Cahill: Build Slot Parlors Instead Of Casinos

Treasurer Timothy Cahill said Tuesday that Massachusetts should license three slot parlors to give the financially ailing state a boost of gambling revenue.

The treasurer estimated Massachusetts could generate $2 billion to $3 billion in up-front licensing fees, plus up to $250 million annually in tax revenues if 9,000 machines were allowed. The take would fall to $200 million annually if the number were cut to 7,500 machines.

In either case, the revenue would offset sagging sales at the Massachusetts Lottery, which Cahill oversees, and tax collections that have left the state facing a $1.1 billion deficit this year and $3.5 billion in cuts for the budget being debated for next year.

"We need revenue. We are deeply in the hole. We have drained our rainy day fund down to less than $1 billion, and it doesn't look like it will get any better," said Cahill. "We can either cut spending or raise revenue. This gives us a third option that could lessen any action in the other two areas."

Cahill outlined his idea before testifying about the state's financial condition at a legislative hearing. Gov. Deval Patrick, who also addressed the hearing, said he welcomed the idea but had considered it before proposing three resort-style casinos. That plan was defeated last year by then-House Speaker Salvatore DiMasi.

Since then, the national recession has led to a downturn in Las Vegas, bankruptcies in Atlantic City and a credit crunch for casino developers.

"I think the most important thing, in this area and others, is that we not make long-term decisions on the basis of short-term factors," the governor said. "Whatever we do - or not do - is going to be with us for a while. And so the ebb and flow in the strength of this business or other businesses shouldn't be a factor."

The governor also said the "human costs" of slot parlors could be greater than those incurred with resort-style casinos.

"We favored the destinations because when we were thinking about the balance of costs and benefits - and there are costs that go into it, including human costs - it seemed like the human costs would be less in the resort setting and that the benefits would be greater because of you have, in addition to the gambling, you'd have hotel and entertainment and meals and so forth, other revenue components of a resort," he said.

Cahill's plan builds off elements of Patrick's plan: The state would similarly auction licenses for three sites across Massachusetts, tax the revenues at 27 percent and let private companies run the parlors. Nonetheless, he suggests ditching resort casinos, replete with hotels, restaurants and multiple forms of gambling, for less-expensive slot-machine parlors.

They can be built relatively cheaply and quickly, in some cases at existing gambling sites. While Cahill advocated an open bidding process, he suggested the Boston-area license could end up with the owners of Suffolk Downs horse racing track, while one slotted for southeastern Massachusetts could end up at the Taunton-Raynham greyhound track or the Plainridge trotter track.

A third would be dedicated to a site in western Massachusetts.

A similar conversion took place in 2007 in Rhode Island, where the former Lincoln Greyhound Park was transformed into the Twin River slot parlor. It has about 4,000 machines - but is on the verge of bankruptcy today.

"I'm trying to take what are the best ideas of previous plans and take today's financial environment into account, and get the best outcome for citizens in terms of revenue," said Cahill.

The treasurer, who has not ruled out challenging Patrick for re-election next year, dismissed any political motivation behind his proposal.