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Report Challenges a Favorable Gambling Study Prepared for the Greater
Cleveland Partnership; Claims Shallow Research Conclusions and Flawed
Economic Assumptions Made for Supporting Casino Gambling in Ohio
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August 24, 2005 - The Ohio Roundtable today released a detailed analysis of the gambling study prepared for the Greater Cleveland Partnership and a select group of business leaders. The Roundtable criticized the Cleveland State College of Urban Affairs for publishing a report that they state was clearly biased and focused on manipulating voters.

Roundtable President David Zanotti and Legislative Affairs Director Melanie Elsey wrote the five-page analysis that challenges what they say are the shallow research conclusions and flawed economic assumptions of the Greater Cleveland Partnership/Cleveland State University report. The Roundtable also questioned whether a tax-funded University such as CSU should be publishing research for undisclosed clients whose motives are to change the laws of Ohio for potential personal profit.


A Review of the 2005 Greater Cleveland Partnership Study on Casinos for Ohio

Prepared by: The Ohio Roundtable
David Zanotti, President/CEO
Melanie Elsey, Director of Legislative Affairs

The "study" produced by the Maxine Goodman Levin College of Urban Affairs at Cleveland State University is packaged to bear the credibility of a serious work of research. However, the work carries a profound bias from start to finish. It is a bias that matches the special interests of the undisclosed corporate leaders who paid for the study.

The following brief analysis raises serious points of factual contention regarding the work commissioned by The Greater Cleveland Partnership and "Selected Cincinnati Area Businesses".

Who chose the "three important questions" regarding casino gambling in Ohio and why were just these three questions selected?

The study claims to be directed toward the purpose of helping "leaders and voters understand the social effects of opening casinos in the state." Why would any legitimate economic or sociological impact study be targeted directly to Ohio voters, unless it is designed to be used as a campaign tool by the sponsors?

Thus, in the very first line of the Executive Summary, this study is self- defined as part of a political movement to influence Ohio voters on the issue of casino gambling. This raises a bigger ethical/legal question: Are the taxpayers of Ohio, who help underwrite Cleveland State University's College of Urban Affairs, being used to pay for the private profiteering of a secret group of pro-casino business leaders?

Three questions are proffered as the basis of the study; all relating to the social costs of problem and pathological gamblers if 18 casinos opened across the state. By choosing to focus only on one of the complicated economic, political, legal, tribal and historical questions surrounding the gambling debate the authors have marginalized their own work.

"Existing and Future number of Ohioans with Chronic Gambling Problems"

In this section the authors fail to present a clear, logically consistent approach to the three questions they offer. They begin by quoting a range of gambling addictions that is static at 2% to 5% of the adult population. The rising rate of gambling addictions among teenagers is completely disregarded in their projections. They project only a 1% increase in addiction should Ohio, which has no casinos operating today, open 18 facilities in the next few years. Their 1% increased projection is a total guess. There is no statistical validation for this projection.

The authors concede 18 new casinos "could lead to an additional 109,000 residents becoming serious problem gamblers". The authors walk away from this conclusion as if it bears no real-life tragedy. It is simply a number, and most likely a low number at that.

The authors fail to even mention the substantive data compiled by the University of Michigan, Harvard University and the National Research Council for the United States Congress. (See the National Gambling Impact Study Commission Report Table 4-2, http://www.ohioroundtable.org/gaminginfo/NationalGamblingStudy2.pdf). There is also substantial and readily available information from the real-world experiences of communities that have tried the casino gambling experiment. None of this data is considered by the Cleveland State report. An honest review of this data reveals the projected 1% increase in gambling addictions is anchored in thin air.

"Chronic Gambling and Personal Financial Issues"

Consider the abundant contradictions in the following language of the CSU report:

"People with gambling addictions do have higher debt levels and are more likely to file for personal bankruptcy protection. However, a statistical link between the presence of casinos and personal bankruptcy filings has not been found."

This language bears an eerie likeness to the writings of the tobacco companies in the 1960's and '70's. Because the CSU professors cannot find a study to statistically isolate the reality of the data, they play the mind game of ignoring the obvious - even after stating it exists.

Back in the late 20th century the tobacco companies said it this way. "We see that smokers die more often from cancer and lung disease than the rest of the population. But some smokers die of other causes so you cannot prove in any study there is an isolated, direct, one-to-one correlation between smoking and cancer and lung disease. We simply need more money and time for research."

The CSU study says it this way. "We see gamblers have real problems with addictions and social costs. They even go broke and kill themselves more than the general population. But science cannot prove gambling is the cause. Therefore, we need more money to help problem gamblers. The best way to get the money is to open 18 casinos in Ohio. More gambling will help solve more gambling problems."

"Chronic Gambling and Social and Health Problems"

After conceding, "People with gambling addictions are more likely than non-gamblers to have committed a crime or to have been incarcerated during their lifetimes", the authors state there is no connection between casino gambling and crime. They fall back to the discredited strategy of blaming increased crime solely on the increase of people that gather around a casino. Evidently, the authors have never ventured off the Boardwalk in Atlantic City or spoken to law enforcement veterans in that casino-dominated city.

Regarding health problems among problem gamblers, the CSU study disregards significant data from the Congressional National Gambling Impact Commission Report. (Table 7-1, http://www.ohioroundtable.org/gaminginfo/NationalGamblingStudy.pdf). In a clear case of Orwellian double-speak the authors concede problem gamblers suffer from greater "physical ailments, suicide rates, higher divorce rates, and increased levels of family abuse" but then go on to claim there are no studies that "isolate the causality" between these maladies and problem gambling. What further evidence does the CSU team require to validate the connection between these problems? Are they waiting for a "gambling suicide gene" to be discovered in the brains of dead gambling addicts?

How would the CSU team account for the suicide of police officer Solomon Bell, who gambled at the tables of the MGM casino in Detroit? The officer went into the casino, lost his money, pulled out a gun and killed himself right there on the property. The casino cleaned up the mess and kept on doing business. The same attitude of isolated denial seems evident in the CSU study.

"Chronic Gambling and Societal Costs"

The authors reject any causal link between problem gambling and the horrific problems gambling addicts experience. Therefore, the CSU team states, " ... it is not prudent to fix a net cost figure on the higher levels of problem gamblers in the state."

In other words, we cannot ignore the facts these problems exist but we cannot "scientifically" prove casino gambling plays any role in the problems. Therefore, we will pretend there is no real dollar figure associated with the human costs of casino gambling. Casino gambling will cost something, but we cannot project what it will cost so we will pretend the costs do not exist.

"Chronic Gambling and the Cost to Ohio"

In a crescendo of prejudicial bias the CSU research team offers a patronizing sop to the taxpayers and victims of gambling disorders. Since gamblers have problems, we must pay for the problems. Therefore we must open 18 casinos in the state so the state will have enough money to help gamblers with their problems. The researchers are clueless as to how to fix a net cost to these problems but demand Ohio raise enough money to treat the affected individuals.

The logic here is circular. We need at least 18 casinos in Ohio to pay for all the problems gambling addictions create. Forget attempting to solve the problem at the source and save 109,000 more people the horror of an addicted life. Just find a way to "service" their problems with increased gambling revenues.

State of Ohio Gaming Market Assessment - Executive Summary

This section of the report is a further attempt to distort economic facts of the casino business. The report is inaccurate in the following points:
 

1) It uses the Harrah's study on the Profile of the American Gambler but fails to acknowledge the report is a telephone survey not an actual accounting of the real trade numbers of a single casino in America. In citing more than "2 million Ohio casino visits in 2002 and 2003" the study does not reveal how many visits were repeat visits by Ohioans - hiding the gambling industry's darkest secret, that it thrives on the creation of problem and pathological gamblers.

2) On page 5 the following statement occurs: "Ohio is charged with many of the costs associated with casino gaming and receives none of the benefits." In the first five pages of the study the authors consistently denied any quantifiable costs directly linked to casino gambling. Suddenly they change their tune by blaming other states for turning Ohioans into addicts with significant social costs. Their solution? Ohio must immediately open 18 casinos so we can pay for the costs casinos in West Virginia and Indiana are creating for Ohio.

3) On page 6 the researchers make a statement that is stunning. To make their casino plan work they acknowledge they must "seal the borders" to keep Ohio gamblers gambling in Ohio only. Yet there is no scientific study that reveals any state has ever succeeded in sealing their borders to traveling gamblers. Such an unrealistic objective calls the balance of all their economic projections into question.

4) Again on page 6 the economic formula requires attracting new visitors and increasing spending from existing visitors. The research on regional casinos proves time and again that most casino players are "locals" not "visitors". At best Ohio can hope for "day trippers" from nearby border states but the competition is fierce and busses travel to and from Ohio. This unrealistic expectation runs contrary to the well-know market facts of regional casino gambling.

5) The authors concede there will be a "redirection of existing spending within Ohio" but offer few solutions to the problem. At best they imply Ohioans who lose their jobs because of the casinos could get a job in the casinos. This is very important because the authors are establishing a baseline of gambling from Ohioans that is much higher in 2008 than the $925 million they claim Ohioans are currently gambling. The increased gambling revenue of $2.975 billion by 2008 means $2 billion will leave the existing Ohio economy and flow into the casinos. How many jobs will be lost as that $2 billion dollars disappear from the local consumer economy?

6) "Maximize the competitive position and viability of Ohio race tracks and casinos" is another criteria on page 6. This type of language is regularly used by casino lobbyists to strong arm state legislatures. Tax breaks and reductions, increased facilities and fewer regulations are all part of keeping casino owners "competitive" and profitable.

7) On page 7 the study announces the "winners and losers" in the grand casino design. No mention is made of any commission or legislative body that will direct location, licensing and fees. The seven racetracks are given automatic consideration regardless of geography or history. This is a direct challenge to the Ohio Constitution which requires a uniform operation of laws across the state. By granting an automatic casino license to racetracks the state will be eliminating competitive bidding and creating a preferred monopoly for racetrack
owners.

8) The estimates used to bring Ohio and 18 casinos into the year 2008 are most intriguing with $2.975 billion coming from the local economy. But if other states are working to "seal their borders" as well, how will Ohio casinos top $4 billion in revenue by 2008?

9) In the height of irony the study concludes that with $4 billion in new casino gambling in Ohio the casinos will only provide $610 million in direct tax revenue. It is not clear how this money will be divided between the state and local communities. Even assuming all $610 million went to the state - casinos in 2008 would fail to provide as much money as the current Ohio Lottery. The lottery consistently produces over $650 million to Ohio on roughly $2 billion in annual sales - half the total revenue projected in the CSU model.

10) The CSU model is completely silent on the tribal controversy currently raging across Ohio. Terry Casey, spokesperson for the Eastern Shawnee tribe, is enthusiastically promoting the CSU study for one simple reason: The tribe fully understands that if Ohio installs a single slot machine in a racetrack or casino, the tribes can claim Ohio has crossed the federal threshold and has become a class III gambling state. Once that happens tribes will fight in courts for Ohio lands solely for the purpose of opening casinos. Once Ohio is a class III state under the federal law (IGRA) it will be very difficult to stop tribal casinos from opening. Tribal casinos are not obligated to pay a penny to state or local governments in taxes and operate as sovereign nations. The CSU projections are being made in total disregard to the very real problems created for commercial casinos and local governments by tribal casinos. This fact alone renders the CSU study virtually useless in the current legal and political climate in Ohio.

Summary

It is obvious that the research team from Cleveland State directed their efforts toward creating a positive spin for casino gambling in Ohio. Their work is similar to studies created by accounting and PR firms hoping to influence voters in the 1990 and 1996 statewide ballot campaigns. The economic and legal issues surrounding casinos have grown far more challenging as the casino industry battles the tribal community for limited gambling revenues.

Pro-gambling researchers and advocates consistently inflate the "lost revenue argument" to the Ohio media. In reality, there is nothing Ohio can do to stop residents from traveling to gamble wherever they choose. "Sealing the borders" is an unworkable and anti-constitutional concept. Opening 18 casinos in Ohio will drain at least $2 billion more gambling dollars from the Ohio consumer economy. This is money that is NOT being gambled today but is being spent on homes, food, cars, consumer goods, college tuition, charitable purposes and entertainment.

If every Ohio gambler stayed home today and only gambled in Ohio casinos, according to statistics from the gambling industry, the net gain to the state of Ohio would be approximately $300 million annually. That is a mere 1.2% of the current state budget.

The potential owners of the Ohio casinos would make billions but state and local communities would be left with a fraction of the proceeds - hardly enough to restore any economy let alone pay for the serious downsides recognized by all honest researchers of the gambling industry.



 
 
Summary of Gambling Study Prepared for the Greater Cleveland
Partnership and a Select Group of Business Leaders

Studies Show Potential Economic Impact, Social Costs
of Legalized Casino Gaming in Ohio 

August 24, 2005 - Ohio's leaders, lawmakers and citizens now have solid information to determine whether legalizing casinos is a good idea for Ohio. The Greater Cleveland Partnership and some leaders from the Cincinnati business community today released the findings of two studies they commissioned to examine the statewide economic and social implications if casinos were to come to Ohio.

The studies, representing the most comprehensive analysis of the gaming issue undertaken in more than a decade, were done by researchers at Strategic Partner Management Consulting and the Maxine Levin Goodman College of Urban Affairs at Cleveland State University.

Significant study findings include:

  • Ohio residents are already participating in games of chance and skill in and around Ohio
  • Ohio dollars are leaving the state, generating tax revenues and jobs in other states
  • Social costs of Ohio's problem gamblers are borne entirely by limited lottery funding ($350,000 a year)
  • Social costs of gambling are not insignificant; over the lifetime of the adult population, 109,000 additional Ohioans could become problem or pathological gamblers
  • Potential revenues from casinos at 11 surrogate locations and the seven current horse racing tracks are an estimated $4.071 billion a year, resulting in about $610 million per year in state and local tax revenues
  • Casinos could generate $3.7 billion in temporary construction output (41,000 construction jobs) and generate and leverage a total of $8.2 billion in annual operating output (85,000 operating jobs)
  • Best practice approach to gambling prevention and treatment could cost $29.7 million a year
The model used by the researchers places an emphasis on major metropolitan areas, seals off Ohio's borders to reduce the number of Ohioans traveling to a casino in a neighboring state and seeks to avoid situations where Ohio's casinos would compete against each other. The study is not a specific proposal for casino gambling locations in the state, nor is it an endorsement of casino gaming in Ohio. Additionally, no attempt was made to determine the potential use of gaming revenues or the appropriate regulatory structure.

"We consider this study a first step in assisting citizens and leaders at the state and local levels in reaching sound policy decisions about gaming in Ohio," said Joe Roman, President and CEO of the Greater Cleveland Partnership. "It is important that we arm ourselves with facts when making decisions critical to the future of Ohio."

Now that the studies are complete, leaders across the state can take time to consider the findings before taking a position on the legalization of casinos in Ohio.

For additional information, including the complete published studies, an archived copy of an informational webcast that includes questions and answers with the researchers, and other documents relating to the study, go to http://www.ohiogaminginfo.org/.

CONTACT: 
The Greater Cleveland Partnership
Amanda Marko
+1-216-592-2250
oramarko@gcpartnership.com
http://www.ohiogaminginfo.org
http://www.clevelandgrowth.com


 
 
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Contact:

Patty Marountas
Ohio Roundtable
+1-440-572-1796
http://www.ohioroundtable.org

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Also See: After Two Years of Study, Federal Commission Reports That Gambling Has Serious Consequences for America / June 1999
Is Gambling America's National Pastime? The American Gaming Association Makes a Case for It / June 2004
Comments on the Gaming Industry: Big and Getting Bigger / Dr. Charles F. Urbanowicz / April 1999 


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