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States Outsource Casino Policing to Private Firms
LAS VEGAS — When Springfield, Mass. needed to choose who would build its first casino, the city hired an outside adviser to help with the process.
The consulting firm Shefsky & Froelich recommended that the deal go to MGM Resorts International. At the same time, the consulting firm was also working as a registered lobbyist in Illinois for MGM Resorts.
The arrangement highlights an often-overlooked trend as more cities and states embrace legalized gambling around the country: Private companies are being hired to write regulations and vet casinos, even as the same firms work the other side of the fence, helping casinos enter new markets and sometimes lobbying for their interests.
States hoping to make money quickly from legalizing gambling have few options as speedy as outside contractors, which allow them to get casinos up and running without having to hire and train a cadre of staff regulators.
But letting consulting companies with deep ties to the gambling industry decide how casinos are run — and who runs them — is a significant departure from how more established gambling states, including Nevada and New Jersey, do things.
Regulators in states that maintain control over their own rules say the move toward privatization is unnerving.
“How do you vet your consultants? If a lot of these consultants at one time or another have worked for the people that you’re in charge of regulating, at some point, you’re going to have issues with the purity of the investigation,” said Illinois Gaming Board spokesman Gene O’Shea.
Casino opponents are skeptical. John Sowinski, spokesman for the Florida nonprofit No Casinos, says that Spectrum often paints an overly rosy picture of the boon casinos might provide, overshooting tax revenue estimates in studies conducted for Ohio, and calling New Jersey’s Revel project “just the tonic that Atlantic City needs.” (The state-subsidized casino filed for bankruptcy 10 months after opening.)
Sowinski believes states in need of consultants should hire experts and firms with no connection to the casino industry.
“The gambling industry is the one industry that seems to get away with this conflict of interest carte blanche,” he said.
Contact: Michael Joe Murphy