How much would a slots parlor have to pay you to open in your backyard? Worcester is debating that question, as Chicago-based casino operator Neil Bluhm seeks to operate in the city’s Green Island neighborhood. There is good and bad in gaming, but putting Massachusetts’ only dedicated slots parlor into a vulnerable area of Worcester — a city that hopes to emulate Seattle, but is at risk of being Buffalo — seems as dangerous as drawing to an inside straight.
I’m enough of a libertarian to believe in allowing people to gamble, but we must also acknowledge and plan for the downside of that freedom. When gamblers jeopardize their life savings, or blow through funds that should be spent on their children or elderly parents, then losing at the tables becomes more than a private matter. Heads they win; tails, public programs bear the costs of impoverishment. Call me a paternalist, but we should steer gambling away from poor communities — not concentrate it in places like Green Island, where the median household income is about $25,000.
Yet the very poverty that makes such a neighborhood vulnerable to slots-related risks also makes it more attractive to casino developers. Poorer areas have cheap land, such as Worcester’s Wyman-Gordon industrial site, which has been vacant for years and is full of environmental hazards. Poorer places are more likely to be swayed by the promise of a few casino jobs and a modest payment to their local governments. The presence of a large low-income population within walking distance may even provide the casino with a core customer base.
For its part, Worcester should be very wary about embracing a slots parlor. One extensive study of Native American casinos by economists William Evans and Julie Topoleski found that employment rose in communities after casinos opened, but the bulk of jobs went to outsiders. And compared with full-scale casinos, slots parlors are capital intensive, not labor intensive — which is to say, they depend far more on machines than on human workers. An operator that needs workers with skills tailored to specialized machines seems unlikely to hire from the local neighborhood.
Moreover, the work of Evans and others finds considerable downsides to gambling. Bankruptcies and property crimes, such as auto theft, rise after a casino opens. Another study documents that alcohol-related auto fatalities increase in counties where casinos open. Unsurprisingly, several studies find that new casinos increase the prevalence of problem gambling.
These problems, which some communities might view as manageable, are more worrisome in Worcester, a former hub of industrial innovation that perpetually teeters on the brink between information-age success and rust belt failure. After losing one-fifth of its population between 1950 and 1980, Worcester has experienced a modest renaissance since then, adding population and economic activity because of immigrants and universities — two pillars of modern urban growth. Human capital is the bedrock of urban growth, and Worcester’s rich endowment of colleges means that 30 percent of the city’s adults have at least a college degree. Worcester is a gateway city, providing opportunity to the foreign born who are priced out of Boston, and one-fifth of its population today was born outside of the United States.
The future of Worcester depends on attracting the skilled and ambitious, with a pleasant, inexpensive city that is close to Boston’s economic dynamo. How does a slots parlor contribute to that goal? Rising traffic and crime levels could just as easily make the city less appealing to families and businesses looking for a more affordable, relaxed place.
Massachusetts entered into gambling to raise casino-related revenues that were otherwise going to Foxwoods and Mohegan Sun, just as Singapore built a massive casino complex to steer some money away from Macau. But savvy Singapore imposed an $80 tax on any of its own residents who wanted to enter the casino, because the city-state was so worried about gambling’s social costs. Shouldn’t Worcester be at least as frightened as prosperous Singapore?
Theoretically, a slots parlor operator could make the city an offer it can’t reasonably refuse. If the slots parlor offers, say, $100 million per year, Worcester should take the deal. That’s enough cash to make noticeable improvements to schools and public safety — and balance off the social costs of gambling. But if, as seems likely, the proposed payment is far smaller, Worcester should walk away. The city should recognize that urban success is made by long, slow investments in education and entrepreneurship, not the shiny spin of a slot machine.
Edward L. Glaeser, a Harvard economist, is director of the Rappaport Institute for Greater Boston.