Will state’s bet on Encore casino pay off? We’re about to find out
The Boston area has staked its future on a heady blend of life science, finance, health care, high tech, and higher education. And that bet has paid off handsomely, with a post-Big Dig renaissance and downtown building boom that show little sign of abating.
Now another long-term wager is about to show its payoff: the opening of the area’s first Las Vegas-style casino along the Mystic River in Everett on Sunday.
One of the largest private construction projects in the state’s history, the $2.6 billion Encore Boston Harbor resort has replaced a grim, polluted stretch of waterfront with a curved bronze glass palace of 671 hotel rooms, 15 restaurants and lounges, and a massive casino ringed by flowers and trees. It also brings more than 5,000 jobs and a wellspring of tax revenue to the state.
But perhaps more important is the potential for an even bigger jackpot down the road. Wynn Resorts officials envision their company and others building yet more venues, shops, and hotels, joining the bustling Assembly Row across the Mystic to create a massive social hub that could further cement the entertainment and tourism industry’s place among the pillars of the region’s economy.
“We’ve opened up the waterfront for the first time in 100 years,” Encore president Robert DeSalvio said. “I think there’s a great opportunity here to use this as a launchpad. This is a great opportunity for a business in America to change a neighborhood.”
But as critics have maintained all along, the Encore project carries substantial risk as well. Traffic, already at crisis levels, will only get worse. With the Northeast currently home to a number of casinos, with more on the way, the market could quickly hit a saturation point, the businesses will suffer, and the promised tax revenue will come up short.
And inevitably there will be a pernicious downside: In an industry where the odds are stacked in the house’s favor, some gamblers will lose far more than they can afford.
“More gambling opportunities could lead to more gambling problems,” said Dr. Timothy Fong, a psychiatrist and codirector of the UCLA Gambling Studies program, who said gambling addiction can be “brutal,” with immense money loss, broken families, and even suicide.
“When you introduce gambling into a community, you can mitigate problem gambling by implementing science-based prevention and treatment — Massachusetts is doing this, which is really good,” Fong said, praising the state’s research on gambling problems and programs to help people stop betting before they get into trouble.
Marlene D. Warner, who leads the nonprofit Massachusetts Council on Compulsive Gambling, said before casinos opened in the state, surveys showed that about 2 percent of residents had a clinical level gambling disorder, while another 8.4 percent exhibited problematic behaviors or were susceptible to such a disorder.
Those numbers are unusually high, she said, raising the concern about a casino that so many people can visit so easily.
“Those are pretty astronomical numbers prior to a casino opening,” she said. “We are expecting to the see the rate spike for a while and then we are expecting the rate to level off.”
The council is promoting good gambling practices through a program called GameSense, which has hired 13 people to work inside Encore, helping gamblers understand odds and learn key strategies.
“One of the best things you can do is not sit in front of the machine or the table for hours, but get up and take a walk outside,” Warner said.
The state also has a voluntary self-exclusion program, which bans a person from the gaming floors of all Massachusetts casinos for as long as they choose.
Casino officials say they take problem gambling seriously and train employees to notify supervisors of customers who seem to be in trouble so they can be connected with support.
“We do not want anyone who has any sort of problem with gambling to spend any money on that casino floor,” DeSalvio said. “It is not in our best interest at all. We want to make sure that they a) stay out, and b) that they get the necessary help that they would need.”
Lawmakers determined the benefits of casinos outweigh the social ills. They passed a sweeping expanded gaming act signed into law by then-governor Deval Patrick in 2011. The decision went on the ballot in 2014, and voters affirmed they want casinos here.
Under the state’s casino law, Massachusetts receives 25 percent of gross gaming revenue from Encore and MGM Springfield, a casino that opened last year.
Wynn Resorts, the Las Vegas company that owns and operates Encore, projected in 2014 that the Everett casino’s gross gaming revenue would be about $800 million in its first year of operation and top $845 million in its third. State budget officials, meanwhile, are anticipating a more modest opening, of $542 million in gross revenues from July 1 through June 30, 2020, with $135.5 million of that going to tax payments.
DeSalvio said Wynn Resorts isn’t changing its projections but did note that casinos take time to find their groove.
“We think of this first year . . . as a way for us to really work on developing a database, meeting new customers, and building the business,” DeSalvio said. “Historically, our business has shown that these properties can take as much as 12 to 18 months to ramp up.”
For the state, $135.5 million would be a substantial but not transformative sum in the context of a $43 billion annual budget. Plus, because the money is being divided 12 ways as required by law — from aid to cities and towns, to transportation, to education — its effect is diluted.
Casino revenue is “not a panacea,” said Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, a fiscal watchdog group. “Nor will it solve the Commonwealth’s long-term fiscal challenges by any stretch,” though it could help fund new or supplement existing services.
By the same token, the casino may not apocalyptically worsen congestion in the area, if only because traffic is already so bad.
“We are the most congested region in the United States,” said Somerville Mayor Joe Curtatone, a longtime opponent of casino gambling. “That will have, and is having, a detrimental impact on our environment, public health, our ability to expand business, our quality of life.”
But opening a casino, he said, “is not the cause of our congestion.”
Eric Bourassa, a transportation specialist with the Metropolitan Area Planning Council, likened the additional volume to a large retail plaza with big box stores and restaurants. He praised the job the casino has done to mitigate the traffic effects that include a massive campaign to convince patrons to use public transit but noted those efforts were largely at the behest of regulators.
Others said that the casino could have only so much effect in a state of 7 million people and an economic output of $600 billion.
“It’s just like any other business,” said Clyde Barrow, a political science professor who closely follows the gambling industry in Massachusetts. “I suspect in a short order of time, people will not even think about it any more than they think about the Walmart down the street.”