At Issue: The Big Gamble

Just a couple of years ago, the prospects for casino gambling coming to Georgia seemed pretty good. The economic impact arguments continue to be enticing.

For example, we know that hundreds of millions of dollars are spent by Georgians on casino and other types of gambling in neighboring states. Casino operators who want to do business in Georgia, as well as the legislators and lobbyists who advocate for them, say legalized gambling in Georgia could mean hundreds of millions in added revenue, much of it headed directly to the Hope Scholarship.

Yet legislation that would allow legalized gambling in casinos or at horse tracks has never made it out of committee. And in fact, it seems as if the prospects for gambling in Georgia could be fading. The Georgia GOP state committee last August passed a resolution opposing casinos and horse racing. And all five Republican candidates for governor have come out against casino gambling. So what has happened to alter the landscape of an issue that many had thought its time had come?

Without question, there is big money potential in the world of casino gambling. But it’s no magic bullet. There are numerous cautionary tales for states and localities that see nothing but dollar signs when considering gambling. Atlantic City, N.J., is probably the best example, but there have also been economic, legal and social difficulties related to gambling enterprises in places such as Mississippi, Louisiana, Missouri, Arkansas and Pennsylvania.

For a move into big-league professional gambling to truly benefit Georgians, it has to be done the right way. What that means, according to industry experts, is focusing on a high-end, world-class resort-style casino in the Atlanta area that would serve as an engine of economic development for the region and the state. The wrong way to go, according to these same analysts, would be to create multiple casinos in the state that would compete with each other in a race to the bottom.

On top of that, for it to truly be worth the calculated risks of bringing legalized gambling to the Peach State, it had better be a great deal for the citizens, most of whom will never set foot in a casino. Taxing the proceeds at a rate of 30 percent to 35 percent should be non-negotiable. A dedicated fund for the Hope Scholarship should also be carved in granite for any such deal.

One example of a high-end casino tailored to the needs and circumstances of a surrounding community is the MGM National Harbor on the Maryland side of the Potomac River, just across from Alexandria, Va. Built for $1.4 billion in private funds, the facility, which opened in December 2016, was designed as a multi-purpose entertainment destination.

It includes a large performance hall, a world-class hotel, retail space, 12 restaurants, and a spa and salon. The exterior was designed with community aesthetics in mind, unlike the glitzy, larger-than-life gambling icons in Las Vegas. In its first year of operation, it generated more than $500 million in gross revenue, with approximately $142 million going to the state of Maryland’s Education Trust Fund.

However, much of that revenue came at the expense of Maryland’s five other casinos, most of which saw declines to varying degrees in 2017. This should not be unexpected.

One potential pitfall of multiple casinos is that instead of generating new revenue, they could merely recirculate existing revenue around the region. Another often-stated concern from business analysts is that casinos can potentially drain business away from neighboring hotels, restaurants and other businesses. Hence the term “destination resort,” like the MGM National Harbor, which is not in downtown Washington, D.C., but nearby.

Here’s the problem in Georgia. The economics and politics don’t necessarily mesh. The experts say the best economic model is a single high-end destination resort in the Atlanta area similar to National Harbor. But don’t expect legislators from other parts of Georgia to get too excited about that. They want casino revenue in their part of the state, too. And that’s significant, because a two-thirds vote from both chambers of the state legislature is required to get a statewide referendum on the ballot.

Then there is the moral conundrum. Although we already have a form of legalized gambling in the Georgia Lottery, there is still widespread opposition to casinos and horse racing on moral and religious grounds. There are also the usual warnings about casinos bringing with them increases in crime, prostitution and the drug trade.

So between politics, moral concerns and economic uncertainty, the prospects for casinos in Georgia are sputtering. Perhaps a new occupant of the governor’s chair will find a way to strike a compromise.

Categories: At Issue