica casino.

BINGO, as they say in the church hall on Thursday afternoons.

There’s a finite number of gamblers out there, as the Connecticut casinos are going to find out when the Massachusetts casinos open. And as Massachusetts will figure out when Vermont (okay, Vermont would be far fetched) decides to open a casino at the base of Killington.

Gambling is just not the industry you want to bet on for your area’s economic future. Yet, like gambling itself, it certainly has a certain lurid lure. Hey, it’s a lot easier to “get” than biotech. And I guess you do get those couple of good years of construction jobs, followed by casino-based employments.

Still, any region that’s gambling on casinos saving their economy is placing a pretty foolish bet. The smart money’s on industries that are more sustainable.

1 comment:

Rick said...

My favorite economist of all time is Frederic Bastiat (1801-1850). One of his wisest thoughts is that in economics one must look not only at what is seen, but also what is unseen.

Casino supporters will claim that X number of new jobs will be created at a proposed casino. Their claims may even be true (unlikely, but possible,) but that wouldn't be telling the whole story. Those jobs would only exist because visitors bet and lose enough money to the house such that the house can pay the wages of those workers and still have a decent amount left over for profit.

The money that was lost - did that float down from the sky and fall into the hands of the bettors just before they walked into the casino? No, it came out of their income and savings. The money that is lost in the casino is money that the bettors no longer have to spend somewhere else. The businesses that no longer get the bettors' money have to cut their expenses by around the same amount, which means laying off workers and/or cutting their pay.

The X number of new jobs that exist at the casino will almost certainly be balanced off by X number of old jobs lost elsewhere in the area. The casino jobs are the "seen", because they are easily counted and identified, the jobs that get lost elsewhere are "unseen" and uncounted, because when one more store at the mall closes, one can't say for certain that it closed because of a casino opening up 25 miles away. Yet the money that goes to the casino company definitely comes from somewhere.

When casinos were rare in the country, the job gains were focused in Vegas and Atlantic City, and the equivalent losses were spread so widely to be completely unseen. Now that they are common, and most business comes from locals, the losses will also be close to home.