Testimony of James Rafferty before the Ways and Means Committee of the New Hampshire Legislature on HB 886.

February 13, 2007

Madam Chair and Members of the House Ways and Means Committee: I rise in support of HB 886 with the following amendments.

With 28 years experience in the casino industry and a devotion to the great State of New Hampshire, I believe I’m uniquely qualified to testify before this Committee. HB 886 in its current state is a good piece of legislation that provides significant resources for education and creates the framework for expanded gaming that enhances the racetrack operations and also serves those with problem gaming behaviors. However, we believe the public and the market could be better served. The bill should be amended to include slot parlors for New Hampshire located at four additional beneficial locations, while at the same time authorizing slots at the four New Hampshire racetracks. A total of (8) eight slot licenses should be issued in the State. We have evaluated the greater Southern New Hampshire Market and believe you should authorize a total of 10,000 slot machines. This proposed legislative program replicates the statute (not the scope) that was recently passed and is now being implemented in the Commonwealth of Pennsylvania. The Pennsylvania bill authorizes 65,000 slot machines in the State under the authority of a strong central regulatory body (The Pennsylvania Gaming Commission).

I would like to share with you five reasons why I believe this Committee should vote in favor of an amended HB 886 and send the bill on to the House and the Senate for final passage. First, gaming is entertainment. While some people like to go to movies, attend sporting events, or garden in their backyards, others like to try their luck at slot machines. The people of the great State of New Hampshire, as well as the citizens of our neighboring states, should not be deprived of this form of entertainment. The fact of the matter is the New England region is exceptionally undersupplied with slot machines. In America, the home of the free, and in New Hampshire, where we proudly stand by our motto "Live Free or Die," people should be free to choose how they spend their leisure time and their money. The facts are clear that most Americans approve of gaming. I have spent my career talking to customers about their experiences playing slots and the fun and excitement it brings to their lives. The vast majority plays to a predetermined budget, and it is heartwarming to see how much they enjoy it. Playing slots is a preferred form of entertainment for them and they overwhelmingly enjoy the experience.

Second, the income from gaming is important to New Hampshire's fiscal future. From a public policy standpoint, you should not pass up this opportunity for the State. As you know, the State in 2007 is facing a dramatic educational funding crisis. The monies raised from gaming revenue - money that is currently going to other states - should stay here in New Hampshire. Further, the tax rate in the “racing industry + four beneficial locations bill” is attractive from the State's perspective. While lower tax rates are certainly desirable from a gaming company's perspective, the private sector has found ways to be successful at tax rates of 40%- 50%. I can tell you as a manager who has worked for years within high tax rate Racinos and slot parlors, the ability to successfully manage Racinos and work with tight marketing budgets calibrated to adjust for the tax rate is the key and is a discipline that is best left to the private sector.

Third, the empirical facts continue to mount: The net effects of gaming in communities are positive. In September 2005, the American Gaming Association released a study "Community Leaders' Perceptions of Gaming Industry's Effects." In this timely report, Peter D. Hart Research Associates surveyed the perceptions of gaming held by 201 civic leaders from jurisdictions around the country where gaming has been authorized. When asked if the benefits provided by gaming met or exceeded their expectations, overwhelmingly the community leaders said yes, particularly in the case of generating tax revenue, where 85% found gaming generated more tax revenue than anticipated.

Community leaders believe gaming's negative effects to be relatively minor. Opponents are quick to point to anecdotal evidence of the social negatives that are supposed to follow gaming initiatives. What is critical to point out is that the research does not support them. In an open ended question about the benefits and drawbacks of gaming, community leaders were twice as likely to volunteer a positive outcome versus a negative one. While the area of greatest concern was an increase in gambling addiction, it was only voiced by 19%, and they expressed little concern over the other negatives commonly sited by opponents, including increases in poverty or bankruptcies (9%), crime (6%), congestion and traffic (5%), or other social or family problems (4%).

With all things considered, 79% of the community leaders concluded the overall impact of gaming on their community was positive and 13% were neutral. When asked if they would vote again to allow gaming, 75% said yes and 6% were neutral. It is a compelling endorsement of gaming that the community leaders remain so strongly favorable toward the decision to bring gaming to their communities.

Fourth, gaming creates good jobs. I have long believed that the issue of job creation has been grossly understated. The National Gambling Impact Study, the 1999 Federal study authorized by The United States Congress, states that large gaming properties clearly benefit the communities they serve in the area of job creation. Further, the AGA study sited earlier found that a plurality of the community leaders believe that gaming offers better pay and benefits as compared to other businesses in their areas. My own experience leads me to believe that the four New Hampshire tracks and four beneficial locations with a total of 10,000 slots would produce 8,000 full time jobs. In my 28 years working in and around the gaming industry, I have produced some 25 major job fairs and major hiring programs for new gaming properties. To see 10,000 people show up for job fairs is a true indication of how powerful these businesses can be from a job creation point of view.
Fifth, now is the time to act. New Hampshire's ability to provide the best gaming environments is dependent upon good gaming companies being interested in development in the State. The gaming industry is changing as businesses consolidate and take alternative strategic positions. The biggest of the gaming companies have changed strategic direction, focusing on lower tax rate jurisdictions and international projects. Some, like MGM/Mirage, are outspoken about not being in high tax states. The current gaming companies that have assumed the development rights are smaller, niche players, but are very well regarded within the industry and in my opinion would be outstanding partners for the State. The State should act while great companies continue to be interested.

In conclusion, my perspective comes from my experience inside Racinos and slot parlors, where I have seen the effects of gaming entertainment on a daily basis. I believe in the product and the entertainment that it provides. The genuine enjoyment that customers experience and the value of the paychecks that employees receive every week are a reality. The economic benefits to communities and States are also a reality. These are realities that I believe that you as policy makers should hear and understand, and I appreciate the opportunity to share my thoughts with you today. I stand ready, willing and able to help in any way to make your jobs easier. Please call or e-mail (jamesjrafferty@yahoo.com) if you need any further information.

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