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A measure to change Georgia’s Constitution to allow casino gambling died in the this year’s legislative session. To legalize Las Vegas-style gambling, the measure would have to pass with two-thirds majorities of both the state House and Senate and be approved in a referendum by Georgia voters.
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A study paid for by downtown Atlanta’s top booster group throws some cold water on rosy projections of the economic impact of legalizing casinos in Georgia.
Four casino resorts in Georgia could generate hundreds of millions of dollars in tax revenue, but it is unclear how much would be new to the state and how much would be created by spending diverted from other parts of the economy, according to the report by hospitality consultants HLT Advisory and Horwath ATL.
The report concluded that the majority of visitors would be locals, not tourists, and that spending in casinos could “cannibalize” spending that might have gone to nearby restaurants, museums or concert halls and in turn undercut other state and local tax collections.
The study was commissioned by Central Atlanta Progress, a downtown business coalition, in an attempt to provide independent data as lawmakers weigh the issue in the months ahead, said the group’s CEO, A.J. Robinson.
In an exclusive briefing Monday with the editorial board of The Atlanta Journal-Constitution, Robinson said he has no position on gambling but is skeptical about casinos downtown.
“At the moment, we’re trying to grasp the compelling reason to have it (in downtown),” Robinson said. “We’ve got so much going on, so many wonderful things.”
Last July, the AJC first reported Las Vegas giant MGM Resorts International was scouting sites to build a $1 billion gambling resort downtown. The plans emerged after a bill was introduced in the General Assembly that would change the state constitution and allow up to six casinos.
The measure was later amended to allow up to four gambling resorts, but the matter didn’t move forward as Gov. Nathan Deal signaled he wanted a higher tax rate than casino interests proposed.
Under last year’s bill, tax revenue from gambling would have paid for HOPE Scholarship and pre-k programs. One projection said six casinos with a 12 percent tax rate on gambling revenue would generate more than $280 million per year for HOPE programs and at least 10,900 jobs statewide.
The CAP report found Georgia’s casino market could be about $2.2 billion to $2.5 billion per year and that more than $570 million is spent each year by Georgians in out-of-state casinos. The out-of-state spending figure is actually higher than a widely circulated report from casino interests.
The CAP report said a proposed 20 percent casino tax rate that emerged late in this past legislative session could produce $320 million to $400 million a year in revenue for the state. Casinos would likely reduce Georgia Lottery revenues some, but that would likely be made up by tax revenue from the resorts.
The report said Georgia casinos would capture some of gambling dollars leaving the state, but legalized gambling would not likely broaden the city’s tourism appeal. Robinson said a flood of new hotel rooms from a resort downtown could also hurt the margins of existing hotels.
MGM scouted sites near the Georgia World Congress Center to be near downtown tourist attractions, but Robinson disputed the idea that downtown has a suitable location. Though an AJC poll last winter showed a sizeable majority of Georgians support legalized casinos, Robinson said he isn't certain many would want one in their neighborhood and said that might be one reason why downtown is viewed as a preferred location.
He said the likely market area in Georgia is a two-hour drive, and Robinson said locations outside downtown might be better to attract guests.
Sara Rayme, a senior vice president of public affairs for the American Gaming Association had not seen the report and couldn’t comment on specifics. But she said “any responsible state or jurisdiction should be looking at these things.”
“I think across the board we can support that a high tide lifts all boats,” she said. The $240 billion-a-year industry is a driver of business to other businesses in local communities, she said, employing more than 1.7 million people.
Robinson said virtually all of the data released so far about the potential impact of legalizing Las Vegas-style gambling in Georgia has come from the industry, and independent study is necessary.
He said his group plans to fund additional analysis into economic impacts on job creation, property tax values, sales tax collections, cannibalized discretionary spending and potentially social impacts.
“There’s not enough information that is compelling in this to say we’ve got to have it,” he said. “There’s probably not enough information to kill it. … Our whole intention is to get educated.”
The issue will likely return next year in the Legislature, as casino companies and other backers have hired platoons of lobbyists and other advisers. Political winds have shifted in recent years. A slim majority of GOP voters supported casino gambling in 2012 and horse racing has gained some traction in the Gold Dome.
MGM Resorts declined to comment as executives had not seen the report. Robinson said he will present it to his board on Wednesday.
He said it is important to present independent information now as the city will have an election next year with a governor’s race and state elections to follow in 2018.
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