ONE YEAR LATER, HOLLYWOOD SLOTS
PORTLAND - One year after opening its new casino in Bangor with 1,000 slot machines, Hollywood Slots has failed to live up to its promises to revive both harness racing and the local economy, according to an analysis by CasinosNO!
In every category, the rosy predictions and forecasts by gambling promoters that casinos are "engines of economic growth" have not come true. Figures for the Bangor area show that since Hollywood Slots began operation in 2005, unemployment is up, crime is up, addiction is up and retail sales are down. Furthermore, evidence of the "substitution effect" - the claims by opponents that casinos only move money from one segment of the economy to another rather than create new opportunities - is clear.
"Any objective analysis of the data would be hard pressed to show any meaningful economic or social benefit from Hollywood Slots," said Dennis Bailey, executive director of CasinosNO! "I can't really say 'we told you so' because the truth is the evidence is worse than we even thought it would be."
An examination of the data in several categories shows the following:
Harness Racing: The most significant justification to voters for allowing a gambling casino in Maine was that it would revive a dying industry - harness racing. While it's certainly true that the owners of race tracks and horse breeders have received a healthy subsidy from the slots revenue - allowing them to continue their way of life - Hollywood Slots has done nothing to revive interest in the sport. Fewer and fewer people are attending or betting on harness racing events. According to the Maine Harness Racing Commission, the "live handle" - the amount of money wagered on live harness racing in Maine - has fallen consistently year after year - from $7.7 million in 2003 to just $4.7 million last year. "Saying that Hollywood Slots has revived the harness racing industry would be like saying we've revived the shoe industry because we've put all the shoe-shop employees on welfare," Bailey said.
Unemployment: The unemployment rate in both Bangor and the Bangor Labor Market began creeping up even before the recent economic downturn and continued to rise after the opening of Hollywood Slots, from 4.6% in July 2005 to a high of 8% in March 2009, according to the Maine Department of Labor. (It now stands at 7.4%) It should be remembered that while Penn National, the owner of Hollywood Slots, brags of creating 500 jobs in Bangor, it purchased and closed the former Miller's Restaurant, putting close to 100 people out of work, before converting it to a temporary slots parlor. It then purchased and tore down the Holiday Inn (100+ employees) and the Penobscot Inn (75 employees) before constructing its new facility. While Bangor's unemployment rate is slightly below the state average, there is no indication that Hollywood Slots has had a measurable impact on employment in the Bangor area.
Retail Sales: In 2007 - two years after Hollywood Slots opened its temporary facility - retail sales declined in Bangor by $13 million after several consecutive years of steady growth, according to figures compiled by the State Planning Office. While this would seem to confirm studies that show that the introduction of casinos cause a reduction of spending in other retail areas, more analysis is needed. The collapse of the housing and construction markets in Maine and the nation has slowed retail sales in numerous markets. "But it's safe to say that Hollywood Slots has had no discernible positive impact on retail sales in Bangor and has failed to make the area immune from the economic downturn that is affecting areas of the state that don't have a gambling casino," Bailey said.
Meanwhile, downtown Bangor restaurants are not seeing any benefit from Hollywood Slots. In fact, a February 2009 article in the Bangor Daily News chronicled the fate of eight restaurants that had recently closed their doors or reduced their services. (See Eatery Signs Bad Omen for Bangor, by Renee Ordway, Feb. 27, 2009)
Substitution Effect: The best evidence of the so-called "substitution effect" or cannibalization of other businesses due to the advent of slot machines is to examine how other gambling operations have fared since the introduction of Hollywood Slots. According to several accounts, charity bingo games and other games of chance have suffered as more gamblers are drawn to the lure of slot machines. Michael Hurley, who runs a company in Bangor that provides bingo hall supplies to nonprofit organizations in eastern and northern Maine, told the Ellsworth American, "This racino is killing me." Hurley said his business declined 20% shortly after Hollywood Slots opened in November 2005.
Similarly, the Penobscot Indians have suffered losses of up to $200,000 a year in its high stakes bingo game since the opening of Hollywood Slots, reducing the state's share of revenue from $150,000 to just $3,800. Sales of Lottery tickets in the Bangor region have dropped nearly 20% - even when they've increased everywhere else in Maine - since Hollywood Slots came to the area. And in an ironic example of how the big fish eat the little fish, the state's off-track-betting parlors - which were put in place in 1991 to "save" harness racing - are in financial trouble themselves due to the racino, the latest "solution" for the dying harness racing industry.
George Kerr of Old Orchard Beach, a commercial property owner and co-owner of the Sanford OTB, told CasinosNO! in 2007, "Everybody's losing money, they (gamblers) are all going to Bangor. All the handles are way down. Everybody wants to play the slot machines."
"Gambling dollars only go so far," Bailey said. "During the campaign for the racino, nobody mentioned the fact that setting up a racino would only compete with existing gambling outlets which only serves to reduce the state's cut from other games like the Lottery and OTBs. These revenue losses to the state are never deducted from the rosy figures presented by Hollywood Slots to show its actual contribution to Maine."
Crime: In 2006, the first full year of operations at Hollywood Slots, the crime rate in Bangor increased 22% - the biggest increase of any city in Maine, according to figures compiled by the Maine Department of Public Safety. The increase in Bangor's crime rate came at a time when the city's population actually declined and followed two years of steady decreases in the city's crime rate. Part of the increase was due to a sharp rise of larceny, which includes embezzlement, from 1,304 cases in 2005 to 1,633 in 2006 - an additional larceny almost every day. Penobscot County as a whole saw only a slight increase in crime, from 29.7 offenses per 1,000 residents to 32.3 offenses; however nearby Brewer saw its crime rate rise more than 15%. Bangor's crime rate increased again in 2007 (although not by much) while the crime rate in Brewer showed another sharp increase (figures for 2008 are not yet available). By comparison, the crime rates in Maine's two largest cities, Portland and Lewiston, declined.
Bangor officials were quick to say that the increase in crime had no connection to Hollywood Slots and blamed the increase on drugs (even though numerous Maine communities have problems with drugs but saw their crime rates go down in the same period). The increased crime rate also ran counter to predictions by the general manager of Hollywood Slots who told the Bangor Daily News in 2006 that the casino would likely cause a decrease in crime. "I have never seen gambling lead to an increase in crime," said John Johnson. "Unemployment creates crime. When you bring in economic development to an area, crime goes down. The slots facility is part of that."
"Johnson was wrong on two counts," Bailey said. "Unemployment has gone up along with crime since Hollywood Slots opened in 2005."
Several incidents that were connected to Hollywood Slots are noteworthy. A convenience store manager from Trenton was arrested and charged with stealing $23,000 from his employer and losing it all at Hollywood Slots. A 41-year old woman was sentenced to three years in prison for stealing $43,000 from elderly patients at a Bangor facility where she worked and gambling it away at Hollywood Slots. A Portland apartment manager was charged with stealing $260,000 from tenants and gambling it away at Hollywood Slots and other gambling venues.
In addition, the story of a woman in her mid-50s who lost more than $100,000 at Hollywood Slots, drained her pension fund and jeopardized her marriage after becoming addicted to the slot machines found its way into Legislative debates over expanded gambling. (See One Woman Finds Lure of Slots Can be Costly, by Meg Haskell, March 21, 2007) A decorated soldier committed suicide, following a gambling binge at Hollywood Slots, an incident that led to the introduction of legislation in Congress to ban slot machines at US military installations.
Addiction: More than 100 people have voluntarily placed their names on a "self-exclusion list," giving the management of Hollywood Slots permission to kick them out if their addiction compels them to show up to gamble. And they do show up - in wigs and disguises to try and enter undetected, according to the management of Hollywood Slots. And while the state continues to maintain that few people are calling its gambling hotline, calls from Maine to the National Gambling Addiction Hotline have soared - from just 118 in 2004 to over 1,000 last year.
"If Hollywood Slots has helped the economy, where's the evidence," Bailey asked. "There's no question that some people are getting rich, but it's not players at the casino, residents of Bangor or the state of Maine."