Pittsburgh casino jobs a matter of promises – 3 slots license bidders estimate different employment numbers

By Mark Belko,
Pittsburgh Post-Gazette
Sunday, March 19, 2006

The three competitors for the Pittsburgh slot machine license are offering wildly different estimates on the number of jobs the casino will create, even as they promise thousands of them.

And some experts caution against putting much stock in any of the numbers being thrown around, especially when it comes to the thousands and thousands of spin-off jobs the applicants say their casinos will produce for Pittsburgh and Allegheny County.

“Those figures can be very, very bogus,” said Robert Goodman, a professor at Hampshire College, who has studied the impact casinos have had on local economies.

Mr. Goodman said that, for every spin-off job created in a casino in a regional market such as Pittsburgh, another is lost as local gamblers make choices about how they spend their money. A night at the casino, for example, might mean one fewer dinner out or a purchase not made.

“You’re talking essentially about a zero-sum game,” he said. “There’s no additional money coming in. You’re just playing with the same money.”

Opportunities promised

That hasn’t stopped the potential casino operators from promising plenty of job opportunities in economic impact reports filed with the state.

The projections are included for two categories of jobs: Direct jobs are those produced by the casino itself or the restaurants, lounges and retail or entertainment venues that are part of the complex. Indirect jobs aren’t tied to the casino but are created by casino spending. An induced job is created when a casino employee spends money at a grocery store, a doctor’s office or a restaurant.

Forest City Enterprises has projected job numbers for its proposed Harrah’s Station Square casino which are far higher than those of the two other competitors for the Pittsburgh license.

*Forest City estimates its facility can generate as many as 3,953 direct jobs, about half of them full-time positions.

*Isle of Capri Casinos Inc. estimates that its proposed casino in the lower Hill District will produce 979 direct jobs.

*PITG Gaming LLC, led by Detroit businessman Don Barden, estimates that its proposed North Shore casino will produce 1,500 direct casino-related jobs.

Estimates for indirect jobs also vary: Forest City estimates 5,200 spin-off jobs; Isle of Capri, 3,100; and the Barden group, 1,500.

Forest City’s estimates are for jobs created by the end of its casino’s second year of operation and are according to a study done by Christiansen Capital Advisors.

Told of Mr. Goodman’s comments, Sebastian Sinclair, president of Christiansen Capital Advisors, retorted, “He’s wrong.”

He said there were plenty of examples of casinos being job generators for cities and states, citing Mississippi as one. He said the Mohegan Sun and Foxwoods casinos in Connecticut also have been an asset for that state.

“There will be some displacement. There always is. But it’s not a zero-sum game,” he said.

Why numbers differ

Abe Naparstek, Forest City director of development, said the full-time job numbers were the highest for the same reason its revenue estimates were nearly $200 million more than the other competitors’. Harrah’s sees the Pittsburgh casino as a destination, even though most of the play will come from people who live in the region.

He said Forest City would build a “bigger and better facility” than the others. “It’s a different type of operation that we’re looking to get into. It’s a first-class casino,” he said.

Isle of Capri’s estimates are based on a report by consultant The Innovation Group.

Despite skeptics such as Mr. Goodman, Steve Rittvo, the consultant for The Innovation Group who did the Isle of Capri study, said he was comfortable with the projections, saying those involving indirect and induced employment were calculated based on government formulas by community.

Direct casino-related projections were determined by studying Isle of Capri operations elsewhere in the United States.

“I’m very comfortable with my number because it’s not pulled out of the air,” he said. “It’s based on what we perceive will be in place.”

But the estimates also might come as a shock to Hill District residents hoping to cash in on the proximity of the casino and the Isle of Capri’s pledge to help redevelop the long-struggling neighborhood.

Of the 4,100 jobs estimated, 41 would go to Hill residents, based on demographics and employment models. Jill Haynes, Isle of Capri spokeswoman, said, however, that it was the operator’s intent to provide more jobs to that community.

Isle of Capri and its partner, the Pittsburgh Penguins, have formed the Pittsburgh First coalition with a goal of providing job-training programs for Hill District residents to take advantage of casino job offerings.

“I’m not at all dissuaded by what is a projection,” said the Rev. James Simms, chairman of the Pittsburgh First board of advisers. “In reality, we’re looking at something much, much more impressive, and I think that’s what the people of the Hill will insist on.”

Ms. Haynes said the 979 direct casino jobs estimated for Pittsburgh were “about average” for an Isle of Capri facility. The report said the average salary would be about $26,000, not including benefits.

A sampling of casino operations prepared by the American Gaming Association shows a wide range of job numbers. The Borgata in Atlantic City employs 4,800 full-time workers; Caesars, 4,399; and Trump Marina, 3,000.

Harrah’s in St. Louis employs 1,800 people, close to its Pittsburgh estimate, and Ameristar in Kansas City, 1,918.

All of those casinos haved table games, which are far more labor intensive than slots parlors.

It is the lack of table games that causes some critics to be skeptical of how many people the Pittsburgh casino will employ.

William N. Thompson, a professor at the University of Nevada Las Vegas, said he doubted that a slots parlor would need more than 600 employees in direct casino-related operations.

“If these places say they’re going to hire 2,300, 3,000 people, it might be through hotels, it might be through restaurants, but it won’t be through gaming. If you have 3,000 machines, you probably can run it on 300 employees,” he said.

Adding to the uncertainty, he said, is that most casinos use tickets to keep track of winnings, eliminating change makers.

“You can leave [a casino] without ever interacting with another human being. They don’t even have a greeter at the door like Wal-Mart does,” he said.

(Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.)

This article appeared in the Pittsburgh Post Gazette. © Pittsburgh Post Gazette