1.23.08
Detroit has no luck with casino trio eyed by Deval
By Dave Wedge http://www.bostonherald.com/ Local Coverage
By Dave Wedge http://www.bostonherald.com/ Local Coverage
DETROIT - Three Detroit casinos similar to those proposed by Gov. Deval Patrick have fallen about a half-billion dollars short of initial projections and created thousands fewer jobs than predicted in what could be a stark warning to Massachusetts.
In 1998, developers, politicians and casino proponents promised that three Detroit casinos would rake in up to $1.8 billion but in 2007 the gaming parlors took in $1.335 billion, according to the Michigan Gaming Control Board.
A Michigan state senate report in 2000, meanwhile, estimated the casinos would create 10,500 jobs but so far the gambling venues have just 7,000 permanent workers. The same report predicted the city’s annual gaming haul would reach $1.4 billion by 2004.
The news comes as the Detroit casinos posted slight revenue increases this year yet also showed signs of significantly slower growth. Revenue generated by three Motor City casinos crept up in 2007 - from $1.303 billion to $1.33 billion - but growth was down four percent over the previous year.
The Herald had reported that gambling revenue at the city’s three casinos was down in 2007 but newly posted numbers that included December revenues showed an overall increase of about $30 million.
Still, Detroit City Councilor JoAnn Watson said the casinos have “created social and economic devastation” that has led to 20 percent of the city’s small businesses going “belly up.”
“There were a lot of promises made in terms of how the economy would improve and jobs, jobs, jobs,” Watson said. “But the circumstances in the aftermath of the casinos has been ‘Lord have mercy.’ The ballyhooed promise of prosperity has not occurred.”
Patrick’s controversial plan for two commercially operated casinos and one Indian gaming hall has been a reality in Detroit since voters legalized gambling more than a decade ago.
Revenue in 2007 was down about $450,000 at the Greektown Casino, but up slightly at the MGM Grand Detroit and the MotorCity Casino, according to the state gaming board. All three casinos have either recently completed or are in the midst of massive expansions that will include more gaming space and hotel rooms.
The luke-warm numbers sound a warning for Patrick’s headline-grabbing 2009 budget plan, which calls for $300 million in casino license fees to pay for schools, public safety, transportation and much-needed tax relief.
“What I’ve seen is there’s only a finite pot of gambling money that people have,” said former Michigan Rep. Allen Lowe, who opposed Detroit’s three-casino plan. “I don’t know that economically we’ve seen much of a boon here.”
Michigan state Sen. Alan Cropsey, a vocal casino opponent, said the slowdown in Detroit shows the market is “tapped out.”
“This really is taking money out of the local area and putting it into the casino owners’ pocket,” Cropsey said, adding that it’s “foolish” for a government to rely on gambling revenue.
Kofi Jones, spokeswoman for Patrick’s economic development secretary Dan O’Connell, said the governor’s panel looked at several regions with casinos, but “no one model alone formed the basis of the governor’s legislation.”
“We are confident that our plan will meet its projections,” Jones said.
Revenues aside, the impact of the Detroit casinos has been questionable as the city remains severely blighted, with entire blocks of vacant, boarded-up buildings infesting surrounding neighborhoods.
“They ruin the city,” said Detroit autoworker Mark Hauswirth during a recent visit to the MotorCity Casino. “People blow all their money. It don’t help nobody but the people who own them.”
Howard Berenbom, who runs the online magazine Casino Detroit, said the casinos have been “disappointing,” mainly because a plan to spur local development by locating them all on the Detroit River never materialized. Still, Berenbom believes they’ve given the city a boost.
“It brings in jobs and revenue,” Berenbom said. “The negative is that some poor people go and gamble and a lot of people can lose.”
Michigan politicians pushed through legalization by focusing on how much local money was flowing to casinos across the Detroit River in Windsor, Ontario, much like Massachusetts’ drive has been fueled by concerns about tourism dollars going to Connecticut casinos.
Article URL: http://www.bostonherald.com/news/regional/general/view.bg?articleid=1068406
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