Gambling as an urban race to the bottom: Richmond; DC

Alfred C. Liggins III, CEO of Urban One, in Richmond on Aug. 11. (Julia Rendleman/The Washington Post) 

I wrote about this recently ("Casinos as economic development: destination versus casual visitation" and "More sports and revitalization: Pimlico Race Course in Baltimore") but the ongoing the process to approve the creation of a casino in Richmond Virginia ("A Black-owned casino bets on a Black neighborhood in the former capital of the Confederacy," ) brings up some interesting issues about access and "equity" because the operator chosen to create a casino if approved in this November's referendum is Alfred Liggins, a prominent African-American businessman based in the DC area, who leads the Urban One broadcast business--radio stations focused on black demographics and the TV One cable channel--which grew out of the WOL-AM station in DC (when I first moved to DC in 1987 their studio was at the end of the block on H Street, it had a window so you could see the DJ booth).

With the exception of Native American-run casinos, most are run by large corporations led by white people.  Isn't it a matter of equity for African-American business interests to get a piece of the action?

-- "Building supportive ecosystems for Black-owned US businesses," McKinsey
-- "$290 BILLION WOULD BE CREATED IN BLACK WEALTH IF THE REVENUE GAP BETWEEN BLACK AND WHITE BUSINESSES WAS EQUAL," Black Enterprise Magazine

Springfield Massachusetts casino as an analogue.  But as pointed out in the previous pieces, the average city doesn't benefit much from this.  I think Richmond is similar to Springfield, Massachusetts--Richmond has more residents, both are within a couple hours of major cities, have some train service, and a number of attractions.

An event outside the MGM Casino brings people to the streets of Springfield.

While Springfield claims significant impact even though the casino has only been open for a couple years and was more recently affected by the pandemic ("TWO YEARS AFTER MGM SPRINGFIELD OPENED, ECONOMIC BENEFITS NOTED BUT NO INCREASE IN PROBLEM GAMBLING DETECTED," U Mass Amherst) I wonder how much will really happen?

OTOH, I guess if the casino is part of a wide ranging revitalization program, maybe it would be different, and maybe that's the case in Springfield.  But I wouldn't expect much there, or in Richmond.  From the Worcester Daily Voice article "Did Springfield Cash In? See How Much Visitors To MGM Have Spent Locally":

The Donahue Institute estimated that MGM visitors accounted for $66.3 million in new, off-site spending at local restaurants, shops, grocers, fuel stations, and more. “One of the big findings we have is that 61.7 percent of patron spending was new to the state and would not have occurred had it not been for the casino,” said Thomas Peake senior research analyst at the UMass Donahue Institute in a statement. ...

However, when MGM was selling Springfield on the casino, developers said MGM would create 3,000 new jobs and generate $35 million in revenue per month. The casino peaked in its first full month of operations at just under $27 million and has averaged only around $21.5 million ever since, according to CalvinAyre.com.

(Another example is the touted benefits for Richmond from being the practice site for the Washington Redskins.  Not much happened.  "VCU report: City won't recoup investment on Redskins training camp deal until at least 2023," Richmond Times-Dispatch -- use printfriendly).

The biggest problem is that the business model for "gaming" isn't designed to share customers with other venues.  They want 100% of the time and money of gamblers, outside of spending money on gas, they don't want you to leave the premises and spend money elsewhere.  That makes it hard for a "gaming" use to be multiplicative in terms of the multiplier effect and spillover economic benefits.

I wrote about this in terms of Walmart ("Jumping in bed with the devil--it's hot, but will you survive the heat?," 2006), the same points pertain.

The problem with Wal-Mart isn't so much that it is a behemoth store. The problem is their business model, which appears to be designed to capture as much as 100%* of the average customer's retail expenditure dollars. That doesn't leave much room, even crumbs, for other businesses. (* or more than 100% if you consider credit cards...)

Gambet DC: DC's sports gambling app. Another Post article, "D.C.'s sports betting app keeps underperforming, with lots of finger-pointing about what’s to blame," discusses the relative lack of success of a DC branded and controlled sports gambling app.  

The pitfalls are pretty obvious. (1) taking a larger cut than competitive apps. (2) there being lots of competitive websites. (3) apps for gambling for profit entities fully focused on gambling are likely to always outpace and be more exciting than "a government sponsored app" produced by a contractor.

The Gambet DC website looks like a government website.

And as is too common in city economic arguments for gambling, great success is touted while the results are significantly less buoyant.  The city initially projected revenues of $22 million annually, then the forecast shifted downward to $6 million annually.  But revenue is less than $50,000 per month.

Some types of revenue generation aren't really worth pursuing.

versus

(One of the websites listed in "Best Gambling Sites and Apps for Real Money Gambling Online")

The DC Auditor made suggestions for improvement ("D.C. auditor offers ideas for improving the city’s sports betting app," Post), but how do you create "verve" in a city agency?

-- D.C. Sports GamblingFails to Meet Expectations, DC Auditor

FWIW, I think DC Lottery created a great commercial promoting DC neighborhoods as part of a past promotion, which I thought was a way better ad promoting "visiting DC" than the ads by Destination DC ("City branding versus identity | Branding versus Urban Strategy").  

So maybe they have the potential to become much more customer-facing, as they are with lottery tickets.  Clearly those aren't the people in charge of Gambet DC.