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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Gambling issues scarce on ballots

10 October 2006

RHODE ISLAND -- Harrah's Entertainment executives hope the electorate in Rhode Island will have gambling on its mind as it heads to the polls next month.

Political pundits say the war in Iraq, fluctuating gasoline prices and homeland security are voters' foremost concerns this midterm election season. But Harrah's has faith that Ocean State voters will consider legalizing a casino just outside of Providence.

Rhode Island residents will vote Nov. 7 on a constitutional referendum that would allow the Narragansett Indian Tribe to open a casino in West Warwick, just off Interstate 95. Las Vegas-based Harrah's said it would build a $1 billion hotel-casino and operate it for the tribe.

Company officials said the casino could easily produce annual gaming revenues of $700 million.

The measure is one of only two casino ballot initiatives nationwide. The circumstances don't surprise analysts and observers. States, they say, are not hurting for money.

In the last few election cycles, measures to legalize casino-style gaming popped up on ballots from Florida to California. In 2006, blossoming state economies have rendered moot the idea of using gambling revenues to balance government budgets.

"When it comes right down to it, states are doing well and there isn't a lot interest in gaming as an issue to raise funds," said Robert LaFleur, a gaming research analyst for Susquehanna Financial Group in Connecticut. "When there is a tax issue, then gaming seems to be an easy issue to push."

Brad Coker, managing partner of Mason-Dixon Polling & Research of Washington, D.C., agreed with LaFleur. He said using the revenues generated by legalized gaming is a handy way for states to balance budgets or subsidize public education.

In times of financial crisis, legalized gambling can be an easy sell to voters.

"Gaming is always tied to schools," Coker said. "It seems to be a marriage of convenience."

As Rhode Island voters consider the Harrah's casino, voters in Ohio will cast ballots on whether to approve slot machines at racetracks. Nebraska voters were expected to vote on a matter to legalize casinos, but the state's Supreme Court threw the issue off the ballot.

LaFleur said that although just a handful of citizens will vote on gaming nationally, voters in other states could be judging candidates based on their stance on casino gaming. In the Texas governor's race, comedian Kinky Friedman, who is running as an independent, wants to legalize casinos to replace some property taxes. He has argued that Texas money is flowing out of state to casinos in Oklahoma and Louisiana.

LaFleur suggested Friedman's argument is off base.

"There are fewer and fewer states that don't have some form of gambling, so it's not really an issue," LaFleur said. "There really isn't any effort in those states to expand upon what is already legalized."

The Narragansett Indian Tribe has been trying to build a casino in Rhode Island for more than a decade but has been thwarted by state and federal politicians. Harrah's got involved with the tribe in 2001 and since then has doubled the price and size of the proposed project.

The company has spent more than $5.2 million this summer on public relations and advertising to convince voters to support the referendum. The state's governor, attorney general and other elected leaders oppose the casino project. It took an August ruling by a federal judge to get the matter placed on the ballot.

If passed, the proposal would allow a casino to be built on 86 acres in an industrial area of West Warwick, in between downtown Providence and the T.F. Green Airport. The 12-story hotel would have 500 rooms, a 140,000-square-foot casino with 3,500 slot machines, 100 table games and a 50-table poker room.

In its campaign materials, Harrah's said the project would offer 3,500 construction jobs and 3,800 full-time jobs when it opens.

"Rhode Island is a beautiful state and this is a property we would market to our customers across the country," said Jan Jones, Harrah's senior vice president of communications and government relations, who is leading the campaign for the Rhode Island casino.

"This is the only tribe in the United States that was stripped of its (Indian Gaming Regulatory Act) rights by the state," Jones said. "The tribe hasn't been treated fairly by the state. Right now, we're in a ground game to identify and move voters. I think it will be a close race."

The company recently leased a 40-foot luxury bus to drive casino backers throughout Rhode Island in an effort to drum up support of the casino referendum.

Jones, a former two-term Las Vegas mayor who twice ran for Nevada governor, said the casino bill has been challenged by that state's two racetracks. The tracks have slot machine parlors with only video lottery terminals and fear business would be lost to the tribe's Las Vegas-style casino.

The other opposition, Jones said, is coming from the two large American Indian casinos in Connecticut, the Mohegan Sun and Foxwoods.

Jones said the competing tribes are funding the opposition campaign. Both Mohegan Sun and Foxwoods could lose customers to a Rhode Island casino.

"That's why Rhode Island is so important (to us)," Jones said. "There are 1.3 million cars a day that would drive past our casino. The tribe would pay to build on-ramps and off-ramps from I-95 into the casino.

"There's nothing else surrounding the site, so we don't have an issue with neighborhoods (opposing the project)."

It's unclear what the state's casino tax rate would be; Jones said it has to be negotiated if the measure passes. In addition, Harrah's would guarantee sales, room and property taxes, and would reimburse the state for lost revenues for up to two years should the racetracks lose money.

The most recent polls, Jones said, show the casino referendum in a virtual dead heat with "yes" and "no" votes divided evenly and about 5 percent of the voters undecided.

Susquehanna's LaFleur said he didn't like Harrah's chances with those numbers.

"Harrah's has been the issue in Rhode Island," LaFleur said. "They've tried to paint the tribe as the face of the initiative, but the anti-casino side has made the vote all about Harrah's. Historically, I'd like to see an issue go into the election at 60 percent (in favor). Right now, it doesn't have a great chance of passing."

***

OHIOANS WILL VOTE ON SLOT CASINOS AT TRACKS

Ohio voters are being asked to approve a referendum that would allow racetracks in the state to open slot machine-only casinos. A portion of the revenues would be directed toward a scholarship program to help Ohio students defray the cost of higher education.

Issue 3, dubbed Ohio's Learn and Earn, allows for a maximum of 31,500 slot machines to be divided between nine locations. Proponents say the machines will generate $2.8 billion in annual revenues. They estimate between $700 million and $850 million of the revenues would be deposited into a scholarship fund for Ohio students.

Penn National Gaming, a regional casino operator, is pushing the measure along with the racetracks, including those owned by Forest City Enterprises, and Jacobs Entertainment. Penn National has a site in Lawrenceberg, about 30 miles outside of Cincinnati, that it would develop should the measure pass.

Brad Coker, managing partner of Mason-Dixon Polling & Research of Washington, D.C., said Ohio's budget crisis makes the state a prime target for supporters of casino expansion.

"In most of the country, states are doing well but Ohio is one big mess," Coker said. "You have a bad economy and an unpopular governor and he's facing the wrath of the people. That should make this issue an easy sell to the voters."

Gambling issues scarce on ballots is republished from Online.CasinoCity.com.