Is the #Ilani Casino going to cannibalize the Oregon lottery?

IlaniOpeningDay

Opening day at the Ilani Casino

The word Ilani means “sing” in the Cowlitz language. The Cowlitz Indian Tribe is surely singing the praises of the thousands of Oregonians gambling at the tribe’s new $510 million Ilani Casino near La Center, WA.

The attitude at the Oregon Lottery is not quite so buoyant.

In September 2016, the state’s Office of Economic Analysis (OEA) predicted a decrease in lottery sales of approximately $120 million per year in the 2015-2017 biennium due to the opening of the casino, particularly because of a slowdown of the rate of Video Lottery growth.

The Video Lottery is the Oregon Lottery’s cash cow.

You know the typical casino ad. The gorgeous blonde’s crystal blue eyes gaze adoringly at the urbane, fashionably dressed man as he places a bet. The couple is surrounded by smiling, equally fashionable friends enjoying the gaiety.

You almost expect Jay Gatsby to stroll into the scene from West Egg and enjoy the fun.

The raw reality at video lottery sites in Oregon is usually quite different. On a recent afternoon, all the machines at one site in Hillsboro were being used only by solitary, slightly disheveled men and women in jeans and sweatshirts.

All of them looked hypnotized by the glow of the screen in front of them. Almost motionless, except for the rapid movement of their hands to push the play buttons, they sat mute in the dim light.

MIT anthropologist Natasha Dow Schüll knows such people well. In her book, “Addiction by Design,” she shows how the rhythm of gambling at electronic terminals puts people into a trancelike state in which gamblers keep playing not to win, but so they can stay “in the game” and maximize their “time on device.”

Oregon voters overwhelmingly approved the lottery in 1984. It launched in 1985 at a Portland event featuring an 84-foot-tall inflatable King Kong, perhaps symbolizing the behemoth the lottery would become.

Oregon’s approximately 11,909 Video Lottery terminals deployed throughout the state are now a major part of a rising river of lottery money flooding Oregon. The money has turned the state into an addict as Oregon’s total lottery take has gone from $87.8 million in 1986 to $ 1,230,189,728 in the Fiscal Year Ended June 30, 2016. Video Lottery has been responsible for most of that growth, taking in $876,475,310 in FY16, 71.3 percent of total revenue.

To say the least, the Oregon lottery is a very big business.

The Ilani Casino has already shown it can attract huge crowds and their gambling dollars and the Cowlitz expect millions of guests. Who wouldn’t prefer to gamble at a Vegas-style over-the-top casino just 25 miles north of downtown Portland instead of at a dark, claustrophobic room in a roadside strip mall.

So, will Ilani cannibalize sales from state lottery operations?

Some studies offer strong evidence that it will. An analysis of the relationship between Indian casinos and state lottery revenue in Arizona found that a 10 percent increase in the number of casino slot machines was associated with a 2.8 percent decline in lottery sales. Another study found that riverboat gambling expenditures had a negative and statistically significant impact on state lottery revenues, while a third study found that an increase of $1 in commercial casino revenues reduces net lottery revenues by $0.56.

In Maryland, the opening of casinos affected lottery revenue almost immediately, with traditional lottery sales decreasing by 2.2 percent in fiscal year 2013 and 1.7 percent in 2014, raising fears of a continuing downward slide. But revenue has since rebounded to $1.76 billion in FY15 and $1.9 million in FY16.

Pennsylvania’s lottery was on a roll, too, with steadily increasing sales, but beginning in 2006, when casinos began to open across the state, lottery sales leveled off and then declined. The hardest hit locales in terms of traditional lottery sales were close by areas within a one hour drive. But, as in Maryland, the downward trend was temporary. Pennsylvania’s lottery sales have gone up every year since 2010 and in FY16 the lottery posted record revenue of $4.1 billion.

In Massachusetts, lottery sales didn’t decrease statewide after a casino opened in June 2015, but lottery revenues for agents nearer the casino grew more slowly on average than the rest of the state.

Ilani’s impact on the Oregon Lottery may well follow the pattern in other states, with sales affected most significantly in the Portland Metro Area, particularly in areas that border Washington, and with video lottery being the hardest hit.

According to a March 2017 report by the Oregon Office of Economic Analysis, more than half of Oregon’s statewide video lottery sales occur within the Portland Metropolitan Statistical Area (MSA). About 11 percent of statewide video lottery sales occur within just the northern portion of the Portland MSA – from the St. John’s neighborhood through the Parkrose neighborhood, including Hayden Island.

Anecdotal evidence, plus statistical analysis, indicated that the border effect with the State of Washington, which does not have video lottery in its bars and restaurants, was large, the report said.

This is particularly true directly across the two interstate bridges in Portland. If these northern Portland zip codes see a 40-50 percent decline in video lottery sales, the report said, that means total statewide video lottery sales would decline 4.5 to 5.5 percent. Factoring in additional losses of around 10-15 percent throughout the rest of the Portland region brings the total impact to nearly 12 percent, relative to no casino baseline.

But if the experience of other states holds true, the negative impact of Ilani on even video lottery games in Oregon may not last.

Richard McGowan, a professor at Boston College and an expert on the economics of gambling, explains that the limited impact of casinos on lottery receipts is because the customer bases for lotteries and casinos also don’t overlap as much as people might assume. “Most lottery tickets are bought on impulse when people go in to buy milk and gasoline,” McGowan said. “You have to plan to go to a casino.”

Ilani is, however, likely to impact Oregon’s entertainment venues over the long term. Gaming serves as a substitute for other forms of entertainment, so the more Oregonians go to Ilani to entertain themselves, the less money they will spend in Oregon. But that’s another story.

 

 

 

 

 

 

 

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The minimum wage mess: what hath we wrought?

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Governor Kate Brown signs the bill to raise Oregon’s minimum wage, March 2, 2016

If you listen just to Democrats in the Oregon Legislature, the just-signed law upping the minimum wage is an unalloyed victory for all.

Tell that to Oregon universities that are faced with big pay increases and to the students who aren’t going to get a job because their school can’t afford to pay them.

According to The Oregonian, Oregon’s new minimum is likely to lead to cutbacks in student hiring or in the number of hours they’re allowed to work, and possibly higher tuition to cover added costs.

At the University of Oregon, the annual wage increases will translate into an estimated $2.3 million in additional wages

In the 2017-19 biennium, $3.4 million in the next funding cycle and $6.1 million by the 2021-23 biennium.

With similar impacts expected at Oregon State University, the school could be looking at reducing the number of student jobs by 650 to 700 positions by FY2019 to cut costs, said OSU spokesman, Steve Clark.

Small businesses across the state are agonizing over the minimum wage increases, too. They’re not going to be talking about ‘What do we do to expand? What do we do to hire more people?’,” said Anthony K. Smith, Oregon state director for the National Federation of Independent Business.

“They’re going to be making some very difficult decisions, none of which are going to help them grow. They have to decide whether to reduce hours for employees, raise prices on customers, make a reduction in their workforce, relocate their business, or maybe even close their doors.

Then, of course, Oregon’s minimum wage changes will contribute to the increased hodgepodge of pay rates in the Pacific Northwest.

If you are an employer in the Pacific Northwest, the minimum wage you will have to pay your employees early next year could, depending on the type and specific location of your business, the age of the employee, and other factors, be any one of the following: $8.05, $9.25, $9.47, $10.15, $10.50, $12.00, $12.50, $13.00, $15.24, $10.35, $11.15, $14.50, $15.00, or $15.24.

If you have to pay prevailing wage rates, your minimum wage rate will be even more expansive. In Oregon, for example, if an employer chooses to include the fringe rate with the basic hourly rate, the minimum hourly wage will be $57.26 for a boilermaker, $52.36 for a dredger and $34.31 for a Highway & Parking Striper.

Clearly, the plethora of minimum wages is going to generate maximum confusion for employers and employees alike. What a mess.

Want to know the whole bewildering picture? See below.

FEDERAL

2016 Federal hourly minimum wage: $7.25 an hour

Federal (sub) Contractors hourly minimum wage

Rate: $10.15. Calculated annually based upon cost of living and rounded to the nearest multiple of $0.05

WASHINGTON

2016 Washington hourly minimum wage outside Seattle, SeaTac and Tacoma: $9.47

  • 14- and 15-year-olds may be paid 85% of the minimum wage ($8.05).
  • Businesses may not use tips as credit toward minimum wages owed to a worker.
  • Under Initiative 688, approved by Washington voters in 1998, the state makes a cost-of-living adjustment to its minimum wage each year based on the federal Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) (www.ssa.gov). The state’s minimum wage is recalculated each year in September. Th4 new wage takes effect the following year on January 1.

2016 Seattle hourly minimum wage

A wage includes salary, hourly pay, commissions, piece-rate, and non-discretionary bonuses. Wages do not include tips or payments towards medical benefits. However, payment toward medical benefits can reduce employers’ minimum wage requirements temporarily until 2018.

Small Employers – 500 or fewer employees

 To calculate employer size, count the employer’s total number of individual employees worldwide. For franchises, count all employees in the franchise network.

All small employers are required to pay minimum compensation. Small employers can meet this requirement in two ways:

  • Pay hourly minimum compensation rate; or
  • Pay hourly minimum wage and make up the balance with employee tips reported to the IRS and/or payments toward an employee’s medical benefits plan. For an employee’s medical benefits to qualify toward the minimum wage, the plan must be the equivalent of a “silver” level or higher as defined in the federal Affordable Care Act. An employer cannot pay a reduced minimum wage if the employee declines medical benefits or is not eligible for medical benefits.
  1. Hourly Rate

Small employers pay hourly minimum compensation rate based on the following schedule:

  Minimum Compensation
2016 (January 1) $12.00/hour
2017 (January 1) $13.00/hour
2018 (January 1) $14.00/hour
2019 (January 1) $15.00/hour
  1. Tips and/or Medical Benefits

Small employers pay an hourly minimum wage and reach the minimum compensation rate through employee tips reported to the IRS and/or payments toward an employee’s medical benefits plan. If the tips and/or payments toward medical benefits do not add-up to the minimum compensation rate, the small employer makes up the difference.

  Minimum Compensation Minimum Wage
2016 (January 1) $12.00/hour $10.50/hour
2017 (January 1) $13.00/hour $11.00/hour
2018 (January 1) $14.00/hour $11.50/hour
2019 (January 1) $15.00/hour $12.00/hour
2020 (January 1) $15.75 $13.50/hour
2021 (January 1) $16.49 $15.00/hour

In 2025, small employers will pay the same minimum wage rate as large employers and will no longer count employee tips and/or payments toward an employee’s medical benefit plan toward minimum compensation. The City of Seattle will calculate percentage changes to the minimum wage based on the Consumer Price Index (CPI).

Large Employers: 501 or more employees

To calculate employer size, count the employer’s total number of individual employees worldwide. For franchises, count all employees in the franchise network.

Large employers can meet Seattle’s minimum wage requirements in two ways:

  • Pay hourly minimum wage; or
  • Pay reduced hourly minimum wage if the employer makes payments toward an employee’s silver level medical benefits plan. For an employee’s medical benefits to qualify toward the minimum wage, the plan must be the equivalent of a “silver” level or higher as defined in the federal Affordable Care Act. An employer cannot pay a reduced minimum wage if the employee declines medical benefits or is not eligible for medical benefits.
  1. Hourly Rate

Large employers who do not pay towards an employee’s medical benefits plan pay hourly minimum wage based on the following schedule:

  Minimum Wage
2016 (January 1) $13.00/hour
2017 (January 1) $15.00/hour
  1. Medical Benefits

Large employers who do make payments toward an employee’s medical benefits plan pay a reduced minimum wage based on the following schedule:

  Minimum Wage
2016 (January 1) $12.50/hour
2017 (January 1) $13.50/hour
2018 (January 1) $15.00/hour

Once Seattle’s minimum wage reaches $15.00/hour, payments toward medical benefits no longer impact employees’ minimum wage. In subsequent years, the City of Seattle will calculate percentage changes to the minimum wage based on the Consumer Price Index (CPI).

SeaTac Minimum Wage 

Rate: $15.24 for workers in and near Seattle-Tacoma International Airport.

 Tacoma, WA hourly minimum wage

11/04/15 – Tacoma, WA voters approved a $12 city minimum wage phased in over two years. The new minimum wage will apply to most employees who work 80+ hours per year within Tacoma city limits and begins with an increase to $10.35 an hour on February 1, 2016, Jan.1, 2017: $11.15; Jan. 1, 2018: $12.

 

 

OREGON

Current:  $9.25

 Tier 1 (the Portland urban growth boundary)

July 1, 2016: $9.75

July 1, 2017: $11.25

July 1, 2018: $12

July 1, 2019: $12.50

July 1, 2020: $13.25

July 1, 2021: $14

July 1, 2022: $14.75

 

Tier 2 (Benton, Clackamas, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Wasco, Washington and Yamhill counties)

 

July 1, 2016: $9.75

July 1, 2017: $10.25

July 1, 2018: $10.75.

July 1, 2019: $11.25

July 1, 2020: $12

July 1, 2021: $12.75

July 1, 2022: $13.50

 

Tier 3 (Malheur, Lake, Harney, Wheeler, Sherman, Gilliam, Wallowa, Grant, Jefferson, Baker, Union, Crook, Klamath, Douglas, Coos, Curry, Umatilla and Morrow counties)

 

July 1, 2016: $9.50

July 1, 2017: $10

July 1, 2018: $10.50

July 1, 2019: $11

July 1, 2020: $11.50

July 1, 2021: $12

July 1, 2022: $12.50

 

Milwaukie hourly Minimum Wage for city employees

10/22/15 – The Milwaukie City Council adopted a $15 minimum wage for all city employees. The resolution passed unanimously, putting in place a $15 minimum wage for not only full-time employees of the city of Milwaukie, but also part-time and seasonal workers, as well as interns.

Prevailing Wage Rates

In January and July of each year, Oregon’s Bureau of Labor and Industries publishes the prevailing wage rates that are required to be paid to workers on non-residential public works projects in the state of Oregon. Quarterly updates are published in April and October.

REGION #2

Clackamas, Multnomah and Washington Counties

Under the Davis-Bacon Act, employers can either choose to pay the fringe benefits as additional cash wages (which would result in an effective hourly wage of $38) or provide a “bona fide” benefit plan. Benefits that might be included in such a plan are retirement accounts (401(k) or pensions), medical insurance, vision insurance, dental insurance and life insurance.

 

Basic hourly rate             Fringe rate

Boilermaker               $33.92                           $23.34

Dredger                       $39.08                           $13.28

Fence constructor

(non-metal)               $24.10                         $10.12

(Metal)                          $20.50                         $ 5.09

Highway & Parking

Striper                            $26.11                          $ 8.20