Casinos in Georgia could be burden on local governments, study says

Casino gambling could give state tax revenue a giant boost, but it would also generate new public safety, infrastructure and social costs for cities and counties, a study commissioned by a downtown Atlanta business group says.

Central Atlanta Progress leaders on Wednesday presented the second of a two-part study on the potential effect of legalized casinos, a topic that could be fiercely debated again during this year’s legislative session.

The debate so far has centered on the potential tax revenue benefits for state education programs and job creation.

But the brunt of the public costs of casinos — including road improvements, policing, social assistance for problem gamblers and other issues — will be shouldered by local governments, CAP President A.J. Robinson said during a meeting with editors and reporters of The Atlanta Journal-Constitution.

The report reiterated findings released last June that, while casinos will likely be a tax revenue driver, they could cannibalize spending that might have gone to nearby restaurants, museums or concert halls and in turn undercut other state and local tax collections.

If that happens, local governments could lose out unless there is sufficient local revenue sharing, he said.

“Once the state says yes, [the burden] falls to local jurisdictions,” Robinson said.

State and local leaders need to examine these issues and identify sources of money — perhaps from casino tax revenues — to help, he said.

Robinson said the study will be made available to Central Atlanta Progress members on Thursday.

Robinson said his group’s board has not taken a position on casinos, though it could in the near future. He said members are positioned on all sides of the issue, and the report is designed to provide independent data for lawmakers and business leaders.

“I don’t think they’ve made a compelling case yet why we need to do this,” Robinson said of casino supporters.

Backers of casino gambling in Georgia say it could create thousands of jobs and pump hundreds of millions of dollars into Georgia Lottery-funded education programs such as the HOPE Scholarship.

State Sen. Brandon Beach, R-Alpharetta, is expected to soon introduce new legislation to start the process of legalizing casino gambling. It would require two-third majorities in the state House and Senate to put a constitutional amendment on the ballot in 2018. Local approvals would also be needed.

Beach said casinos would bring business for hotels and restaurants and boost the downtown Atlanta convention business if a casino resort is built in the city’s core.

“That World Congress Center is a big animal we’ve got to feed every year,” he said. “It’s a very competitive environment with Chicago and New Orleans, Las Vegas and Orlando with Disney World. There’s not a lot of night time activities here. That could be a draw for our convention center and our convention business.”

The casinos won’t require public dollars for infrastructure, he said.

“Add on to that 5,000 jobs,” Beach said. “Cities and counties will do well under this plan.”

Georgia Municipal Association leaders say they want to see a bill before taking a position.

Las Vegas-style gambling faces formidable opposition.

Many conservative groups and faith leaders oppose it, and Gov. Nathan Deal has signaled his opposition. Last week House Speaker David Ralston, R-Blue Ridge, told reporters he was "still not sure that casinos in Georgia are consistent with where we want to be as a state."

The bill is expected to tax casino revenue at a 12 percent rate, though states such as Ohio charge a tax rate of about 33 percent and Maryland collects more than half of casino revenue in taxes.

The Central Atlanta Progress study assumed a 20 percent tax rate. It said four Georgia casinos could generate about $2.5 billion in revenue, with $320 million to $400 million going to the state in taxes.

The revenue would mostly come from locals, not tourists.

Robinson said the report has found that casinos are not a big driver of new convention business, the engine of the city’s hospitality industry.

Cannibalization – both of business revenues and local tax revenues – is likely, but the issue is complicated and difficult to predict, the report said.

Some entertainment groups, such as theater owners, also worry about being outspent by casinos to attract concerts.

The CAP report found that Georgians spend $570 million to $670 million a year in out-of-state casinos, money casino boosters say Georgia should keep within its borders.

The report was compiled by Horwath ATL, HLT Advisory, Casinonomics Consulting, Georgia State University Economics Professor Bruce Seaman, Bleakly Advisory Group and Key Advisors.

Casino interests have mobilized dozens of lobbyists to support a constitutional amendment, calling gambling an economic driver.

In a statement, the American Gaming Association said industry critics usually become supporters “once they see the many benefits we bring as strong community partners.”

“In addition to good careers and unmatched tax revenue, small businesses gain from more customers and the opportunity to produce goods and services for their local casino,” the organization said.

Las Vegas-based casino giant MGM Resorts International is one of the biggest backers of the bill, and the company has said a $1.4 billion resort complex at National Harbor near Washington, D.C., could be a model for what it would build here if lawmakers and voters endorse gambling. The resort employs about 4,000 people and MGM officials project it could generate 20 million guest visits.

The AJCreported in 2015 that MGM Resorts had scouted sites near the Georgia World Congress Center, but the company hasn’t named a specific location. Robinson said he does not know of a site in downtown that would work for such a mammoth facility.

Edward Lindsey, a former state House Republican caucus leader, is now a lobbyist with Dentons, the law firm representing Wynn Resorts Development, a LasVegas-based casino interest. Lindsey told reporters recently that Georgia has an advantage that could ease some of the concerns raised in the report.

“Georgia has the benefit of seeing what has worked well (in other states) and the problems that have come up,” he said.