Study Questions Benefits Of Slots

Low Pay At Tracks Depresses Salaries In Nearby Areas, Journal Says

August 05, 2009|By Hanah Cho | Hanah Cho,hanah.cho@baltsun.com

As a slots license selection commission evaluates bids for slots licenses in Maryland, a new study has found that facilities that provide both racing and casino activities create low-paying jobs that depress salaries in surrounding areas.

The study by Ball State University examined West Virginia's so-called racinos - horse or dog racing facilities with casino games - during a 26-year period and found that counties with such gambling operations saw a one-time employment gain of 1.1 percent, while the average salary in the area fell by as much as 2.9 percent because of the prevalence of low-paying jobs.

Although only one of four bids under consideration in Maryland is a racetrack operator, the study's author suggests casino-only operations also could lead to similar outcomes.

Two bidders, however, disputed the study's findings, noting that their projects would create good-paying jobs with benefits that would not otherwise exist.

The study, appearing in the latest issue of The Journal of Economics, found that the average salary of racino employees is less than $14,000 a year.

Donald C. Fry, chairman of the slots panel, said the group will consider business and market conditions, economic development and location when awarding a slots license.

"Certainly, we want to see that economic impact and [that] new jobs are created," Fry said. Licenses could be awarded this fall and the first slots parlor could be open 16 to 18 months later, he said.

Michael Hicks, the study's author and director of Ball State's Center for Business and Economic Research, said policymakers should carefully scrutinize the economic implications of expanding gambling as more states consider such a move to shore up their coffers.

Maryland voters approved last year a referendum to legalize slots, with proceeds to help save the struggling horse racing industry and fund public higher education.

"The economic [benefits] to a region that gambling supporters seem to suggest is not really borne out of the data; data on racinos or any other type of gambling facilities," he said, noting he does not object to gambling. "There isn't a huge economic boost because they're offering employment for lower-paid workers."

But James Karmel, an associate professor of history at Harford Community College and a consultant for the Maryland Gaming Association, said other studies have shown higher compensation for casino workers.

For instance, a recent report examining gaming in Massachusetts, whose income and other economic indicators Karmel says are more comparable to Maryland than West Virginia, found that the average salary for employees is $35,000.

"I'm guessing that the average wage levels and average incomes in West Virginia are lower than Maryland," Karmel said, who blogs at gamingatlantic.com.

Of the four racinos in West Virginia, one is Penn National's Charles Town Races and Slots, which is popular with Marylanders.

Penn National also is the sole bidder for the Cecil County license, one of five locations statewide approved for slots. The commission also is reviewing applications for parlors to be built in Baltimore, Anne Arundel County and on the Eastern Shore.

Eric Schippers, Penn National's senior vice president of public affairs, disputed the study's findings, noting that the average employee at Charles Town makes $40,000 a year.

Schippers anticipates its bid for Cecil County, if approved, would create about 550 construction jobs as well as 600 full-time jobs associated with the casino operations. The average salary would be $40,000.

"What's exciting about this project for us is that we think it'll bring additional third-party investments in this area and help capture some of the gaming patrons who are crossing the border to Delaware and Pennsylvania and repatriate these benefits for Maryland," he said.

Jonathan Cordish, vice president of The Cordish Cos., which wants to build a 4,750-machine slots parlor near Arundel Mills Mall, said in an e-mail that using West Virginia's wages as representative of Maryland or elsewhere is flawed.

Cordish cited a January study by the University of Massachusetts, which found that gaming workers without a college education at casinos enjoy higher pay and better benefits than workers in non-gaming jobs.

Cordish said its project would create 2,500 construction jobs and 1,500 casino-related jobs with benefits.

"Our project will lead to significant spin-off economic benefit for the region, as well as over $30 million per year in new taxes revenues to Anne Arundel County and over $400 million in total gaming taxes statewide," he said.

Other bidders for Maryland slots licenses did not return phone calls or could not be reached Tuesday.

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