Net Economic Impact of a Southern New Hampshire Casino

The Numbers Turn Negative

The New Hampshire Center for Public Policy Studies revenue and cost assumptions for a $500 million Southern New Hampshire casino (now showing a rather paltry net state benefit of $48 million per year) should be modified to account for:

• A likely lower tax rate on slot machine "net machine income." The Center calculations assume a tax rate of 39%. The rate in Rep. Stepanek's amendment is 40%. The tax rate proposed in Massachusetts is 25%. The rate in Connecticut is 25%. The weighted average US casino tax rate is 22%. It is highly likely that the NH rate will drop to 30% or below.
• A likely Northern Massachusetts casino. Steve Norton testified to the House Ways & Means subcommittee on 9/27 that he would not be surprised to see a Northern Massachusetts casino proposal (i.e. Lowell) emerge, which will further reduce revenues.
• Use of midrange cost per pathologic gambler data from the peer-reviewed literature.

The Center used what it termed a "conservative" cost per pathological gambler per year of $5,143. The Center's social cost calculation is based on its estimate that a single Southern New Hampshire casino would increase the number of pathologic gamblers who are state residents by 5,424.[1] Dr. Earl Grinols, the nation's best-known and widely published academic gambling impacts researcher, presented a summary[2] of published gambling cost studies to the Commission, showing an average cost per pathological gambler of $12,125.

A substantial part of this difference is the Center's decision to exclude "abused dollars," a cost category used in nearly all peer-reviewed gambling cost research, and which comprises over 25% of the annual costs per pathological gambler. The Center's estimates do include the cost of crimes such as theft and burglary but not "abused dollars" -- which is often gambling money stolen or taken under false pretenses from family and acquaintances -- which would otherwise have been reported as a crime. Both are involuntary transfers of property from a victim to the gambler, and there is no basis for the distinction or the exclusion of abused dollars as a social cost.

If the average of cost per pathological gambler used in published studies were used rather than the Center's number, costs for a single southern New Hampshire casino would rise by about $38 million per year.[3]

Assuming reduced revenues resulting from a 25-30% tax rate competitive with Massachusetts, a Northern Massachusetts casino, and average cost per pathologic gambler from the published literature, the net economic impact of even the best located New Hampshire casino falls to well below zero - an economic loser for our state.