Calais racino study projects $12 million in annual revenues

A market study estimates that a racino in Calais proposed by the Passamaquoddy Tribe could generate between $11.9 million and $13 million annually in slot machine revenue. The estimated slot machine revenue would make the Washington County racino larger than at least 40% of the U.S. tribal casinos in operation as of 2005, according to the results of the study, which is based on a number of assumptions.

Todd Gabe, associate professor in the University of Maine School of Economics and a fellow in the Center for Tourism Research and Outreach, says that the analysis "does not show, one way or the other, whether the revenue generated by the proposed facility is 'new money' to the region, or whether it is money that would have been spent in the region on other goods and services." He emphasizes that the results of his study are intended to be just one piece of information to be considered along with other economic and non-economic issues in the debate about the expansion of slot machine gaming into Downeast Maine. Voters will be asked in a statewide November referendum whether to allow the Passamaquoddy Tribe to develop a racino with up to 1,500 slot machines in Washington County.

Some of the $11.9 million to $13 million generated by the proposed facility would be taxed by the state, kept by racino operators, and used to pay the wages and salaries of racino employees. Along with other disbursements outlined in the legislation for the racino, 2% of the total gross slot machine income would fund scholarships at the University of Maine at Machias; 1% would fund scholarships at the Washington County Community College; 1% would be given to the Washington County Development Authority; and 1% would be forwarded to career and technical education centers in Washington County.

"No matter how you read them, the numbers add up to the one thing that Washington County needs most C jobs!" said Senator Kevin Raye of Perry and a member of the steering committee for the "Yes on 1" Coalition that is supporting the racino initiative. "The revenue projections from the economic study demonstrate the viability of the racino in Calais. And this report doesn't even take into account the additional dollars from the harness racing side of the operation or what will be spent at hotels, restaurants and other businesses in the region."

The study finds that the proposed racino would have a large impact locally relative to the size of Calais' hospitality industry. Gabe notes, "The projected impact of $11.9 million to $13 million in slot machine revenue is actually larger than the total sales generated by restaurants and hotels in the Calais area." By comparison, slot machine revenues at Hollywood Slots are equivalent to less than 20% of total hospitality sales in the Bangor region.

The report, Gabe says, "gives people an idea of the amount of revenue that a facility like this would generate, if Mainers and visitors to Maine gamble at the national average." His projection of the total market potential for slot machines in Maine relies on data from other states, as a survey of Maine data is not available.

In his study, Gabe assumes that casinos in Maine attract residents and out-of-state tourists primarily from a two and one-half hour market area. "For a place in Maine that is located within two and one-half hours of Calais but more than that distance from Bangor (i.e., Hollywood Slots), we assume that residents and tourists visiting the area would gamble at the proposed facility in Calais. For an area that is located within two and one-half hours of Calais and Bangor, we assume that the gaming activity originating from the area would be proportional to its relative distance from the two casinos." Thus, in Gabe's estimate, because the traveling time from Bar Harbor to Bangor is 78 minutes and Bar Harbor to Calais is 150 minutes, 34% of the potential revenues from the Bar Harbor area would be spent in Calais, and 66% in Bangor. Again, based on travel time, Houlton would contribute half of its potential revenues to Calais and half to Bangor.

Although he agrees that there could be other factors for why visitors might travel to Bangor instead of Calais, Gabe says he feels confident about the assumptions he made. He notes that without a survey of gambling habits in Maine it is difficult to make a further analysis of possible revenues.

Gabe conducted the study at the request of the Passamaquoddy Tribe, but he received no compensation for the research. This project builds on his earlier work on casinos and, more broadly, the tourism industry, he says.

Increased crime rate in Bangor

While the "Yes on 1" Committee is touting the results of the market potential study, CasinosNo! is continuing its efforts to stop passage of the racino referendum and publicized recent data on crime in Maine that show a jump in Bangor's crime rate of more than 20% during the first full year of operation of the Hollywood Slots racino.

"We're not suggesting a direct link between the increase in crime and the operation of Hollywood Slots," says Dennis Bailey, executive director of CasinosNo!, in a prepared release. "But the double-digit increase in Bangor's crime rate is certainly troubling, and it refutes suggestions by some casino supporters who claim that casinos actually reduce crime through jobs and economic development. Clearly, that hasn't happened."

According to the Maine Department of Public Safety's website, Bangor's crime rate went from 51.6 offenses per 1,000 residents in 2005 to 63 offenses in 2006, an increase of 22%, the largest increase of any city in Maine. The increase in Bangor's crime rate came at a time when the city's population declined and follows two years of steady decreases in the city's crime rate. Part of the increase was caused by a sharp rise in larceny.

"What this data means is we need better information and more study to find out what is really going on in Bangor," said Bailey. "There's often no way to tell when someone commits a crime to feed a gambling habit."