Connecticut was finally swept into the Northeast's whirlwind of gambling expansion with the introduction of keno to its lottery portfolio to produce revenue for the next budget. It's tapping a market that has proved very profitable for Massachusetts but will test the depth of bettors' pockets.
Keno is a simple numbers game. Gamblers choose one or more numbers from 1 to 80 and then wait patiently, usually in a bar or restaurant, as 20 randomly generated numbers appear one by one on a television monitor. A bettor's winnings depend on how many of the player's numbers match those on the screen. Players often choose numbers based on dates of spouses' and children's birthdays, anniversaries and divorces, or as with one of my friends, the birthdays of ex-girlfriends, which evidently is a measure of good luck.
As Massachusetts, New York, and Rhode Island have keno, its appearance in Connecticut is emblematic of the gambling arms race that has taken hold in the Northeast. Each state is seeking to fortify its borders with an ever-expanding array of gambling options designed to keep every available gambling dollar inside its borders.
The Northeastern Gaming Research Project at UMass Dartmouth monitors trends in the gaming industry in a triangle of 14 states from Maryland to Ohio to Maine. In 1993, only three of those states had casino gaming: Rhode Island with two slot parlors, Connecticut with Foxwoods Resort Casino and New Jersey with 12 casinos in Atlantic City. There are now 60 Las Vegas-style casinos in this region and every state except Vermont and New Hampshire will have casino gaming by the end of the next year.
Casino gaming is now a $14 billion industry in the Northeast, and this does not include the billions of dollars in net revenue generated by instant tickets, lotto drawings, keno, parimutuel racing (including simulcasting), and sports betting (Delaware, New Jersey). Mobile device gaming is on its way and, meanwhile, Massachusetts has authorized three casinos and a slot parlor and Philadelphia will soon add a second casino.
The Great Recession, which began in December 2007, has paradoxically been a time of rapid expansion in the gaming industry. The number of casinos in the Northeast doubled in only the last six years, while existing casinos added new games and amenities. During this time, West Virginia authorized table games at its four racetrack casinos. Delaware authorized table games at its three racetrack casinos and reauthorized a sports lottery. Pennsylvania opened nine slot parlors and then added table games — and then added four more casinos.
Rhode Island authorized 24-hour gaming at its two slot parlors and will offer table games at Twin Rivers within days. Maryland opened three slot parlors, while New York opened four new racinos, including Empire City and Resorts World (Aqueduct), which are two of the largest racetrack casinos in the country. The Revel opened in Atlantic City. Four casinos and a racino opened in Ohio, and Oxford Casino opened for business in Maine. The industry expansion induced $ 4 billion to $5 billion in new capital investment.
So what is ahead for Connecticut?
In one respect, the Nutmeg State's gambling policy is limited by its compacts with the Mashantucket Pequot and Mohegan tribes, which preclude additional, non-Indian Las Vegas-style gambling unless the state is prepared to forgo its 25 percent share of the two casinos' slot revenue. On the other hand, Massachusetts is probably an instructive example. Massachusetts introduced keno in 1993 and it is now second only to instant games in providing revenue to the Mass Lottery — $768 million in 2011 sales or about 17 percent of the Bay State's $4.4 billion in the 2011 fiscal year lottery sales.
Connecticut's lottery reported sales of $1.082 billion in the 2012 fiscal year, which returned a record $310 million to the state. State officials project raising $28 million from Keno in its second year.
Since keno was first authorized, Massachusetts lottery officials have continually looked for new ways to enhance its revenue. In 2005, a bonus feature was added, which doubles the price of play. In 2008, "Keno to Go" was authorized, which allows players to check their numbers online instead of having to stay perched in front of a television monitor at a bar or convenience store.
In the mid-1990s, keno licenses were restricted to "pouring establishments," which represented less than 25 percent of lottery agents in 2008. But Keno to Go opened the game to nearly all of the state's 13,000 lottery agents (a number that also nearly doubled since 2008). In the wake of these changes, the percentage of Massachusetts adults who play keno increased from 7 percent in 2004 to 17 percent in 2012.
A great deal of gambling is about convenience. The propensity to gamble increases as the opportunity to gamble becomes more convenient. It is hard to say when the supply of gambling options will finally exceed the demand for gambling, because the "demand" for gambling is not a fixed quantity. It can be increased by state gambling policies that make it more convenient for potential players, but at some point and without significant economic growth, there is only so much discretionary income in a state.
Clyde W. Barrow is the director of the Center for Policy Analysis University of Massachusetts Dartmouth.Copyright © 2015, CT Now