The following press release was sent to eastboston.com on Tuesday morning, August 14.
CONTACTS:
Caesars: Bad
Partner for Suffolk Downs, Terrible Bet for Boston
(EAST BOSTON, MASS, August 14, 2012).— With Suffolk Downs now
officially in the running for one of three casino licenses that will be awarded
statewide, the review process for the racetrack and its development partner,
Caesars Entertainment, begins. Gaming officials ensure that this review process
will be a thorough, careful analysis of each developer’s financial viability
and business practices. Upon investigating Caesars, the Massachusetts Gaming
Commission should reject Suffolk Downs’ application to build a casino.
On
the surface, Caesars may seem like a
top-performing, admirable corporation in a booming industry. But when
you pull
back the diamond-studded curtain, one finds a debt-saddled company that
mistreats its employees, preys on the vulnerability of problem gamblers,
shirks
its tax responsibility, and secretly knows the casino market is
saturated and
in decline. In Caesars, Suffolk Downs bringing a Trojan horse into a
family-oriented, tight-knit neighborhood. We urge the racetrack to sever
ties
with Caesars. We urge the City of Boston to stand against dangerous
businesses
preying on its residents. (Note: We have still received no
acknowledgement of our letter to Mayor Menino asking him to apply the
same scrutiny to Caesars as he recently did to Chick-fil-A) And we ask
the Gaming Commission to reject outright any
casino application with Caesars’ name on it. Consider:
Caesars is
Financially Unviable
Caesars is underwater financially and flailing
wildly for even the most unlikely source of rescue. Its debt ($19.9 billion)
dwarfs the next most indebted casino operator, MGM ($13.4 billion). Since its
stock debuted in January, Caesars’ stock has since plummeted 42 percent to
below its initial public offering.
[i] Moody’s
Investor Services has downgraded Caesars’ credit rating and warned investors
that the company’s debt is “eating its cash” and threatens its competitive
position in the market.
[ii] Caesars
industry-leading debt and low credit rating have resulted in the company being
forced to pay an interest rate of 15 percent — close to 70 percent higher than
the gambling industry average of 9 percent.
[iii]
To earn cash, the company has been selling off several of its properties
[iv],
and in what some analysts say is its biggest gamble yet for its long-term
future, Caesars has recently invested heavily in online gaming companies that
try to hook young people through sites like Facebook.
[v]
Caesars Targets Problem Gamblers
with Predatory Marketing, Frequency Casinos
Over the last decade or so, CEO Gary Loveman has built Caesars into the
biggest casino company in the world by accessing gamblers’ personal financial
information and using it to target those who are most likely to come back again
and again. (called “frequency players”) Caesars’ “Total Rewards Program”
provides free meals, alcohol, hotel rooms, and entertainment tickets to people
who visit the casino an average of three to five times a week. The owner of a
Bethlehem, Pa., casino admitted in 2010 that many of these frequency guests
live within 15 minutes of the casino, “give [the casino] $25, $30 five times
a week … grab a hot dog or maybe a chicken sandwich,” gamble three hours, “then
go home and sleep in their own bed.”
[vi] Pressured
financially, Caesars will resort to even more invasive and predatory practices
to keep current customers, woo new ones, and increase its bottom line.
Caesars’ casino at Suffolk Downs will not be a destination
resort, but a frequency market, the centerpiece being the 4,000-5,000 slot
machines (by comparison, Foxwoods – one of the world’s largest casinos – has
6,000 slot machines). With just 350 hotel rooms planned for the facility, it’s
easy to see that Caesars will be primarily targeting the potential repeat
players who live in the surrounding communities.
Here’s the scary thing: They won’t stop at preying on legal gamblers;
they’ll be after our teenagers too. Just a few weeks ago, Caesars agreed to pay
the Nevada gaming regulators a fine of $100,000 to settle
multiple charges
that dozens of Caesars employees allowed underage teenagers to drink and gamble
at several of its Las Vegas casinos.
[vii]
Caesars Mistreats its Employees
Suffolk Downs and Caesars are promising thousands of good-paying
permanent jobs once a casino is built. On average, they say, casino workers
will earn $42,000 per year. But that number factors in a handful of positions
that pay many multiples of the salary they cite, including executive and
manager salaries. By looking at other Caesars locations around the country, we
know the “jobs” reality is much more sobering. Recently, it was reported that
within a few weeks of the grand opening of Cleveland’s celebrated Horseshoe
Casino, “lots of people” were already quitting their jobs. Cashiers reported
working 11-hour days; slot attendants earn $6 per hour plus tips (which have
been nonexistent); and some workers cried after seeing their paychecks.
[viii]
And for the last five years, Caesars has battled union dealers at Caesars
Palace in Las Vegas over a labor contract, even asking dealers to share what
little they earn in tips with management. Dealers at Caesars Palace earn
“little more than minimum wage” and “receive as much as 90 percent of their
incomes from tips.”
[ix]
Caesars Skips Out on its
Property Taxes
In exchange for permission to operate, casinos promise governments a
big cut of the profits in the form of tax revenue. But in Atlantic City,
Caesars has exploited unfair loopholes to pay
less in property taxes,
resulting in city budget shortfalls. Caesars opted to have its properties
reassessed factoring in declining revenues – an option not afforded to
independent homeowners – forcing Atlantic City to retroactively pay Caesars $27
million in refunds for a lower assessment between 2009 and 2011.
[x]
In St. Louis, Caesars is fighting the county assessor in court after its
Harrah’s location there was asked to pay more property taxes.
[xi]
The company is employing the same tax-avoiding scheme at its Rivers Casino in
Pittsburgh.
[xii]
The people of Boston want to know that the business entities in their
midst are good neighbors. Suffolk Downs and the state’s Gaming Commission need
assurance that a casino developer is financially sound and trustworthy. Caesars
Entertainment will be none of these things. Like the people of Foxboro did with
Steve Wynn, we will tell the truth about Gary Loveman and Caesars, and they
will be sent on their way.
The ball is in the Gaming Commission’s court. It must stop Caesars
Entertainment from developing at Suffolk Downs or anywhere in Massachusetts. It
will simply be too costly to do otherwise.
