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Tue May 21, 2013
Whether A Casino Brings Big Bucks To Businesses Depends On These Factors
Whether a casino would be a boon for businesses in Salem depends on a number of factors. Based on anecdotal evidence from a trip to Washington County, PA, these are a few important ones.
1. Is your business a restaurant or shopping mall within a half mile of the casino?
2. Does the casino bring in out-of-town visitors?
3. Are casino employees local residents?
To get the whole story, have a listen:
Geraldine Pajak and her friend Pauline Stripp feed dollar bills into a Gladiator-themed slot machine at The Meadows in PA.
Pajak spends about $100 here about once a week. That’s $5200 a year. $3500 of that goes to the state and local governments through taxes. The rest goes to the casino.
But does any of Pajak’s money make its way to local businesses? In Salem, that’s Bakery owner Brian Costa’s biggest concern. He’s just not sure what a casino would mean for his business:
It all depends on what the casino ends up doing. Is there going to be a hotel? Is there going to be a restaurant? Is there going to be coffee? Desserts?
In Washington County PA, there are two kinds of businesses really making bank from casino visitors – other than the casino itself. There’s the Tanger Outlets, which opened one year after the casino, in 2008, and the seven big hotels that have popped up along Racetrack Road – like the Courtyard Marriott.
Before I meet Tara Morrow – the hotel’s Sales Director, I see her black hummer. Morrow says here in natural gas country, she’s just showing her Western Pennsylvania pride:
Yeah, I mean we’re in Washington County, home of the gas and oil,
Natural gas industry workers fill a lot of rooms at the seven hotels a stone’s throw from the casino. But the majority, Morrow says, are here for the casino. She says five more hotels are being built nearby this year – one of them at the casino itself. The competition, Morrow says, doesn’t really concern her.
Obviously there's demand in the area and it’s going to keep growing, so yeah I have a little concern with more hotels being built, but I think in the summer, we're going to need them.
Right now, the Meadows doesn’t have its own hotel. Millennium’s plans for Rockingham Park, however, do include an on-premise hotel.
Washington County’s tourism office reports that visitors spent $78 million dollars on lodging in 2011 – an increase of 15 percent from 2010. Direct tourism spending also increased: by 48 percent after the casino opened. Visitors to the county spent $451 million in 2007, and $670 million in 2011.
Numbers like that put dollar signs in the eyes of Salem Commercial Real Estate developer, Joe Friedman.
Well the people that work there and that go there need services such as medical services, legal services, engineering services, retail services, so there is definitely a spillover effect for all the businesses in Salem, and New Hampshire.
It’s not clear if a casino would drive private growth in Salem. A 2006 report from the Federal Reserve Bank of Boston looks at casinos nationally. It states that casinos will only bring money into local economies if they draw customers from out of town. That’s a major sticking point in the statewide casino debate.
In Salem, many business owners are optimistic about a casino. But some – especially in the entertainment industry – are concerned. T-Bones restaurant owner Tom Boucher believes Millennium will build a convenience casino, something attractive to locals only. But if a casino did bring in out of towners, he still doesn’t think the Salem branch of his franchise would benefit.
Because the casino is certainly going to have a restaurant, and they will have an advantage over any restaurant, because of the monopolistic advantage they have with slot machines, which enables them to offset the cost of food and drinks.
Millennium Gaming tries to placate people like Boucher by offering customer rewards in the form of gift cards to local businesses. In Pennsylvania, the Meadows Casino has given a cumulative $3.3 million in locally redeemable vouchers. The casino’s owner, Bill Wortman, recently promised to extend this program to Rockingham Park. He addressed a large crowd in the former racetrack’s Belmont Room:
It could be restaurants, it could be other things, we have a car wash, we actually in one location we have a college that takes tuition credits.
But one independently-owned restaurant near The Meadows in Pennsylvania hasn’t felt the love. Since the casino opened at the racetrack, Martin Troy’s Timberwood Grille and Pub has been hurting:
Patrons and people who worked at the track, drivers, trainers and grooms. They’d stop in, have a couple drinks, grab a meal or something else, which really just doesn’t happen now.
That’s probably because employees eat for free at the casino.
But getting casino employees to spend money around town may be key to spreading casino profits to nearby businesses.
A second finding from the same Federal Reserve Bank of Boston report shows that casino visitors generally don’t shop or eat around town.
Rather, their money enters the local economy from the pockets of the people who serve them – casino employees.
Millennium Gaming’s projections put about 1300 employees at a Rockingham Park casino. That’s similar to their PA operation. At The Meadows, General Manager Sean Sullivan says more than half of his employees are full time.
The combined payroll is over $30 million, And if you include benefits it’s over $50 million.
And Sullivan says the average salary is $43,000 not including tips or benefits.
It's what we consider family-sustaining opportunities.
On top of that, Sullivan says, the casino spent $58 million last year for goods and services in PA, $19 million directly in Washington County.
New Hampshire’s pending bill puts no requirements on how casino developers spend money. But in Massachusetts, towns have agreements with developers requiring they hire local residents, and buy products and services in town.
Whatever the details, Salem developer Joe Friedman says a casino is right for Salem. He explains, the town’s insignia says it all:
The seal for the town of Salem says industry, recreation and commerce.
But whether a casino is written in Salem’s destiny… right now, that’s in the hands of lawmakers.