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Gamers see 2003 as year of disappointment

Aug 12, 2003 6:46 AM

When lawmakers from gaming states meet next month in Rhode Island, they might be asking themselves, "What happened in 2003?"

This year was supposed to be a high-water mark in the proliferation of gaming, mostly through expansion of slots at racetracks and new casinos.

But, so far in 2003, virtually every measure to expand gambling has either been torpedoed or is treading water.

Only Tennessee is moving forward with a statewide lottery, which was approved by its citizens last year.

"Legislative proposals to install slots and video lottery terminals at race tracks, market lotteries more aggressively, authorize telephone and so-called account wagering, and allow for casino and Indian gaming expansion encountered strong political opposition and raised related social and economic concerns of no small consequence," said Florida State Senator Steven Geller. "Make no mistake, the public policy decisions legislators make have a telling impact on elections, school budgets, senior citizens, youth programs, state budgets, taxes and bond ratings."

Geller and other state law makers from the National Council of Legislators from Gaming States (NCLGS) will meet Sept. 5-7 in Newport, Rhode Island, to discuss issues related to the expansion of gaming and review cases of successful and failed gaming initiatives.

"Legislators will have an opportunity to learn which specific gaming initiatives have succeeded in producing needed revenues, and which have failed, either because of political opposition or because anticipated revenues never materialized," said Geller, who is president of the 150-member NCLGS. "Legislators will also learn of cases where state-authorized gaming enterprises have taxed themselves out of the market."

The legislators should have plenty to discuss.

Last fall, pro-gambling governors were elected in Pennsylvania, Maryland, and Oklahoma, and the outlook seemed bright for expanded gaming in Kentucky, Nebraska, Ohio, New York and Massachusetts.

Minnesota, Kansas, Florida and Indiana also studied adding slots at racetracks to shore up state coffers.

But, as legislative sessions come to a close, gaming proposals have either been passed over or buried in committees that have closed shop for the summer.

In New York, for instance, legislation to expand gaming to racetracks and six new Indian casinos has been tied up in legal battles. And just last week, the New York Racing Association shelved plans to build a slot casino at Aqueduct because of an ongoing investigation by the U.S. Attorney’s Office. MGM Mirage was slated to operate that facility.

And in Pennsylvania, the state’s Senate and House each passed differing forms of legislation that would expand slots to its nine racetracks as well as one location in Pittsburgh and another in Philadelphia, but they couldn’t agree on a compromise and deferred the discussion until the next legislative session.

Even though states are strapped financially and desperately need the tax dollars gaming could provide, they’ve remained reluctant to use gambling as a cure-all, according to Deutsche Bank analyst Andrew Zarnett. "This year, states are deferring fiscal problems to other areas of their budget," he said.

Indeed, budget deficits are a compelling reason states have considered gaming.

In Massachusetts, faced with a $3 billion deficit, lawmakers are weighing a plan to add 1,000 slot machines at each of its four horse and dog tracks, and to allow three new casinos.

If and when approved, the state would collect $650 million per year by charging annual license fees of $150 million per casino and $50 million per track.

If those figures sound exhorbitant, Massachusetts Governor Mitt Romney has even suggested that casinos in neighboring states pay $75 million for Massachusetts not to add casinos.

"Either the states are afraid to move forward or they’re too greedy to settle on a fair system of gaming," said an analyst who asked for anonymity. "These bureaucrats will kill the golden goose before it has a chance to lay any eggs."

Another proposal that is languishing in the bureaucratic process is a plan to add slot machines to Ohio’s seven racetracks. Ohio, which has a $2 billion budget deficit, would collect up to $700 million in taxes, which would be used for education. But, the plan has yet to get off the ground.

"The legislators need to move forward and stop dragging their feet," the analyst said. "If they delay too long, they may find themselves being dragged out of office, feet first."