Slots linked to $20M in hospitality income Report analyzes hotel, restaurant revenue

ORONO – Patrons of Hollywood Slots at Bangor contributed more than $20 million to area restaurants, hotels and motels over a 15-month period after the facility opened, according to a recent study by a University of Maine economics professor.

In a report that compares the relationship between net gaming revenues at Hollywood Slots and area restaurant and hotel sales, UM associate professor Todd Gabe stated that from November 2005, when the temporary gaming facility opened, and March 2007, racino patrons spent an estimated $14 million at Bangor-area restaurants and an estimated $6.02 million at local hotels.

The study shows that a $1 increase in monthly net gaming revenues is associated with a 29-cent increase in restaurant sales and a 12-cent increase in lodging.

But Gabe focused on a very small portion of the sectors potentially affected by Hollywood Slots, and notes that once the racino opens its permanent facility, the impact on existing businesses may be shifted.

“The results of the study alone cannot be used to conclude whether Hollywood Slots has a positive or negative effect overall on the region or state,” he cautions in his report.

“I don’t find it surprising that they’ve seen some increase,” Dennis Bailey of Casinos No! said Monday.

He warned, however, that the money may not be new money being introduced into the economy, but more likely is being transferred from one sector or area to another.

“Ninety-five to 98 percent of the patrons to Hollywood Slots are Maine residents,” Bailey said. “All that money they’re spending is simply money they’re not spending somewhere else in the Maine economy so all you’re talking about is a transfer. There’s nothing wrong with that, but from a statewide perspective there’s not much of an economic gain.”

The current Hollywood Slots at Bangor site has only one interior restaurant and includes no internal lodging options.

“If they were to have a hotel, we wouldn’t know if that additional lodging sales were at Hollywood Slots or in a different area,” Gabe said. “Right now, we can assume that the kind of bump to other sectors is mostly taking place outside their facility.”

Bailey explained that similar conditions occurred in places such as Atlantic City.

“There were over 100 restaurants before slot machines, and when the casinos came that dropped to like 12,” he said. “Everyone’s staying within the confines of the casino.”

Gabe obtained data for his study from the Maine Gambling Control Board, which regulates the gaming facility, and from Maine Revenue Services.

“I was just looking at kind of one aspect of the facility. There are other questions,” Gabe said. “We didn’t look at employment; we didn’t look at any of the fiscal impacts on taxes.”

The study did control for other potential activities and events occurring in the area that might have increased food and lodging figures.

“We had other variables in the model that, hopefully, picked those types of things up,” Gabe said.

This wasn’t the first time Gabe has conducted this type of study.

Gabe’s interest in the gambling-business relationship stems from the 1990s when he completed his master’s thesis in Minnesota and looked at several American Indian casinos in the state and the impact they had on employment in hospitality sectors.

“In Maine, we don’t have casinos in more than one area, but yet I had monthly data to see how the racino affected sales and hospitality,” he said.

Gabe said he likely will continue to monitor the relationship after Hollywood Slots at Bangor opens its permanent operation on Main Street, but that it probably will take a couple of years to see the impact.

To obtain a copy of Gabe’s report, e-mail him at Todd.Gabe@umit.maine.edu.