On November 6 the voters of Arkansas approved Issue 4, which by constitutional amendment legalized casino gaming at the state’s two racetracks, by a vote of 54 percent to 46 percent. Two weeks later Oaklawn Racing & Gaming announced a $100 million racino expansion that will include a seven-story 200-room hotel, 28,000 square feet of additional gaming space and a 14,000 SF, 1,500 seat event center.
A total of four casino licenses will be issued under the law by the Arkansas State Racing Commission, one each for the two racetracks in the state, Oaklawn Jockey Club in Hot Springs and Southland Racing Corp. in Crittenden County—which will each get automatic licenses— and one each in Pope and Jefferson counties through a selection process that has yet to be created. Licenses will cost the operators $250,000, which is quite low for such a license. For example, in Massachusetts a casino resort license is $85 million.
The two racetracks are already “racinos” because state law allows them to have “electronic games of skill,” which look and function very much like slot machines.
The 114-year-old racetrack did not take a position on the measure but was ready to hit the turf running with a plan once it passed. Louis Cella, president of Oaklawn Jockey Club, said, “While one may assume that today’s announcement comes in response to the passage of Issue 4 on November 6, we actually began planning for this during our last expansion in 2014.” To underscore that, Arkansas Governor Asa Hutchinson attended the announcement, which included about 200 people and was held in the track’s paddock area.
Hutchinson said, “The state of Arkansas is grateful to Louis and his family for their commitment to growing their business right here at home,” Hutchinson declared. “This project, which will be financed exclusively with private funds, not only represents one of, if not the largest, tourism-related expansion projects in our history, it will also rank among the state’s largest economic development projects in 2019.” He added, “This investment would have happened without Issue 4. I can’t take credit, because this is a private investment, but I still get to celebrate it,” he said.
The developer is dubbing the privately-funded project “one of the largest hospitality investments in the history of Arkansas.” It will employ an estimated 2,300 in construction jobs and create 400 permanent positions.
Construction will begin next May after the end of the racing season. It will be completed by the first of the year in 2020, with the hotel and events center following a few months later.
At the same event where she announced the expansion, Cella said that it would help to maintain the facility’s status as “one of the top thoroughbred race tracks in the country.”
A panoramic view of that racetrack will be one of the selling points for half of the hotel rooms, with views of the Ouachita Mountains and a lake from the other half.
Oaklawn isn’t the only beneficiary of the amendment. Southland Racing and Gaming in West Memphis and in Pope and Jefferson counties, will also be able to take advantage. Sports betting will be limited to those four locations.
The measure is quite specific as to the games that will be authorized: “any game played with cards, dice, equipment, or any mechanical, electromechanical, or electronic device or machine for money, property, checks, credit, or any representative value, as well as accepting wagers on sporting events.”
The amendment mandates a 13 percent tax on gross gaming revenues up to $150 million and 20 percent above that. This will be divided between the state (55 percent), host city (19.5 percent), host county (8 percent) and Arkansas Racing Commission (17.5 percent.)
This is the fourth time Arkansas voters weighed in on a gaming expansion. They rejected previous attempts in 1984, 1996 and 2000. Not to mention 2012 and 2016 when gaming interests gathered enough signatures—or thought they did—only to have the measures thrown out because of the wording. But a key factor is that the racetracks fought the earlier attempts and didn’t fight this one. In fact, Southland supported it.
The measure submitted by Driving Arkansas Forward that ultimately succeeded did face a legal challenge but surmounted it. The attorney for the group, Alex Gray, told the Arkansas Times: “First off, it was actually on the ballot. The ballot title was drafted properly, people could understand it and … we got good signatures. It was not susceptible to the challenges that we saw with other initiatives.”
Voters were persuaded by a campaign that stressed keeping Arkansas dollars in the state by encouraging gamblers to play at local casinos.
The pro-Issue 4 campaign was well funded with $7.05 million raised by Driving Arkansas Forward, and $1.91 million by a separate FAC that backed it. Opponents raised about $30,000 and so were outraised by a factor of 50 to 1.
At stake were casinos that proponents claim will generate $120 million in taxes every year.
Driving Arkansas Forward funded a study that projected that 3,000 new jobs would be created if Issue 4 passed.
The main contributors to the Issue 4 campaign was Delaware North, the parent company of Southland, and Downstream Development Authority, the development arm of the Quapaw Tribe, which is reportedly aiming for a license in Jefferson County.
