Gaming’s side bets in next week’s presidential election
GAMING IMPACT STATEMENT
WHAT: U.S. election
WHERE: U.S., Pacific
WHY: A presidential election takes a back seat to several referendums for parties of interest in the gaming industry.
The general election in the United States is creating much excitement across the country as the prospect of the first African American president or the first woman vice president hangs in the balance.
As the bitter campaign winds down, however, attention turns to some of the lesser known issues to be decided during the same vote.
For the gaming industry, there is a plethora of states that are considering issues that will have an impact on gaming companies and the overall industry. And the decisions on these issues may indicate trends that the industry will grapple with for many years to come.
Below is a roundup of battles in each state and jurisdiction where gaming will face the ballot next week.
Arkansas Lottery
Another rematch is on the ticket in Arkansas, where voters again are being asked to approve a state lottery. They rejected a lottery in 1996 and 2000, but a recent poll showed 65 percent in favor for this week’s round.
As before, opponents of the constitutional amendment worry that the term “lottery” is vague enough to cover the casinos they don’t want to see added to the state’s gambling mix, which ranges from dog races and bingo to video poker and virtual blackjack. “What they do in Vegas needs to stay in Vegas,” says an ad for the Arkansas Family Council.
One news analysis said the emphasis on casinos “may backfire on lottery opponents” by suggesting a lottery is acceptable in contrast to casinos.
The Arkansas Supreme Court did not deal with the meaning of “lottery” when it dismissed a challenge to the ballot measure. Lt. Gov. Bill Halter, who favors the lottery, says the new law will raise money for education without allowing casinos. The terminology may get back to court if this week’s measure passes.
Prediction: The casino vs. lottery argument will play well and voters will approve.
Colorado Max
Should state voters approve, Colorado’s three gambling towns, Black Hawk, Cripple Creek and Central City, would have the option of raising the maximum bet at their casinos if Amendment 50 passes.
Currently the highest bet allowable is $5. That would be raised to $100 under the measure, which casino owners say is necessary to make them competitive.
Opponents fear that raising the limit would transform the friendly little historical Western towns from tourist destinations to Las Vegas style gambling meccas.
Another state that has a similar gambling town, South Dakota, eight years ago raised the limit for Deadwood. The result was a steady increase of revenue, almost doubling from 2000, when the change was approved, to the present. Hotel rooms in town doubled in number. The number of slot machines in the town also increased by 60 percent.
In addition to raising the bet limit, Amendment 50 would also allow casinos to expand their hours to 24/7 and add craps and roulette. Currently they only offer blackjack and poker, besides slots.
The additional tax money raised, estimated at $220 million, would be set aside for community colleges.
The amendment is opposed by Denver Mayor John Hickenlooper, Attorney General John Suthers and former governor, Bill Owens. Current Governor Bill Ritter and Rep. Tom Tancredo are in favor.
Prediction: Polls show a good majority of voters favor the higher limits.
Guam Greyhounds
Voters in the American territory of Guam are being asked again if they want to have casino gaming on their northern Pacific island. This time, the sweetener is a $30 million convention center.
The Responsible Gaming Act seeks to establish a casino at Guam Greyhound Park. The proposal lays out specifics on taxation, license fees, social contributions and the creation of a regulatory agency and its source of funding. The centerpiece of Prop A is the mandatory provision by the developer of a convention center whose total development, construction and operational investment is not to be less than $30 million.
Prop A has two major differences with a previous gaming referendum, which was voted down by a about a two-to-one margin in 2004. The earlier proposal was for slots only, whereas Prop A stipulates all forms of casino gaming. Another big difference is that Prop A would restrict entrance to the casino to those with valid travel documents. The casino and the convention center are intended to increase the appeal of Guam to tourists, according to proponents.
The man behind the initiative is John Baldwin, the majority owner of Guam Greyhound and a principle of Bridge Capital LLC. In 2007 Baldwin approached the government with an offer to pay $100 million in gaming tax in advance, in exchange for a 40-year monopoly. That offer was declined.
Opposing the initiative is an organization tellingly named “Keep Guam Good.” The opposition is well organized and has the support of Governor Felix Camacho, who reportedly spent $4,000 of his own money on a television spot that began airing on local channels one week before the election. The commercial includes a warning from the governor, who appears in it and says, “If it sounds too good to be true, it probably is.”
The outcome of the vote might not matter in the long run. Tourism, the islands second-biggest industry, was off 22 percent in September and the Guam Visitors Bureau expects the trend to continue into next year.
According to Pacific News Center, GVB Chairman Dave Tydingco recently said that within the next five years, his agency will look at the possibility of legalized gambling on Guam.
Prediction: Guam voters will again defeat gaming, but this time by a narrower margin.
Maine Casino
A statewide initiative, called Question 2 will decide whether Maine’s one casino, Hollywood Slots, in Bangor, is joined by a second in Oxford County. A poll shows a tie, 47 percent for, and 46 percent against, with 7 percent undecided.
Two Maine tribes who have been interested in casinos, the Passamaquoddy Tribe and Penobscot Indian Nation, are neutral on the question. Individual members say they may not vote yes because residents have not supported their casinos—as recent as 2003. That year Governor John Baldacci vetoed a bill to allow the Penobscots to operate a bingo and slots on Indian Island.
The tribe is considering something like declaring independence and has told the state to stay clear of the reservation. They are also moving forward with plans for a slots casino on Indian Island, armed with a legal opinion that they can legally used modified slot machines.
At one point the Penobscot were negotiating to take over the Question 2 campaign, before Nevada-based Olympia Gaming bought the rights from Evergreen Mountain Enterprises, just a month ago. Before that, the campaign was considered dead.
Hollywood Slots, owned by Penn National, is also neutral, although the new casino would be competition.
Opponents contend that the referendum is unclearly written. One provision that lowers the gambling age below 21, is very controversial. Governor Baldacci calls the measure “flawed.”
The $184 million casino, if approved, would be built in two stages. Dean Harrold, vice president of Olympia Gaming, recently unveiled the rendering of the rural New England style building.
In a related issue, residents of Scarborough, Maine, will also vote in the same election on a measure that will allow Scarborough Downs harness racing track to become a racino.
Prediction: A narrow victory but uncertain future for the casino proposal.
Maryland Slots
After lawmakers scuttled former Maryland Governor Robert Ehrlich’s plans to add slot machines to Maryland’s racetracks by defeating slot packages in three successive legislative sessions, new Governor Martin O’Malley succeeded this year in securing approval of a limited slot plan to be approved through a voter referendum.
The question on this week’s ballot asks voters to approve an amendment to the state constitution that would legalize a total of 15,000 slot machines in five Maryland counties. The counties listed in the bill do not encompass all of the state’s racetracks, which has been one source of opposition. The language of the ballot question notes that revenues will go to fund education programs (it doesn’t mention that some profits go to horsemen and the track owners, another bone of contention from anti-gaming forces).
The amendment would allow 4,750 machines in Anne Arundel County, where Magna’s Laurel Park racetrack is located; 2,500 in Cecil County, 2,500 in Worcester County, home to Ocean Downs racetrack; 3,750 in Baltimore city and 1,500 in Rocky Gap State Park in Allegany County.
Only two racetracks, Laurel Park and Ocean Downs, are eligible for slot machines under the referendum (although an investor proposing to buy Laurel Park’s parent company said last week he would not add slots).
The other locations would be stand-alone slot casinos. One would be two miles from Interstate 95 in Cecil County, close to the Delaware state line. Another would be at the Rocky Gap Lodge near Cumberland; and a third would be in the city of Baltimore.
The referendum would tax slot revenues at around 50 percent, with proceeds to the state’s educational trust fund along with a 7 percent stake for horsemen. A portion also would go to fund purses.
The latest polls show a solid majority of voters are likely to support the ballot question. An October 22 Washington Post poll showed 62 percent of likely voters are in favor of legalizing slots.
Prediction: Tired of traveling to Delaware and West Virginia, voters go for home-state slots.
Missouri Limits
Missouri’s voters have the chance to end the $500 buy-in limit per every two hours that is the only such restriction on casinos in the nation. Proposition A would also cap the number of casinos in the state at 13 and raise as much as $130 million annually for education from additional taxation of casino revenues.
But there powerful interests opposed, including the Illinois-based Casino Queen, which donated $150,000 to the Voters for Good Government, which is fighting Proposition A.
Proponents also have casino money, and a whole lot more of it, provided by the two of the biggest potential beneficiaries, Ameristar and Pinnacle Entertainment, both based in Las Vegas. Between them they have contributed more than $7 million. Both operate several casinos in the state.
The four casinos in Kansas City are particularly worried about market saturation. Lyon County voters recently approved plans for a $90 million casino, and Wild Rose Entertainment LLC wants to build in Sugar Creek, near the existing Ameristar Kansas City and Harrah’s North Kansas City. Not to mention the four regional casinos that Kansas has authorized, including the Hard Rock Hotel & Casino at Kansas Speedway in Wyandotte County.
If Prop. A doesn’t pass some of them hope that the Missouri Gaming Commission will not approve any more new casinos in the Kansas City metropolitan area.
Prediction: Missouri votes to welcome players without previous restrictions.
Ohio Battle
Issue 6, an amendment to the state constitution, gives Ohio voters the chance to open the state’s first, and what would probably be only casino resort, a $600 million project, in Clinton County.
Meanwhile, both sides are suing each other.
Issue 6’s backers are suing Penn National Gaming, Inc., owner of the Argosy Casino in Indiana. My Ohio Now PAC and Blue Water Joint Venture LLC allege that Penn National’s campaign against the measure defames the proponents and makes false and inflammatory statements.
Penn National is counter suing, accusing Lyle Berman of Lakes Entertainment, the company that would run the casino of accusing Penn National of “fraudulent activities.” Penn National’s spokesman commented, “This is a very serious charge, and as a publicly traded company, we cannot stand idly by while Mr. Berman attempts to discredit and defame Penn National Gaming…”
It also accuses My Ohio Now of lying when it says that the casino would pay 30 percent taxes. “The fact is, the Issue 6 amendment leaves to the General Assembly to set a tax rate ‘up to’ 30 percent of the gross casino receipts of the casino, which means it could end up anywhere from zero up to 30 percent,” said the spokesman.
The Argosy Casino In Lawrenceburg would face strong competition from a regional casino. Its parent company, Penn National Gaming, has contributed almost $28 million to defeat the measure. Lakes Entertainment Inc., which would operate the casino, has contributed $3 million.
Opponents argue that the measure would facilitate Indian casinos. Ohio has no aboriginal tribe, but one wants to establish itself: the Eastern Shawnee Tribe of Oklahoma. It has gotten nowhere with the federal government. Yet Issue 6 would make it easier to open a casino, if it gets federal recognition.
Union UNITE HERE, the largest U.S. union of casino workers, warned members that Lakes Entertainment has opposed unionization and challenged the casino company to open its books so that voters could see what its non-union workers earn.
Prediction: Uncertainty will send this measure down to defeat.
West Virginia Tables
In West Virginia, the Greenbrier resort workers’ jobs seem so precarious that a minister who successfully fought a 2000 ballot measure to permit table games there refuses to do the same this time around. Unions got the November 4 issue onto the Greenbrier County ballot by contending that new gaming revenue is crucial to the White Sulphur Springs hotel’s continued operation and staffing.
The four-star resort has recently been losing $15 million a year, according to a $50 million lawsuit filed early this year by a former Greenbrier president who says he was fired improperly after less than a year on the job.
Bucking sentiments of other area churches that oppose the Greenbrier gaming measure, Pastor Alvie Edwards of First Baptist Church in Fairlea says, “My heart goes out to those employees who are in desperation for their jobs and may need this to save them.”
The Greenbrier spent $1 million promoting the 2000 gambling measure, which went down 58-42. The transportation company that now owns the resort, CSX Corporation of Jacksonville, Florida, refuses to comment on this week’s election question or the labor dispute that has run since February.
That’s one reason another pastor opposes allowing gaming at the resort. “We have had no promises by the Greenbrier yet,” he says, “and I just don’t accept the notion that if the resort gets gambling that all of these jobs will automatically be saved.”
Prediction: Desperate times means desperate measures, and the Greenbrier will soon host one of America’s most elegant casinos, which will undoubtedly include slots at some time in the future.
Other Issues
Some states and regions are evaluating other issues which have gaming connections, as well.
While some Massachusetts voters would prefer to be voting on casinos, they can only determine the fate of greyhound racing in a ballot initiative pushed by animal lovers.
Lakewood, Washington will ask voters to ban gambling and close down the four card rooms in the town.
Washington gaming tribes are watching this week’s tight gubernatorial election to see if they keep a friend in the governor’s mansion. Democrat Christine Gregoire, seeking a second term, recently negotiated statewide gaming compacts that maintain Washington’s practice of requiring no revenue sharing. The governor said the move contained gambling expansion, but Republican challenger Dino Rossi, who is one-quarter Tlingit Alaskan Native, criticized the deal as not benefiting the state and alleged Gregoire made it in return for campaign contributions. A Rossi spokesman has said the gamers “know if Rossi wins, all bets are off.”
Needles, California, residents can OK the San Bernardino County Board of Supervisors’ just-granted approval of a site where the Fort Mojave Band of Indians wants to build a casino near Interstate 40 four miles west of the desert city. The 100,000-square-foot gaming floor would have 1,500 slot machines. A tribal survey suggests the measure will pass, showing local support of the project to state and federal officials who also must approve it.
