White Elephants

No, the circus is not coming to town, at least not literally: the City of Pittsburgh has to choose the best site for a slots casino. Properly sited and developed, the project has the potential to spark revitalization in its host neighborhood. Or, this project has the potential to become a white elephant – a massive physical eyesore and fiscal anchor that will drag down the whole city. Weighty stuff indeed; luckily Pittsburghers can rest assured that the choice of who to award the license will be decided on the project that will provide the best return for the City. (pause for comedic effect)

Ok, there is the rub. We shouldn’t be concerned that the decision will be based on political payoffs, it probably will. What we can do is make sure to apply pressure for the right proposal and provide the payoff for that choice.

In the parlance of gambling, which proposal offers the greatest chance of the greatest payoff. This requires that we consider the most likely “guaranteed” return as well as the jackpot potential. Since a casino itself is by its nature – a gamble – then the guiding criteria should be how it fits into the fabric of the community and how it will impact the surrounding neighborhood. Since the return of the casino itself is a gamble, then the greatest guaranteed payback is from the multiplier effect that a new development will generate even if the casino is not successful.

So which proposal fits its site better but will also enhance the surrounding developments and increase property values in the adjacent areas. These are the projects that will add the most value to the City. Increasing the value of adjacent property is a major component of future value. Sites that are isolated by rivers, highways or other major infrastructure will limit this positive spillover. If the adjacent properties are tax-exempt, or controlled by a few individuals or developers, then the spin-off benefits from the casino for the public will be limited.

For all of the negative side effects that come with casinos and gambling, we need to maximize the public return on expanding this activity in our City. Let’s hope we can make the best choice.