Operation Hidden Costs

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Gov. Rendell is using grossly inflated and misleading numbers to push casino slot parlors into neighborhoods. Industry studies never looked at the costs of casinos, only their benefits. We deserve the truth.

What are hidden costs?

Gambling brings about severe economic costs, even to those who never set foot in a casino. Those hidden costs to the city include the costs for policing, social service agencies to assist addicts, and prosecuting the rise of crime.

Further, casino slot parlors are being given special treatment by the government, such as exemptions allowing them to serve free drinks all days and all hours. Their introduction will cannibalize millions of dollars from the local economy — another hidden cost.

How much are the costs?

Gov. Rendell never calculated these costs or even explored them. Independent research verifies that his claims of the benefits cannot be trusted. His own financial watchdog agency said the cost of casino-related law enforcement might be as high as $200 million per year, yet he budgeted $0 for such law enforcement.

What is the campaign?

We want a real cost/benefit analysis — and if Rendell will not do his homework, then we will help him. The first step is identifying the areas of hidden costs and then estimating the financial cost associated with them. Once a full cost/benefit analysis is done, one can finally address the question: are casinos worth it?

Casino-Free Philadelphia’s Operation Hidden Costs has three specific objectives:

  • Get the governor to name at least seven hidden costs (we will help him with some examples).
  • Get the governor to put a price tag on those casinos and create a cost/benefit analysis from available data (if he will not do it, then we will).
  • Get the governor in a public debate on whether casinos are worth it, including his plan for how we will pay for the costs.

Governor Rendell says casinos will create 7,000 jobs in Philadelphia. SugarHouse casino sometimes claims 12,000 new jobs. The actual number of employees at a casino would be 1,100. And the only independent study shows a net loss of up to 5,900 jobs. Where do these numbers come from?

Studies funded by the casino industry assume that all of the jobs will be completely new. They assume casinos will not compete with other businesses.

In fact, those studies assume casinos will encourage people to spend more — an average of $270 per person after someone losses $60 in their casino.

That’s how 1,100 jobs becomes 7,000, or even 12,000 jobs. Governor Rendell makes that economic leap of faith.

Independent economists assume that casinos compete with local businesses and take revenue away from them.

But casinos, unlike family-owned restaurants, are not people intensive. Slot machines require fewer people to operate them. So when money goes from small-businesses to the casino, more jobs are lost. They conclude casinos will result in a net loss of jobs — from 3,000 to 5,000 per casino.

Some economists point out that for every dollar of profit at a casino, most of it is exported to investors who live outside of Philadelphia. Profit at locally-owned businesses goes to local wage-earners and therefore mostly stays in the city. But casino revenue is a major drain, sending millions of dollars to the out-of-state and suburban investors.

Shockingly, all independent cost/benefit analyses conclude casinos will be a net drain on the economy of Philadelphia.

It gets worse.

Casinos have hidden costs. But Foxwoods casinos’ “cost/benefit” analysis showed $0 of social cost. Governor Rendell, likewise, has never produced a balance sheet with any costs of gambling.

His budget currently assumes gambling will only incur 0.001% of the revenue costs. Ontario spends 2% of casino revenue on the human costs — that’s 2,000 times more.