MGM Springfield was the third casino to open in Massachusetts in August 2018. The $573 million resort was the subject of two studies by the University of Massachusetts Amherst’s Social and Economic Impacts of Gambling in Massachusetts (SEIGMA).
Rod Motamedi, senior research manager at the UMass Donahue Institute, which leads SEIGMA’s economic research and Mark Melnik, who leads the economic development component of the team, talked about their conclusions in an exclusive Q&A with GGB.
The SEIGMA team was chosen by the Massachusetts Gaming Commission (MGC) to perform research as required by the 2011 Expanded Gaming Act that authorized casinos in the state. The research measures the social and economic impacts of casino gambling in Massachusetts and is the first of its kind anywhere. The results are presented annually to the MGC.
The report notes that the casino spent $573.2 million in construction, of which two-thirds went to state-based building firms. In addition, two-thirds of the 4,249 workers lived in the state.
Lead author Motamedi wrote, “Overall, we found that every county in the commonwealth saw some economic benefit from the construction of MGM Springfield. The economic benefits did ultimately tend to grow with proximity to Springfield.”
Melnik said the real estate impact report was more ambiguous since the state was experiencing a strong economic boom during the same period.
GGB News: Will there be future surveys to follow the economic effects of the casino? When?
Motamedi: We’re beginning conversations with MGM Springfield to start our analysis of the casino’s first year of operation. To feed that study and other research projects, we’ve already undertaken surveys of MGM’s employees and patrons.
Furthermore, our mandate covers all the commonwealth’s casinos so we continuing to study the economic impacts of Plainridge Park Casino in Plainville and Encore Boston Harbor in Everett.
You say every county in Massachusetts benefited from MGM Springfield. What measurements did you use to determine that?
Motamedi: Our research mandate allows us to have incredible access to staff at the casinos and develop data sharing relationships with them. For this project, at the conclusion of each construction contract MGM provided us a closeout statement for that company. We received over 200 of these statements, which included all the data we needed to understand spending and employment related to constructing MGM Springfield.
We were able to apportion spending, employment, wages and more by year and zip code directly from the data provided by MGM. This data showed that except for the counties covering the islands off Cape Cod, all Massachusetts counties had at least a small direct connection to the construction, with spending and employment growing with proximity to Springfield.
More broadly, we took this data and ran it through an economic impact model to see how this change in one place in the economy rippled throughout the rest of Massachusetts. It is was with this analysis that we saw that every region of the state ultimately saw more total benefits than it received in direct spending from MGM’s construction.
Would you say all sectors of the economy benefitted equally from the MGM Springfield, or more sectors than others?
Motamedi: Perhaps somewhat obviously, the biggest benefits accrued to the construction sector because the Massachusetts share of construction spending was nearly $380 million of the $573 million total. The economic modeling showed that after construction, many of the sectors that benefited were those that are supported by increased consumer spending like accommodations and food services and retail.
Your news release said it’s difficult to detach effects of the general economic boom from those generated by the casino. How did you differentiate between those causes?
Melnik: Well, it is hard to at this point. We used a mixed-methods approach to contextualize quantitative trends with key informant observations. Our project will continue to track these trends to attempt to tell a full picture of real estate impacts on the community over time.
You single out real estate as one factor improved by having a casino in the area. How does that happen?
Melnik: What we’re seeing in Springfield is that increased economic opportunities in the region are strengthening the real estate market. Obviously, MGM is one of the largest examples of new economic activity in the region. This is a common story in Massachusetts right now as the economy is quite strong and housing prices are on the rise, even in places with traditionally weaker markets.
It’s been said that the studies in Massachusetts are the most comprehensive ever. What value do you think future planners will get from your efforts?
Motamedi: The legislature tasked the MGC with maximizing the economic benefits and minimizing the harms of commercial gaming. As researchers, our goal is to provide thorough and unbiased research that will help the MGC meet those goals and help the legislature understand the evolution of this new industry that it created in 2011. Locally, I hope our studies will provide a basis for managing the roll out of commercial gaming in Massachusetts.
We knew prior to any casinos opening that the state, cities, and towns will face both benefits and costs from this new industry though the when, where, how, and how much was unknown. Our studies should help actually define and quantify these impacts and allow policymakers to adapt.
More generally, I hope lawmakers and regulators elsewhere will look at what we are doing in Massachusetts as an example of ensuring public accountability for industries that receive benefits from government. In the case of casinos, these benefits are usually legally guaranteed monopolies on games or regions. For other industries, it could be tax exemptions or public investments in infrastructure that are used to entice businesses to move to an area. In these cases, a research agenda structured like ours could be used to ensure that the companies are meeting the spending, hiring, and compensation obligations they made to receive these benefits. In addition, in the case of industries that may cause some social or economic harm, e.g. problem gambling with casinos or pollution with a factory, the research could help quantify these harms and help inform mitigation actions.
Do you get a lot of inquiries from out of state about your findings? Are other governments interested, or is it mainly gaming professionals?
Motamedi: We’re beginning a concerted push to spread the methods and results of our research, which is also something that is important to the MGC. Thus far, we have received a lot of interest from other researchers and local community organizations. We don’t know what conversations the MGC may be having with other regulators and legislators.
Did you encounter any data in your study that surprised you?
Motamedi: On the economic impact work, the most surprising finding to me was that this study was even possible. I’ve worked in this field for over a decade and have never had the support and access to undertake studies for a public client with the level of detail that our SEIGMA work has allowed. It’s a testament to how forward thinking the Expanded Gaming Act was to include an ongoing research agenda and how seriously the MGC has taken this mandate.
Separately, we’re just now beginning the public rollout of the construction study. First impressions seem to suggest that people are generally pleased to see that the economic benefits were spread widely but also increased with proximity to the host and surrounding communities and that the construction workers’ race and ethnicity were representative of the populations they were drawn from, which is especially important to a city that is majority minority like Springfield.
Encore Boston Harbor Lures MGM Workers
Meanwhile, Encore Boston Harbor, which opened in June, has lured away almost 200 employees from MGM Springfield. MGM Vice President of Human Resources Marikate Murren said it’s difficult to maintain full-time employees or keep full-timers from requesting part-time shifts. The casino’s workforce has declined from 2,303 in March to 2,054. Some of that Murren attributed to Encore’s aggressive recruitment tactics.
“We do have some challenges unfortunately with theft. They are moving onto bigger and better opportunities. We have lost 125 table game dealers to Encore so we are doing the additional recruitment to rectify that,” she said.
MGM Springfield President Michael Mathis added, “We also lost management so really the number is closer to 200 that left the operation because of Encore. We felt that particularly in May and June as they got closer to their opening.” He added, “I certainly don’t fault them. We have great, trained employees that are already licensed, licensing being key. They were very aggressive with offering our employees opportunities.”
The casino continues to partner with local community colleges that offer courses to prepare potential recruits for the casino workplace. “We are going to be here for a very long time. We have a commitment to the state and the city and more importantly to the residents of this area,” Murren said.
