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Expert: Lower expectations for casino fees

Committee looking over gaming bills

Governor Maggie Hassan meets with the Executive Council for the first time on January 16, 2013. Hassan faces questions about what revenues gambling will bring and how to move forward on the issue during her term. 

(ANDREA MORALES / Monitor Staff)

Governor Maggie Hassan meets with the Executive Council for the first time on January 16, 2013. Hassan faces questions about what revenues gambling will bring and how to move forward on the issue during her term. (ANDREA MORALES / Monitor Staff) Purchase photo reprints at PhotoExtra »

Lawmakers hoping to plug a $25 million budget shortfall by selling a single casino license shouldn’t count on the $80 million asking price included in at least one bill, according to the New Hampshire Center for Public Policy Studies.

Steve Norton, executive director of the center, told the House Ways and Means Committee yesterday that even expecting $50 million for a license might be too ambitious given the proximity of other gambling opportunities in Maine and Massachusetts and the inconsistency in license fees.

Those fees range from $5 million in Maine to $250 million in Indiana, said Norton, whose center has studied the economics of expanded gambling extensively. Massachusetts, which has legalized casinos but has not seen one open, offers its license for $85 million.

“We were trying to understand the relationship between market potential, (casino) size, tax rates and the general concepts of risk,” Norton told the committee. “We asked, ‘Could those be correlated and put on a sliding scale?’ And we couldn’t really do it.”

Gov. Maggie Hassan’s support for expanded gambling, something her predecessor opposed, has inspired a handful of bills this session. She declined to say yesterday whether she would include casino revenues in her budget, due by Feb. 15. Nor would she say yesterday what she believes the state could get for a license, which is critical for budget writers because a license fee is the only immediate money the state can expect if it legalizes expanded gambling.

It can take up to five years for a casino to reach its revenue goals, Norton said yesterday.

One bill, co-sponsored by Sen. Lou D’Allesandro, a Manchester Democrat, envisions a single casino that would pay a 25 percent tax and net the state at least $80 million for a 10-year license.

“And that’s cheap,” D’Allesandro said last night. “Eighty million (dollars) is very possible.” Massachusetts got 11 bids for its limited licenses even though it cost developers $400,000 just to apply, he said.

Norton wasn’t as optimistic yesterday. He met with the committee at its request yesterday to give members an economics overview before they begin debating particular gambling bills.

There was some good news for those supportive of expanding gambling in New Hampshire. There is a “hole” in the casino market in the Vermont, Maine and New Hampshire area, he said. But there’s also pressure on New Hampshire to act quickly because Maine has already added two gaming sites and Massachusetts has two sites, one close to the New Hampshire border, ready to go.

“Any expansion in Massachusetts will significantly impact what is done in New Hampshire,” Norton told the committee.

But much will depend on not only when Massachusetts builds but also on what it builds. Two $500 million casinos within a moderate drive from New Hampshire, might make it difficult for New Hampshire to support its own $500 million casino. Yet while a smaller casino might compete better in that market, a smaller operation would probably mean a lower license fee for the state, Norton said.

Location will matter, too, Norton said. His studies have shown that a casino would do best in the southern part of the state, where it can draw gamblers from Massachusetts. The longer people must drive to a casino, the less likely they are to go, Norton said.

Asked after the meeting what he thought New Hampshire could price its license at, Norton said he couldn’t answer. Too much depends on the wording of legislation governing a casino: the tax New Hampshire levies on it, the size of the casino, and how it compares to any in Massachusetts.

He was more comfortable ruling out amounts.

“Asking $40 (million) to $80 million would suggest our markets are as large as Massachusetts, and I’m not sure that’s right,” Norton said.

(Annmarie Timmins can be reached at 369-3323, atimmins@cmonitor.com� or on Twitter @annmarietimmins.)

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