1. 1 11 “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” Board of Directors Todd I. Selig, Chair David Alukonis Michael Buckley William H. Dunlap Sheila T. Francoeur Stephen Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Kimon S. Zachos Martin L. Gross, Chair Emeritus John D. Crosier, Sr., Emeritus Gambling in New Hampshire – September 2011 Update Steve Norton, Executive Director NH Center for Public Policy Studies

2. 2 Fundamental Assumptions of models The placement of a casino in New Hampshire (or closer to New Hampshire) will increase the number of people that gamble. The farther individuals have to travel, the less likely they are to go to a casino in New Hampshire. And … the closer you are to a casino, the more likely you are to go to a casino. Gravity of a facility – attractiveness, size, amenities – and the competition in the market affects gambling behavior. For a small share of the population, exposure to gambling results in pathological behavior. –This creates a set of social issues which – if they can be quantified -- are offsets to the potential benefits.

3. 3 Center’s Model of Expanded Gambling Take as Inputs –Location –Size –Type –Massachusetts Action Produce as Outputs –Economic (jobs, product) –Net Revenue –Crime –Social Costs to NH and local communities 5 Sites North Woods Southern NH Ski Country Southwestern NH Lakes Region Sites IDed by Commission to give a sense of the impact of location. Model can be used to simulate other sites.

4. 4 Drive time analysis used as the foundation of a gravity model which assumes the more amenities, the greater the attraction. Adjusts for NH specifics: Tourist multiplier Allows us to simulate Massachusetts impact Tested models against existing markets

5. 5 Markets? Standard Economic Development Models Short Term (Construction) Long Term (Operation of Facility) # of Gamblers and Intensity # of New Problem /Pathological Gamblers Societal Costs (Govt and Non- Govt) New Gambling Tax Dollars Meals and Rooms, Lottery Impact Standard Retail Gravity Model Adjusted to Reflect NH Experience Costs of Problem/ Pathological Gamblers Net Impact Direct/ Indirect Direct/ Indirect Net Impact Displacement Putting It All Together

6. 6 Testing Our Approach Market Development  Tested and adjusted model against existing markets in Middle Atlantic. Economic Development  Tested RIMS models against REMI model results. Social Costs  Evaluate against multiple options. Peer review of our report.

7. 7 What Has Changed? Lots The Center’s prior estimates of net benefit to the state  $89m with a $500 facility (including slots and table games) in Southern NH. Three factors have changed –Massachusetts will act –Gambling revenues have declined –Inflation has increased the costs of managing the social costs.

8. 8 Map Source: Boston Globe

9. 9 Markets, Borders and Drive Time: Palmer, MA

10. 10 Markets, Borders and Drive Time: Suffolk Downs, MA

11. 11 NH Lottery Revenues – Actual through August 2011

12. 12 Connecticut Casinos Have Seen a 16% Decline in slot Revenue Since the Peak

13. 13 Changes to Original Study Gaming revenue reduced by 15%, based on CT casino and NH Lottery experience. Same job creation (economic development) Social costs –Increased Regulatory 3% (general inflation) –Increased other social costs 10% (medical services inflation rate)

14. 14 Estimating the Marginal Increase in Problem Gambling Original Results

15. 15 Economic Benefit Is Local, but Social Implications Are Not Original Results

16. 16 Net Benefit: Southern NH Sept 2011 Update

17. 17 Investment Amount/Size Matters: Economic Development

18. 18 We Did Not Model Timing The Costs and Benefits of expanded gambling do not all accrue at the same time and an economic analysis could use a net present value approach

19. 19 NH: Overlapping Markets of Existing Proposals (30 Min.)

20. 20 Maps of Markets

21. 21 What’s Going on in Maine? Fall of 2010 Maine voters passed a referendum (by a narrow margin) that would allow a casino at Pigeon Hill, in Oxford County, Maine. Maine voters will be asked this November to approve two additional casinos, including one near the southern border, at Scarborough Downs in Biddeford and another at Calais.

22. 22 Casino in Oxford, ME will draw NH residents (and tourists!)

23. 23 Lowell, Massachusetts: How Would this Compete with Connecticut?

24. 24 Gaming Facilities in the Northeast