Permanent Casinos are Part of the Solution

14 November 2001

By David Waddell

Detroit's newly elected Mayor and City Council are set to take office in January and our new City leaders will not be starved for work nor will they be searching for issues to address. The issues are apparent, they include crime, city services, abandoned buildings, public transportation, health care, public schools, and the need for a considerable improvement in City services for residents and businesses. However, taking into account a sluggish national economy and possible recession, the most pressing issue the City will face is a $30-$40 million projected deficit. Without addressing the deficit issue it will be extremely difficult to address any or all of the other key City services issues. This budget shortfall will not only hurt mayor-elect Kwame Kilpatrick's ability to address the City's challenges, but also has the potential to lead to layoffs, down-sizing, and a disrupted City economy.

An important contributing factor in dealing with Detroit's budget deficit will certainly be the City's casinos and gaming enterprises. Casino gaming has shown itself to be an effective economic device able to raise considerable funds for local communities and governments. The new administration and City Council members need to quickly examine the Casino Development Agreements and realize that the City is the largest shareholder in Detroit's casino industry. In 2000 alone, Detroit casinos contributed nearly $85 million dollars that went directly back to the City via a City Wagering Tax and a Municipal Services Fee. Not only have the casinos already raised a considerable amount of money for the City and state, they have created jobs, brought people to Detroit, and generally stimulated the City's economy and nightlife.

Gaming is already an important factor in addressing the issues facing Detroit and it's newly elected government, however, the evolution of the current temporary facilities to permanent facilities will have an even more important impact on the City. The construction and completion of these permanent casinos will allow for 100,000 square feet of gaming space within each casino, as opposed to the 75,000 square feet allowed presently in the temporary facilities. The additional supply of gaming floor space could easily be absorbed by the added demand that has resulted from the recent border issues. In theory the extra 25,000 square feet could conceivably generate a 25 percent increase in casino revenues, as well as secure the sights of the operations, and create a genuine and fixed casino district in the City. The City earns an estimated $85 million from the three Detroit casinos annually. With an estimated increase of 25 percent due to permanent facilities, the City could potentially earn in excess of $106 million per year. This does not even include the added revenues that would be gained from new hotel rooms or retail and restaurant sales.

The increase in City revenues due to taxes is only the beginning of what the permanent casinos can potentially due for a struggling downtown district. With the three casinos locked in place other businesses can begin to open in the district. More people will be drawn to Detroit for both conferences and vacations. The three permanent facilities will encourage investors and other companies to locate themselves in Detroit. In short, there is much these permanent facilities can contribute to Detroit's newly elected government and the many difficult challenges mayor-elect Kwame Kilpatrick and the City Council will face in the coming term.

Considering the proven success of gaming statewide, and even nationwide, the permanent casinos will not only assist in balancing Detroit's budget shortfall, but will also contribute much to its schools, neighborhoods, economy, and other programs in need of an economic boost. The permanent casinos are not the one and only solution to the problems facing Detroit, in fact, they alone will not be able to fix the problems. However, they can be an important and healthy contributor to the solutions. Detroit's new leaders should move quickly to take advantage of this unique opportunity to continue the City's progress.