Florida casinos: Wait ’til next year?

January 27, 2014 9:47 am

It turns out, election-year politics may force Florida lawmakers to delay voting on any major gambling bills until 2015, according to the Tampa Bay Times.

Gov. Rick Scott is up for re-election and apparently does not want to get bogged down in a controversial debate about gambling. Lawmakers in Tallahassee are wrestling with a bunch of thorny issues surrounding gambling, including whether to legalize slot machines at racetracks; allow major commercial casino resorts; or renew a gambling pact with an Indian tribe.

Senate Gaming Committee Chairman Garrett Richter, R-Naples, told The Times a modest bill that tightens loopholes may be all that gets passed this year, while the bigger gambling issues wait another year. “If an election year has any influence, it could influence the magnitude of what’s undertaken,” Richter told the paper.

As is often the case, lawmakers prefer to work out gambling deals in the backroom so as not to cause much public attention or media scrutiny until it is too late. (See Pennsylvania, Massachusetts and New York for recent examples of where gambling was legalized with little public debate.) Not to mention, lawmakers often prefer to use the election year to raise more money from gambling interests and then return the favors later.

Gov. Scott knows gambling is a controversial topic that does not have wide public support. So rather than risk upsetting voters, it appears he will follow the advice of Scarlet O’Hara, who famously said at the end of “Gone With The Wind”: “Tomorrow is another day.”

Casino bets are off

January 22, 2014 3:43 pm

Has the casino industry hit its peak?

Gambling revenues are down in a number of states, raising questions as to whether the market has become saturated. It also raises questions for states like Florida that are considering legalizing casinos: Are they too late to the gambling game?

Before making a big bet on casinos, policy makers should take a look at Indiana, Ohio, Pennsylvania and Louisiana to name just a few states where casinos revenues are falling.

In Detroit, casino revenues dropped 4.7 percent last year in part because of increased competition from Ohio. The drop in revenue leaves even less money to fund operations in the bankrupt city.

In Indiana, casino tax revenues plunged 15 percent over the past six months. Overall, revenues in Indiana hit an eight-year low. In Ohio, casino-tax revenue dropped for the second-straight quarter leaving some to wonder if gambling has already peaked in a state where the casinos just opened two years ago. In Wisconsin, the drop in casino revenue there prompted some to say the market is saturated.

In Pennsylvania, casino revenues dropped 1.4 percent in 2013, marking the first drop since gambling play began in 2006. In Louisiana, casino revenues were down 4.4 percent in December, including a 16 percent drop in New Orleans. In Connecticut, revenues from two Indian casinos dropped 15 percent and 8 percent respectively in December. Officials there expect gambling revenues to keep dropping as competition increases, leaving the state scrambling for new sources of revenue.

In Delaware, casinos revenues dropped 5.5 percent in one year, thanks to increased competition mainly from Maryland. The Delaware casinos pushed for lower taxes but got a bailout instead from Gov. Jack Markell. The falling revenues prompted Governing Magazine to wonder if casinos are still a safe bet. Likewise, USA Today recently asked if the country has too many casinos.

Then of course there is Atlantic City, where gambling revenues are down 45 percent since 2006. Last year, revenues dipped below $3 billion for the first time in 22 years. The slide in Atlantic City shows no signs of slowing down. One casino recently closed and the fancy new Revel casino filed for bankruptcy less than a year after opening.

Analysts say the opening of each new casino in some markets essentially cannibalizes business from each other. “It’s close to the saturation point,” Alex Burnazhny, director in Fitch Rating’s Gaming, Lodging & Leisure group, told Bloomberg News. “It’s almost a zero-sum game whenever a new casino opens.”

Clyde W. Barrow, director of the Center for Policy Analysis at the University of Massachusetts, Dartmouth, told the Press of Atlantic City the saturation will only intensify once casinos in New York and Massachusetts open. “I believe the level of competition will continue to escalate, because at this point, table games and slots are just like a commodity — like copper and aluminum,” he said.

In Illinois, Clark County Commissioner John Detrick said the casino funds are an unreliable source of funding..”We’re glad to get it,” he said. “But casino money is an unknown and can go down.”

However, not all of the news is bad for the casino industry. The CEOs at two nonprofit casinos in Iowa were each paid more than $650,000 last year, the Des Moines Register reported. Revenues at the casino in Dubuque are down 20 percent in the past five fiscal years, but the CEO’s pay increased 38 percent, the paper reported.

Just goes to show the house wins even when it loses.

Genting’s shifting casino plan in Florida

January 20, 2014 9:03 am

Remember when casino giant Genting claimed it was going to build an elaborate multi-billion dollar resort in Miami? Now, it turns out the Malaysian-based operator will settle for a bare-bones slots barn.

Talk about showing your cards. It seems Genting will say and do whatever it takes to bring more gambling to Florida. That is really what the casino debate is all about.

Recall in 2012 how Florida lawmakers rejected Genting’s effort to build a destination casino resort in Miami. That came after Genting hired an army of influential lobbyists and spent more than $1 million pushing to legalize casinos in the Sunshine State.

Now, Genting has shifted gears and is pushing a plan to team up with a racetrack operator to build a slots-only facility in South Florida. So much for the glamorous tourist resort. Genting is now targeting local and repeat slots gamblers.

The new plan will add nothing to the economy and do little to attract tourists. Instead, Genting wants to just bleed the local gamblers with a giant slots barn.

The Florida plan sounds a lot like the Genting slots barn at the Aqueduct racetrack in Queens, New York. That facility rakes in nearly $2 million a day and is one of the most profitable gambling halls in the country. The Queens facility does not attract tourists and instead caters to mostly local gamblers.

New York Times columnist Michael Powell captured the scene in Queens when he described Genting’s Resorts World as resembling an “airport departure lounge mated with a pinball machine.” The Times’ Clyde Haberman also interviewed gamblers at the Genting slots hall and found not many were there for fun or looked anything like James Bond. Expect the same scene in Florida if Genting gets its way.

Genting was behind the effort to legalize casinos in New York. Genting’s influence was on display in New York. As a candidate for governor, Andrew Cuomo never even discussed casinos. But less than a year into his term he began pushing the idea – thanks to some help and money from Genting.

Now that casinos are legalized in New York, Genting is showing its true colors. After touting how casinos will bring jobs to New York, Genting recently announced nearly 200 layoffs. Likewise, Genting’s initial Florida plan was going to create lots of jobs, but those plans have been scaled back as well.

In Florida, Genting is poised to do whatever it takes to bring more gambling into the state.

Is Atlantic City the next Detroit?

January 2, 2014 11:01 am

Atlantic City’s faltering casino industry has resulted in a sharp drop in property tax revenues, which has forced the city to borrow hundreds of millions of dollars and is threatening its ability to pay its bills.

A big problem is that the drop in gambling revenue prompted a number of casinos to appeal their property tax assessments, resulting in lower tax bills. In order to pay property-tax refunds, Atlantic City has borrowed $270 million since 2007.

“In a few years, we will be broke under the way the city is doing business, and the [casino tax] appeals is just one part of it,” Mayor Don Guardian told The Inquirer in an interview before he was sworn in. “Detroit continued to bond until [it] couldn’t bond anymore. It increased taxes and lost population. Some of those same things are happening in Atlantic City, and we have to take steps to avert bankruptcy.”

In Detroit, a continued drop in casino revenues is hampering the city’s ability to restructure its debt. Meanwhile, there does not appear to be any end in sight to Atlantic City’s financial woes.

The Atlantic Club Casino (formerly Steve Wynn’s Golden Nugget) is closing its doors later this month, reducing the number of casinos in Atlantic City to 11.The Borgata will be in court this spring fighting to maintain a $48.8 million refund awarded by a state tax court in October. The city appealed the ruling. If the Borgata wins, many expect Atlantic City will have to raise taxes on residents and businesses.

Moody’s downgraded Atlantic City’s credit rating last month to Baa2, citing the shrinking tax base. In New Jersey, casino property valuations are based on the income generated. Casino revenues in Atlantic City have dropped from a high of $5.2 billion in 2006 to just over $3 billion in 2012. The final figures for 2013 are expected to be below $3 billion, which would be the lowest in 22 years. That is without adjusting for inflation.

Atlantic City’s financial woes offer a cautionary tale for other cities and states that try to use casinos to fund budget operations. Research by the Rockefeller Institute shows that gambling revenue is often unsustainable and unreliable.

The nearly two dozen states that get revenue from casinos struggled financially in recent years, according to an analysis by the Lexington Herald-Leader. “All of the states cut spending; half raised taxes. Some fired thousands of their public workers, including educators and police, and gutted their basic classroom funding,” the paper reported.