Casinos cannibalize local economies

Ho-Chunk CEO Lance Morgan expresses concern about new horse track casinos in Nebraska cannibalizing and weakening existing facilities. By facilities, he means several planned Ho-Chunk casinos at existing Nebraska horse tracks.

Morgan’s cannibalization concern is exactly right but far too narrow.

The secret truth Nebraskans failed to hear during the 2020 casino ballot initiative is that nearly all casinos in America cannibalize their local economies. They bring little money from outside. Rather, they pull most of it from spending at existing businesses.

Morgan is understandably worried about his own profits but disappointingly silent about everyone else’s.

The economic impact and jobs casinos claim are not in addition to existing local economic activity but in place of it. Gambling dollars do not drop from the sky. They come from local gamblers whose spending patterns change when slot machines move in, at the expense of local business receipts.

Even for Omaha, “Keep the money in Nebraska” was always a lie. A 2004 Omaha Chamber of Commerce study found that building a casino in Omaha would actually increase, not decrease, Nebraska gambling losses in Council Bluffs casinos because it would result in more Nebraskans gambling.

It’s not a secret that more casinos mean more gambling. It shouldn’t be a secret that more gambling means less money spent on other things.

Lincoln? Grand Island? Columbus? Forget about economic development. Your casinos are going to cannibalize your businesses, as will the potential Bellevue and York casinos Morgan worries about. More casinos mean more cannibalization. That’s you, too, Norfolk. It’s the casino business model.

And now Oklahoma’s Global Gaming Solutions (GGS) is pushing for casinos in Gering and North Platte, with flowery economic impact projections that, as usual, simply ignore their casinos’ cannibalization effects. GGS knows that most casino revenue comes from within 35 miles of a casino, with a smaller secondary market within 80 miles. Nonetheless, GGS claims gamblers will come from 125-150 miles away to gamble in Western Nebraska. Get real.

The last thing Nebraska’s rural business community needs is another revenue drain.

If you own or manage a business in Nebraska, Morgan’s concern that his business will lose money to other casinos in Nebraska should be your concern, too. Only pawnshops and payday lending operations consistently get more business when casinos move in. Once the dust settles at casino construction sites, other businesses see their receipts suffer.

Morgan has proven adept at protecting his own profits. Ho-Chunk is reportedly Nebraska’s biggest beneficiary of the Congressional Paycheck Protection Program. It also got taxpayers to foot some of the bill for its Omaha casino through Tax Increment Financing--an ironic step for an initiative that promised tax relief.

Also ironic is Morgan’s claim that additional Nebraska casinos will cannibalize Ho-Chunk profits--accompanied by his silence about the same effect that Ho-Chunk casinos will have on Nebraska’s broader business community.

Odder yet is that the one man perhaps most responsible for Nebraska’s existing casino law is now complaining about others taking advantage of it. If Morgan didn’t want casinos outside of existing tracks, why didn’t he write that into the petition effort to begin with? Or is the horseracing community pulling a fast one on Ho-Chunk?

— Pat Loontjer is executive director of “Gambling with the Good Life”, Nebraska’s voice against gambling expansion since 1995.