Tuesday, October 30, 2012


It started on October 11th when Jared Hunt, a reporter for the Charleston Daily Mail, wrote an article that ran under the headline, “Md. casino vote could cost W.Va. $1 billion in revenue”.

The projected loss, which would take place over ten years, is based on a study by the Sage Policy Group, a consulting firm commissioned by a political action committee that supports passage of Maryland’s Question 7. The facility at risk of losing the revenue is West Virginia’s Charles Town Races and Slots.

Hunt’s article received considerable attention in West Virginia and was widely shared on Twitter. Hoppy Kercheval, host of West Virginia MetroNews Talkline, gave the report even greater notoriety when he invited Hunt to discuss the article on his statewide radio show.

Soon others were picking up on the story. Tom Miller, longtime writer of the “Under the Dome” column, which appears in numerous newspapers, devoted part of a column to the same study on which Hunt had reported. But, Miller’s summary portrayed an even more horrific scenario.

Instead of a loss of $1 billion over ten years, Miller wrote that the loss would be as much as $1.5 billion. And more shocking, instead of taking place over ten years, Miller said the loss would be annual – an almost catastrophic outcome, since $1.5 billion represents 2% of the state’s annual gross domestic product.

At this point, somebody’s spidey-sense should have been tingling, indicating something was amiss. Not only is 2% of GDP a big number, but last year total revenue for Charles Town Races and Slots was only $570 million. How could the casino lose in revenue three times more than it takes in? But, concerns were allayed when Miller’s column was promoted on Twitter by former West Virginia economics professor, Tom Witt.

With an endorsement like that, it just had to be true! Didn’t it? Well, not really.

It turns out that the study upon which the reports were based does not say that West Virginia would lose $1.5 billion per year. It doesn’t even say we would lose $1 billion over ten years.

The study projects that, in the event Maryland passes its referendum, Charles Town Races and Slots will lose $65 million dollars per year, which is fully one-third less than Jared Hunt reported and less than one-twentieth the amount Miller’s column claimed.

Now, don’t misunderstand, $65 million isn’t chicken feed. It represents an 11% drop in revenue for Charles Town Races and Slots and might cost some jobs. But, it would not be catastrophic and would not by any stretch of the imagination put the casino’s survival at risk as some readers of Hunt’s and Miller’s columns feared.

So the question is, how did prominent and respected people such as Hunt, Kercheval, Miller, and Witt get it wrong and, in Miller’s and Witt’s case, spectacularly wrong?

It’s not as though the error had gone completely unnoticed. Bryan Clark, a reporter for The Spirit of Jefferson, a weekly newspaper in Jefferson County, which is home to Charles Town Races and Slots, noticed the mistake in Jared Hunt’s original article and, in response, wrote a front-page story titled, “Reports of $1B casino loss wrong”. His story appeared even before Miller’s column.

Clark, who had read the study on which Hunt’s original story was based and identified the mistake, was also aware that, before contradicting one of the state’s leading newspapers, he had better be on solid ground. So, he did the logical thing. He called the study’s author.

Anirban Basu, a principal at Sage Policy Group, confirmed that the projected loss to Charles Town Races and Slots would be between $60 million and $65 million per year. The $1.5 billion figure was mentioned in the report, but not as the amount Charles Town would lose if the referendum passes. $1.5 billion is the amount the study predicted Maryland residents would spend in Charles Town over a decade if the referendum is not passed.

However, under no circumstances would the creation of casinos in Maryland cause Charles Town to lose all of that business. Basu’s team calculated that it would lose half or less, hence, the $60 million to $65 million per year figure.

There are many morals to this story having to do with the importance of thoroughness and attention to detail in reporting as well as the need for the public to practice critical reading skills. But, one lesson that should not be lost is the importance of quantitative literacy.

The error in Hunt’s original story should have been suspected by anyone familiar with Charles Town Races and Slots’ business. And the error made by Miller should have been obvious to anyone even vaguely familiar with the size of the state’s economy.

Every day politicians, companies, organizations and their advocates hype stories that from a quantitative perspective and in the total scheme of things are nearly inconsequential -- the imagined problem of pervasive voter fraud for instance. Meanwhile, other stories that are of great consequence, but in no one’s interest to publicize, such as the $600 million windfall in annual federal subsidies that West Virginia would realize by fully expanding Medicaid to uninsured residents, receive little or no attention.

The sad part is that often the truth and weight of issues are right in front of us. But, because they’re expressed numerically, we miss them altogether.

Sean O’Leary can be reached at seanoleary@citlink.net or at his blog, the-state-of-my-state.com.

No comments: