Who is behind the Michigan report on casino cannibalisation?

A Michigan political lobbying firm, McAlvey Merchant Associates, has reportedly commissioned a research report titled “Potential impact of online gambling on commercial casino revenue,” from small local company Meloria Solutions for reasons that are not entirely clear and for an as yet unknown client.

Given the title and the more than five-year-old information used by Meloria’s Matt Hanley it could be assumed that the objective is not friendly to online gambling legalisation in the state, which is currently the subject of debate (see previous  reports).

Hanley’s five page report contains an introductory passage that reads: “You have asked me to analyze the proposal to allow online gambling in Michigan with respect to potential impacts on state revenues, especially those from the three commercial casinos in Detroit and the state lottery,” which illustrates the tasking Hanley was given.

Journalist Steve Ruddock, writing in the Online Poker Report this week, reveals that Hanley’s five-page report relies on a 2011 study by Kahlil Philander which caused a few waves before Nevada, New Jersey and Delaware legalised online gambling at state level (see previous reports).

Philander reached questionable conclusions which suggested that the legalisation of online gambling could cannibalise land casino business.

Howver, empirical results following legalisation debunked the idea, and in 2015 Kahlil released an updated version of his research, reversing his position and acknowledging that online gambling has in fact been beneficial to land casinos.

That was nothing new for several land casino executives, who have repeatedly rebutted the “cannibalisation” argument, based on their practical experiences.

Apparently Hanley was not aware, or chose to ignore, the updated Kahlil finding because his report resurrects the old cannibalism fears in the Michigan context, based on some questionable arithmetic, according to OPR.

For the record, the revised and updated Kahlil report found that:

* Online gambling won’t cannibalise land-based casinos; the researcher declared, “In no model did we find evidence of a cannibalistic relationship among the gambling modes.”

* Online gambling is in fact “robustly” complementary to land-based gambling;

In responding to the Hanley study, the Poker Players Alliance points to another element which Hanley has apparently not taken into his calculations – Michigan online gamblers currently use illegal offshore sites, and the advent of a sensible and regulated Michigan online gambling regime would displace many of these “black market” operators.

In the highly unlikely event that Hanley is correct about cannibalisation, these illegal operators would already be impacting land casino business, the PPA argues….take them out of the equation in favour of state-taxed and protected online enterprises run by the land casinos, and the situation is immediately improved anyway.

The OPR story does encourage speculation on who may be behind the hiring of Michigan lobbyist McAlvey Merchant Associates and that company’s commissioning of an apparently negative report on the impact of online gambling.

Inevitably a hidden hand that comes to mind in such speculation is that of Sheldon Adelson or his cohorts. Progress on legalisation would not suit their agenda at all.

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