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Gaming Guru

Rod Smith
 

Gaming Supporters, Opponents Find Solace

6 November 2003

UNITED STATES -- Despite being dealt setbacks in four out of five states where casinos became an issue, gaming opponents and backers both found reasons for solace in Tuesday's election results.

"(Whenever) voters reject gambling by margins of 67-33 (as they did in Maine) and 81-19 (Colorado), it's clear the public has problems with the product," the Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling said Wednesday.

"If the industry wants to be treated like shopping centers and movie theaters, they can't stand to have voters reject them by these margins. The burden of proof is on the casinos. This was not a good year for gambling," he said.

The only positive gaming votes came out of Indiana, where local voters approved a new casino, and Maine, where a statewide vote legalized slots at one of the state's tracks despite stomping out plans for a proposed casino, UBS analyst Robin Farley said Wednesday.

Frank Fahrenkopf, president of the American Gaming Association, said racino initiatives fared better with voters than full-fledged casino issues.

"When you're talking about racinos, states already have made commitments to the industry. With casinos, you run into NIMBY -- not in my backyard -- problems," he said.

Overall, however, Deutsche Bank analyst Marc Falcone said: "We believe Election Day 2003 was a net positive for the industry, especially the equipment suppliers. In our view, voters proved willing to expand gaming in jurisdictions where it made the most economic sense."

In the longer run, that voter bias could prove to be telling in other states where gaming may be considered, Falcone said.

Voters in Maine, Colorado, Iowa and Indiana faced referendums on casinos and the casinos found themselves seriously challenged Tuesday.

Tuesday's Kentucky gubernatorial and New Jersey legislative elections could also have serious long-term implications for the industry.

In Maine, nearly $10 million was spent by supporters and opponents of plans for a Las Vegas-style, American Indian casino resort.

Maine voters rejected a plan to build a $650 million casino, but they narrowly approved a referendum to allow slots at Bass Park Racetrack in Bangor.

The casino drive was bankrolled by Marnell Corrao Associates, a Las Vegas developer that has built Bellagio, The Mirage, the Rio and is currently building Wynn Las Vegas.

Dennis Bailey, spokesman for Casinos No, said the Maine results were not just for one type of gambling and against another type, however.

"The racino had no organized opposition -- unfortunately. I made a decision early on to take on the big casino, and I didn't think we could fight a two-front war," he said.

"If I had known we'd be able to raise $2.5 million and win by a 67-to-33 percent margin, I would have put money against the racinos and I think it would have fallen like a house of cards. It just came in under the radar," Bailey said.

In Colorado, the campaign turned into a contest between gaming interests. Proponents of a ballot item touted a plan to allow up to 2,500 slots at five racetracks across the state as a tourism booster, while foes funded largely by casino operators said more slots could increase compulsive gambling and hurt their business.

Voters by a 4-to-1 margin crushed that referendum.

In Iowa, the No Dice Committee argued gambling was bad for the community, while proponents argued it would create jobs. Voters in Linn County, Iowa, rejected the referendum that would have authorized riverboat casino gambling on the Cedar River.

In Indiana, however, the battle turned into a David wersus Goliath story with casino advocates raising more than $100,000 while opponents raised just a few thousand dollars to fight it, and Goliath won. Voters in Orange County, Ind., OK'd a riverboat casino in the depressed area.

Analysts saw some hope for future gaming expansion in one other Tuesday election.

In the Kentucky governor's race, the incumbent attorney general and Democratic candidate for governor, Ben Chandler, campaigned for a constitutional amendment to allow slots at racetracks. By comparison, the Republican victor, Ernie Fletcher, said he would not stand in the way of slots at tracks if voters approve an amendment. Falcone, however, said the biggest setback for the industry did not even involve a ballot initiative or any candidate taking a stand on the proliferation of gaming.

"I think the New Jersey elections are going to be a key for the Atlantic City operators," he said, noting that Gov. Jim McGreevey's plans for large gaming tax increases had been stalled because of a divided state government.

"The New Jersey Legislature is now fully Democratic under a Democratic governor, while before Republicans controlled the Legislature. That's a key below the specific election results. It'll make New Jersey particularly important to look at over the next couple of years," Falcone said.