Baltimore is a troubled city, as you know from The Wire. Like many troubled cities, Baltimore has turned to casino gambling as its solution. On August 26, a new Caesar’s casino will open on the site of an old chemical factory, a little more than 2 miles from the famous Inner Harbor and Camden Yards baseball stadium. Yet there’s already reason to expect the casino to disappoint everyone involved: the city looking for tax revenues, the workers hoping for jobs, the investors expecting hefty returns.
Outside of Las Vegas—now home to only 20 percent of the nation’s casino industry—casino gambling has evolved into a downscale business. Affluent and educated people visit casinos less often than poorer people do for the same reasons that they smoke less and drink less and weigh less.
Unfortunately for the casino industry’s growth hopes, downscale America has less money to spend today than it did before 2007. Nor is downscale America sharing much in the post-2009 recovery. From a news report on the troubles of a recently opened Ohio casino:
Ameet Patel, general manager of the property, says the softness in casino revenue that he and other operators have seen has been driven by a key demographic: women older than 50 who used to bet $50 to $75 per visit. The weak recovery has squeezed their gambling budgets, and their trips to casinos are fewer, he says.
What’s true in Ohio applies nationwide. Casino revenues had still not recovered their 2007 peaks as of the spring of 2014, when again they went into reverse in most jurisdictions. Moody’s now projects that casino revenues will drop through the rest of 2014 and all of 2015, slicing industry earnings by as much as 7.5 percent.
Weaker earnings are being divided among ever multiplying numbers of casinos. Baltimore’s casino will be the fourth to open in Maryland, with a fifth soon to rise down the Potomac from Washington, DC. Maryland’s casinos compete with a clutch of new casinos in Philadelphia and Delaware.
Why so much building? Cities are authorizing more casinos for exactly the same reason that the existing casinos are losing business: the weak national economy. Casinos promise a new and easy flow of revenues to hard pressed local governments.
The promise however comes increasingly hedged with fine print.
The casino market is nearing saturation, if it is not already saturated. Two casinos have closed in Mississippi this year. Four have closed or will soon close in Atlantic City, including the glitziest hotel on the boardwalk, Revel.
Casinos that do stay in business yield less to their towns and states. Revenues from Maryland’s first casino, in Perryville, at the northern tip of Chesapeake Bay, have already dropped 30 percent from their peak in 2008, and are expected to decline even more rapidly in future as competitors proliferate.
Yet the truly bad news about casinos is not found in the tax receipts. It’s found in the casinos' economic and social impact on the towns that welcome them.