Chilly political climate cools expansion plans

Apr 23, 2002 7:50 AM

Despite the optimism fueled by the approval of new casinos in New York, most plans to expand gaming this year, especially at race tracks, have already hit stumbling blocks.

Initiatives to expand gambling appear to be dead in Kentucky, Maryland, Florida, Indiana, Hawaii and Kansas.

The biggest disappointment probably occurred in Kentucky, where racetracks were hoping to use slot machines to bolster sagging revenue.

Some Kentucky operators have complained that customers have migrated to nearby riverboat casinos in Indiana.

In addition to boosting the financial condition of race tracks and the horse race industry, slot machines are seen as a means to shore up state budgets, many of which are experiencing financial shortfalls.

"Racino legislation in 2002 was restrained by election year maneuvering, with candidates reluctant to debate the topic while seeking office," said Adam Steinberg of CIBC World Markets. "While proposals in several states languished in 2002, racino legislation will be on the docket again in 2003."

Steinberg added that, even though slot machines at race tracks won’t occur as quickly as anticipated, off-track wagering will help stimulate the horse race industry because of the "proliferation of wagering opportunities through telephone account, interactive television and Internet-based wagering."

In California, voters approved Internet wagering on horse races, which went into practice this year. But tribal casinos remain the only venue for slot machines in the state. Card rooms would like to add slot machines, but backers have been unable to get a measure onto the ballot. If and when they do, the state’s tribal casinos would probably launch a multi-million dollar effort against it.

While tribal clout and other political factors have contributed to deterring the expansion of gaming, some experts believe gaming, in general, may have already reached its saturation point.

"The easy targets have already been conquered," said I. Nelson Rose, a Whittier College law professor who specializes in gambling issues. "There just aren’t a whole lot of states left."

Rose said that, while most efforts to expand gaming were stymied this year, the political climate could change in 2003. He added that there have been some successes on which to hinge enthusiasm.

"The introduction of Internet wagering on horses (in California) was a major expansion for that industry segment," Rose said, adding that the addition of six tribal casinos and additional slot machines in New York will create a sizable new gaming venue.

States which have recently approved or expanded gaming at race tracks include West Virginia, Rhode Island, Delaware, Iowa and New Mexico. Also, Louisiana Tracks including Delta Downs have begun adding slot machines, with early results very encouraging.

Here is a status report on gaming initiatives in other states:

  • Rhode Island: The state’s Lottery Commission has delayed a decision on slots at racetracks until after the governor’s revenue-estimating committee meets this month. Complicating the issue is a federal grand jury probe into allegations of political corruption involving an unnamed Rhode Island lawyer and the former president and CFO of Lincoln Park’s parent company, Wembley USA.

  • Maryland: A new governor will take office in 2003, opening the possibility that slot machines will be permitted at the state’s six tracks. Gov. Parris Glendening has for eight years prevented any gaming expansion.

  • Pennsylvania: A new governor will take office here as well next year. Operators of the state’s four tracks are hopeful that will open the possibility of slot machines. A budget shortfall of more than $600 million could swing support to slots.

  • Arizona: The Arizona Racetrack Alliance hopes to have an initiative on the ballot that would permit casino gambling at racetracks. In addition, the Senate President has introduced legislation calling for video lottery terminals at tracks. However, Governor Jane Hull has vowed to veto an racino legislation, although she couldn’t overturn a referendum

  • Kansas: Racino legislation was tabled this year. Proponents had been hoping endorsement by Kansas Governor Bill Graves would help push racino legislation, which failed both houses last year.