When seeking advice from consultants, don’t just take their word for it or even their data. Information compiled years ago may not be applicable to current situations so make sure your data is up to date.
Making decisions can be hard. Those who are paid to make decisions every day—elected and appointed government officials, company board members, CEOs, and all levels of managers, are generally well-positioned to address day-to-day matters, but cannot possibly have the expertise or time to make every decision without help, or to do so without the pitfalls of groupthink. Many important decisions need to be made on things outside the team’s wheelhouse or would benefit from an unbiased review. In these cases, consultants can provide a valuable resource for decision making… or can steer you further down the wrong road, or waste valuable time.
Consulting firms can be made up of engineers, architects, public relations specialists, strategic planners, social media experts, branding experts, academics—nearly every field that you might need but can’t, don’t want to, cannot afford to, or makes no sense to staff in-house. Particularly for government entities, getting the right help can add significant value to a decision process, leading to the best decision quicker, easier, and saving money.
But too often the help received is not useful or what is truly needed. For a variety of reasons, particularly for local governments that do not have prior experience with the gaming industry, there is frequent lament that they didn’t hire the right firm or establish the right scope of work the first time, only realizing it when they receive a sub-par work product, try to execute decisions, or even worse, when the decisions turn out to be the wrong ones. These decisions can have massive impacts on budgets, forecast and actual, at both the local and statewide levels. The same holds true for gaming companies, tribes and bankers, though they are generally more immediately aware whether the analyses and assistance they receive are useful and credible.
Case in point – our firm recently helped a Midwest city to understand the potential impacts from a new casino development in their community. A year prior, this city had paid another consultant to do just that, but instead received a boilerplate report filled with old and incorrect data, and which did not adequately address the city’s concerns. As we uncovered and delivered to the city, data from the last 10 years clearly shows that today’s casinos are 1) typically good neighbors; 2) do not create community crime problems; and 3) have either no impact or a small positive impact on existing businesses.
However, that data-based truth is not a particularly exciting headline, but was uncovered with thorough research and in-depth analysis of markets where casinos have been developed over the past decade. That truth also came through the hard work of picking up the phone and calling police chiefs, city managers, and other government officials to learn of their experiences. With reliable data in-hand, we were able to help our client respond to the community’s concerns, as well as to budget for future needs—how many new police officers will be needed to handle the influx of visitors, what infrastructure needs to be in place, what can and should be done with the increased municipal revenues? The city’s mayor and staff were grateful for the information, but they simply received the decision-making help that they paid for and should have received a year ago.
Another client, a Native American tribe, was the victim of years of years of bad advice. They had brought in a consulting firm based on a personal connection and price, not the firm’s reputation or work product. Recently, a tribal council member wisely suggested getting a second opinion on a particular project. Our firm listened to this client, dug up not-so-easy to find data, analyzed the situation from multiple angles, and delivered a customized and comprehensible assessment of their situation and the path forward. Tribal council’s eyes were suddenly opened to what they were missing and should have been receiving for years—and how much time, energy, and money they’d been wasting.
In our practice, we have seen a city government nearly railroaded by a self-interested business group with a half-baked consultant’s report which used outdated data and statistics and clearly exhibited little knowledge of the gaming industry and its recent trends. The report looked good, sounded good, but upon examination was grossly misinformed and blatantly wrong.
These are just a few examples of where guidance has been poor, but there are many more where boilerplate language, or a lack of understanding of the gaming industry has misled governments or should have immediately been viewed as useless. We’ve seen analyses by those that don’t examine the gaming industry, suggesting a rural casino has the ability to generate a win per position of approximately $1,000 per day, and the government officials had no idea how ludicrous that sounds. But even for those that frequently work in the space, it is necessary to focus on the fact that the gaming industry is constantly evolving, as are macroeconomic factors. An analysis that relies on data from the 1990s, 2000s or the Great Recession has little to no value, yet we see reports and academic articles like this regularly.
Outdated data can also misinform as much as it can disinform. Critics of the casino gaming industry have frequently weaponized these types of incorrect and outdated reports and data sources, and too infrequently are they challenged. We recently experienced this firsthand when helping an economic development agency to understand the potential impacts from a new casino development in their community. The opposition claimed that the casino would decrease property values in the area, citing what appeared to be a reliable source, the National Association of Realtors (NAR) 2013 report for the Realtor Association of Pioneer Valley (western Massachusetts), which forecast that the winning town of the western Massachusetts gaming license would see aggregate real estate values decline by 4.6 percent. The report used data from casino towns developing in the 1990s to arrive at that projection, and the resulting forecast turned out to be wrong. MGM Springfield opened in 2018, and from 2018 to 2021, the aggregate assessed value of Springfield real estate increased by over 21 percent, a significantly greater growth rate than any of the nearby towns where the license was vied for. But the NAR never revised their analysis, and anti-casino groups continue to weaponize it. This salacious story about casinos negatively impacting property values will continue to be repeated unless officials make an immediate and strong argument against it.
In this post-pandemic world (is that what we’re calling it?), so many things have been upended. Tenets that were long held true have fallen away, and we can’t rely on things such as past performance to the degree we once did. Now more than ever, it is vital for decision makers to insist that the help they solicit is on top of the latest trends and utilizes the latest data. Relying on anything less is sure to steer them and their resulting decisions wrong.