Tag Archives: bankruptcy

Michigan has had enough of casinos

March 20, 2012 2:30 pm

A number of states are just getting into casino gambling, but in Michigan a poll found that residents there are tapped out.

The poll found 60 percent are opposed to more casinos. Another 26 percent said there are already too many casinos. Just 12 percent in the poll want more casinos in the state. Disclaimer: the poll was conducted for a coalition of Michigan casino operators opposed to plans to add as many as 22 more casinos. So take the results with a grain of salt.

But the interesting takeaway is how many residents have had a chance to experience casinos and realize they do more harm than good. That’s a big shift from almost 20 years ago when casinos were being touted as a way to help revitalize Detroit.

That has not panned out too well: Detroit is now facing bankruptcy.

It is hard to see how adding more casinos will help Detroit. Instead, the city needs to reduce its costs and find more sustainable ways to generate tax revenue. Stripping wealth from residents hoping to get lucky at a casino is not a viable form of economic development. The casino experience in Detroit and across Michigan is something other states should consider before heading down the same wrongheaded path.

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Casinos saddled with debt

March 1, 2012 11:14 am

The steady growth in casinos across the country is beginning to weigh on some operators who are struggling with increased debt loads.

USA Today reports that several major casino companies are wrestling with debt burdens taken on before the recession.  The increased competition will only exacerbate the financial pressure on the bottom line for many casinos.

Some of the casino companies cited included Ceasars Entertainment and MGM Resorts International in Las Vegas and the Foxwoods casino in Connecticut. The paper also said casinos in the Atlantic City and Reno markets will also continue to face financial pressure from increased competition. One takeaway: the financial troubles facing many casinos is creating lucrative work for bankruptcy attorneys.

More broadly, the financial struggles of the casinos underscores how the growth in gambling in many states is unsustainable. States that rely on gambling revenue to fund operations will likely find a shrinking pot. The problem is there is only so much money states can take from gamblers. As more and more states legalize casinos and expand other gambling operations, look for the casinos to continue to cannabilize one another.

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Tax breaks for casinos

February 6, 2012 10:45 am

The insatiable drive for tax revenue is one of the main reasons many states are turning to casinos as a way to fill government coffers. But once the casinos begin to struggle they immediately turn to lawmakers for help.

In West Virginia, the city council  in Longview just approved a one-year tax break in an effort to keep the struggling casino afloat. Once the tax revenue goes away, what is the point of having a casino if all it does is create economic and social costs?The troubles in Longview offer a window into what other towns and cities can expect as more casinos open and the competition for limited gambling dollars increases.

Consider: The two mega casinos on Indian reservations in Connecticut are scrambling to refinance crushing debt loads, and will soon face increased competition from Massachusetts and possibly New York. Several casinos in Atlantic City filed for bankruptcy in recent years and continue to struggle, in part from increased competition in Pennsylvania. Meanwhile, the Revel casino needed a state bailout in order to resume construction.

Casinos in Indiana, Mississippi and other states are also experiencing a drop in revenues, in part from the sluggish economy and increased competition. In Delaware, the governor has ditched a plan to add more casinos as the existing casinos lobby state lawmakers to reduce their tax rate. 

Meanwhile, other states like Ohio, Kentucky and Florida have or are considering legalizing commercial casinos, which will further increase competition. As the casino cancer spreads, look for more states to cut taxes and cut back on regulation – as New Jersey has done – in an effort to prop up the increasingly influential casino industry.

The Longview casino claims it has not made a profit since 2008. Meanwhile, the casino continues to strip wealth from the community. And now the government is extending the casino a tax break so it can continue to take money from residents. There is something seriously wrong with that picture. It shows why casinos are such a bad public policy that is insidious and unsustainable.

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