In an off-year, there usually aren’t very many issues that impact the gaming industry. The 2011 weren’t much different, but there were several races that will impact—now or in the future—the gaming industry.

Sports Betting Referendum Passes in New Jersey

As predicted, the recent question to allow sports betting in New Jersey passed easily, by a comfortable 2-1 margin. Polls leading up to the November ballot showed a good portion of state residents supported the measure, and the vote bore this out. The state constitution has been amended to allow betting on professional and collegiate sports, except for athletic events taking place in New Jersey or games involving New Jersey colleges.

“With this referendum, we have an opportunity that gives the state more solid footing to challenge the federal ban on sports wagering outside of a few select places,” said Gov. Chris Christie, who followed his constituents in favor of Public Question 1.

But is the sports wagering amendment just a symbolic victory, or does New Jersey have a real shot at overturning the Professional and Amateur Sports Protection Act (PASPA), enacted in 1992?

Several gaming analysts think it’s a long shot. The legal hurdles facing the repeal or overturning of PASPA are considerable. The act bans sports betting in all but four states—Nevada, Oregon, Montana, and Delaware. Of those, only Nevada has real sports books; the other three states had implemented or planned to implement sports betting parlay cards. Las Vegas has offered single-game wagering since 1975, reportedly the most lucrative form of sports betting. The courts shot down Delaware in 2008 when it attempted to offer more than parlay betting. New Jersey missed its chance when PASPA was first introduced. The initial bill had given the state a year to hold a referendum and approve a sports betting bill, but political maneuvering stalled any effort to ratify legislation. 

But state Sen. Raymond Lesniak, sports betting’s main supporter, seems to think it has a chance. Lesniak has said he plans to introduce legislation that would authorize the New Jersey Casino Control Commission to begin the licensing process for sports betting at casinos and horse tracks in Freehold, Monmouth, Mays Landing and the Meadowlands.

“I expect to get it to Governor (Chris) Christie for his signature before the end of the year,” Lesniak told the Philadelphia Inquirer on election night. “By the start of next year's NFL season, when the Eagles play the Giants, you'd better reserve your room soon in Atlantic City, because it will be packed, just like Las Vegas is now.”

Before that could happen, Lesniak would have to revive and win his federal lawsuit claiming that PASPA is unconstitutional. The suit was dismissed two years ago when a judge found it had no standing, prompting the senator to draft Question 1. But even an initial court victory (as far-fetched as that would be), would spur an appeal, leading to a long process, two years at the very minimum.

Another line of attack in favor of sports betting is planned by U.S. Rep. Frank Pallone Jr. Pallone said he plans to introduce a bill that would immediately exempt New Jersey from the federal ban. No other states would be included in the measure and Pallone’s bill would prohibit betting on college games.

“New Jersey voted for, and deserves a bite of the apple in terms of sports betting,” Pallone said. “Any delay in making this possible is a loss of profits for local businesses which is unacceptable.”

No doubt New Jersey is in a better position to challenge the federal ban, since it now has the support of the people. But obstacles still lie ahead.

The National Football League, along with other major sports leagues, has maintained their opposition to gambling on professional sports. The NFL has a strong lobby in Washington, DC. If Congress doesn’t repeal the law, then the matter would have to go through the courts, which are notoriously slow in settling lawsuits and appeals.

Lesniak plans to go back to court by February 2012. He is backed up by the governor and Senate President Stephen Sweeney. New Jersey’s casinos and horseracing tracks, both struggling to survive in a competitive environment, support the effort.  

The only thing that remains undisputed is the money. It is estimated that sports betting in this country is a $380 billion industry, with most of that money going to illegal operators. Taping into that revenue has been the goal of New Jersey legislators, and they are betting on the chance. Lesniak’s bill would call for an 8 percent tax rate on casino and racetrack profits, the same rate the casinos pay on their gambling revenue. In addition, winning bets are taxable income and gamblers would be responsible for declaring them. Recently reelected Senator Jim Whelan, who will shortly review the bill, said that both houses of the legislature plan to fast-track it in the hope of getting it to Christie’s desk before the current session ends in early January.

Maine Rejects More Casinos

In the seventh election in 11 years where Maine voters have been asked to decide casino measures, voters Tuesday strongly rejected two referendums that would have brought to a total of five the number of casinos in the state. The state currently has one slots parlor, Hollywood Slots in Bangor and one being built in Oxford County.

Question 2, which would have authorized a racino in Biddeford operated by Ocean Properties Ltd. Scarborough Downs racetrack and one Indian racino by the Passamaquoddy Tribe in Washington County, was defeated by 55 percent against to 45 percent in favor.

Question 3, which would have authorized a casino in Lewiston, was defeated by a margin of 63 percent against and 37 percent in favor. Even in Lewiston itself the measure passed by only 900 votes.

According to reports, proponents of the casino measures outspent opponents by a factor of four to one. That didn’t show up in the election results, however.

A spokesman for Mainers Against a Rotten Deal, which opposed both measures, savored the victory. “Stick a fork in it. It’s verification that Maine isn’t ready to install five casinos before number two has opened yet,” said Chris O’Neil, according to the Bangor Daily News.

Dennis Bailey, executive director of the Casinos No! group, according to the Press Herald commented, “Going from two casinos to five was too much too soon for Mainers.”

Lewiston Mayor Larry Gilbert criticized Maine Governor Paul LePage, who is a Lewiston native, from injecting himself into the campaign. “Do I sound upset? You bet. I’m upset at the governor, for getting involved in things when he said he wouldn’t. I smelled a rat then and I smell one now.”

The Thursday before the election the governor made the comment, “I have a degree in finance and economics and I do not see how five casinos in Maine can be sustained. We have a population of 1.3 million and we earn 82 percent of the national average per capita income. Connecticut has 3.5 million people and they can barely support two casinos.”

The mayor conceded that he doesn’t much care for the governor anyway, “because he comes from Lewiston and he’s done nothing for Lewiston.”

But he also blamed negative press stories on the gaming measures. “The only time people come here to write stories is about negative stories. Consequently, what you get is a steady diet of negative things,” he said.

Other supporters said they were shocked at how one-sided the election results were.

Big losers were the leaders of the Passamaquoddy Tribe, which would have been able to build a $25 million racino in Calais if Question 2 had been approved. However, tribal members themselves did not overwhelmingly support the measure, voting for it by 57 percent compared to 43 percent no.

Tribal Governor Clayton Cleaves of Pleasant Point commented on this with surprise. “I am disappointed and have no idea why it was not supported by the Penobscot Nation. They should have supported us. It is in their DNA.”

Passamaquoddy Chief Joseph Socobasin reacted angrily and defiantly.  He told an interviewer, “The tribe has been pursuing this for 20 years now and at what point—what do we need to do? We've tried, just from so many different angles. This is our third statewide referendum. We've had several bills in Augusta make it through the House and Senate, only to be vetoed by the governor. But at the same time, we're resilient people and we're not going to give up.” He promised to appeal to the legislature in January.

Likewise the harness racing industry, as represented by Scarborough Downs, wasn’t ready to give up just yet. “Harness racing is not going down without a fight,” said Ed MacColl, an attorney for the racetrack.

The operators of the Hollywood Slots were happy about the results, however, since some estimates had projected that its revenues would fall by as much as 30 percent if all three gaming facilities had been built.

Friends of Oxford Casino PAC had successfully argued that their casino should be allowed to be built and operate for a while before committing to other casinos. Other commentators used the words “pause button” or “time out,” the term used by political strategist Edward “Ted” O’Meara, to describe the effect of the vote.

Brian Duff, a political scientist at the University of New England, agreed with that assessment, according to the Bangor Daily News. “I think what happened was the ‘no casinos’ campaign had a very effective, very simple message — too much, too fast. That’s a message that made a lot of sense to people: ‘How quickly do we want Maine to become a casino state?”

Marvin Druker a professor of public affairs at the University of Southern Maine’s Lewiston, added  “People are reluctant to have too many until they see what we have with the two. People want to see what it’s going to be like.”

Some felt that the pro-casino campaign had “overplayed its hand” with one direct mailer obscuring what the election was actually about. “If you didn’t know better, you’d think we were voting on an education bonds issue,” said one observer.

Bowdoin political scientist Christian Potholm said Governor LePage’s last minute statement might have also had an effect. “I think the governor took a fairly courageous stand but a correct one, in saying that Maine can’t support five casinos. Common-sensibly, that’s a pretty powerful argument, even though he’s in favor of casinos,” he said, according to the Bangor Daily News.

He added that LePage and the legislature should draw up a tightly written framework for future casino development, because “Pro-gambling forces do not give up. It’s such a lucrative proposition for the people who own the casinos, they keep trying to find a way.”

Backers of the casino measures promised to try again at the next opportunity. Stavros Mendros, who worked on the campaign for a casino in Lewiston, declared, “I have no intention of giving up on my community. Lewiston voted for this and still wants it.”

The defeat of the two measures appears to mark a return to the traditional voting patterns in Maine regarding casinos. Out of seven elections pertaining to gaming in the last decade, the voters have only approved new casinos in two of them: in 2003 for Hollywood Slots and last year for a casino in Oxford County. However, last year’s pro-gaming vote was very close.

Beshear Wins in Kentucky; Bryant in Mississippi

Kentucky Governor Steve Beshear easily won reelection last week. Beshear has been a major proponent of expanding gambling by adding slots to Kentucky racetracks.

His opponent, state Senate President David Williams, wanted any expansion of gambling to be subject to a statewide referendum.

Kentucky racing interests contributed millions to Beshear’s campaign. The debate over expanded gambling will be a main topic of the next legislative session, to begin in January. Proponents of expanded gambling point to racinos in surrounding states—and soon, full-blown casinos in nearby Cincinnati and other Ohio cities.

Beshear is not expected to veto any gaming expansion bill that would emerge from the legislature, even if it did not call for a statewide referendum.

In Mississippi, Phil Bryant was elected governor, succeeding Haley Barbour, the popular two-term governor who was constitutionally prohibited from a third term.

Bryant served as vice-governor under Barbour and is expected to continue Barbour’s policy toward gaming. Bryant is a big supporter of the Mississippi tourism industry, but opposes expansion of casinos into any other areas outside of where they currently exist.

He accepts and encourages growth of gaming in the regions where it currently operates and has resisted efforts to increase the gaming tax rate.

“It is a big business in the state of Mississippi and is providing a lot of jobs,” Bryant said.

By Staff