The path to gambling in Georgia
Casino gambling would face a gauntlet of votes laid out in the 127-page legislation introduced by state Rep. Ron Stephens, R-Savannah, who chairs the House’s economic development committee.
Lawmakers would first have to OK a constitutional amendment seeking to legalize gambling by a two-thirds vote, setting up a statewide referendum. If it passed, county or city leaders would have to decide whether to put a question on their local ballots, giving local voters another chance to approve or reject.
The state would be split into five districts and the legislation allows six casino licenses throughout Georgia — two in metro Atlanta. A company must shell out $25 million and vow to invest at least $1 billion to qualify for the main license for the Atlanta market, or $200 million for any of the other five. It also sets up a “Problem Gaming Fund” to treat gambling addicts.
Gambling in the Southeast
Many of Georgia’s neighbors have embraced casino-style gambling. Some have commercial casinos, Native American casinos or both.
Native American casinos: Alabama and North Carolina
Native American and commercial casinos: Florida, Louisiana and Mississippi
No casinos: Georgia*, South Carolina* and Tennessee
*Does not include ship-based casinos that travel into international waters
Sources: Industry analysis firm RubinBrown, American Gaming Association
MGM Resorts International
Headquarters: Las Vegas
Notable properties: MGM Grand Las Vegas, Bellagio, Aria, Mandalay Bay, Beau Rivage Biloxi, MGM Macau
2014 Revenue: $10.8 billion, up 3 percent from 2013
2014 Loss: $149.9 million, a 12 percent improvement from 2013
Employees: 46,000 full-time and 16,000 part-time in the U.S.; 6,100 at MGM Macau
U.S. projects under development: MGM Grand National Harbor in Maryland, MGM Springfield in Springfield, Mass.
Source: MGM Resorts International Annual Report
Gambling in the Southeast
Many of Georgia’s neighbors have embraced casino-style gambling. Some have commercial casinos, Native American casinos or both.
Native American casinos: Alabama and North Carolina
Native American and commercial casinos: Florida, Louisiana and Mississippi
No casinos: Georgia*, South Carolina* and Tennessee
*Does not include ship-based casinos that travel into international waters
Sources: Industry analysis firm RubinBrown, American Gaming Association
MGM Resorts International
Headquarters: Las Vegas
Notable properties: MGM Grand Las Vegas, Bellagio, Aria, Mandalay Bay, Beau Rivage Biloxi, MGM Macau
2014 Revenue: $10.8 billion, up 3 percent from 2013
2014 Loss: $149.9 million, a 12 percent improvement from 2013
Employees: 46,000 full-time and 16,000 part-time in the U.S.; 6,100 at MGM Macau
U.S. projects under development: MGM National Harbor in Maryland, MGM Springfield in Springfield, Mass.
Source: MGM Resorts International Annual Report
Fifteen cranes perform a synchronized dance hoisting steel into the air on a hill overlooking the Beltway and the Potomac River, where about a thousand workers race to build the $1.3 billion MGM National Harbor casino before the end of next year. Old Town Alexandra sits across the river to the west, while the Capitol Dome, shrouded in scaffolding, rises some 10 miles to the north.
A similar flock of cranes could one day soar over casino construction in Atlanta, perhaps in sight of the Gold Dome, if Georgia lawmakers and voters legalize gambling here.
MGM Resorts International helped sway Maryland voters in 2012 to expand gambling from slots to full Las Vegas-style casinos and is the behind-the-scenes power player pushing for legalization of up to six casinos in Georgia, one of the last states in the union without some form of casino gambling.
The Fortune 500 giant helped craft Georgia legislation that would legalize casinos and has engaged a team of Georgia lobbyists and consultants to push the bill along.
The public vetting begins in earnest Monday and Tuesday during study committee hearings at the state Capitol on the potential for casinos and pari-mutuel betting to aid lottery-funded education programs such as the HOPE Scholarship, which have been curtailed in recent years because of rising enrollments and tuition.
It won’t be easy. Efforts to legalize horse racing have stalled for years, and other attempts to allow casinos have been killed by conservative lawmakers, both Democrats and Republicans, who see gambling as a societal blight.
Maryland’s seven-year history with casinos foreshadows what Georgians can expect as the battle unfolds. Maryland turned to gaming as a way to buttress education without raising taxes. The state has earned hundreds of millions for education from the casinos — but not as much as the rosy projections voters were given early on.
Casinos have added thousands of new jobs to Maryland’s economy, many of which pay middle-class wages, but also increased the number of residents who suffer from gambling addictions.
Maryland significantly expanded its state-run lottery corporation to regulate the massive industry and Georgia contemplates a similar expansion here.
That could be challenging in a state with a history of under-regulating business. This summer, an Atlanta Journal-Constitution investigation found that the lottery corporation was struggling to police the explosion of coin-operated "amusement" machines across the state, a far cry from black jack tables and roulette wheels where serious money is wagered.
Georgia will also have to decide how much revenue to extract from casino operators in exchange for a lucrative business opportunity. Maryland collects more than half of gambling revenues from slot machines, and about one-fifth of the revenue from table games, for education and other public causes. It’s among the steepest tax rates in the nation.
The proposal in Georgia calls for the state to receive only 12 percent.
Voters will have plenty of say. The proposal requires the Legislature to pass a ballot initiative for a constitutional amendment by two-thirds majority, followed by a statewide vote. Voters in five regions created under the bill will then have final say whether or not to let a casino open in their region.
Many proposals for casinos in Georgia have come and gone with a whimper. There have been many ideas to turn Underground Atlanta into a gambling hall. Others have touted Savannah and a manufacturing site in Gwinnett County. None have had the muscle of a Fortune 500 company behind it with plans to spend $1 billion or more to bring it too life.
MGM picked Lorenzo Creighton, president of the MGM National Harbor, to lead the company’s push for casino gambling in Georgia. As he pointed out the features of MGM National Harbor last week, he said, “This is so much different than putting 500 slots in the Underground.”
A $40 million ad campaign
Maryland lawmakers were staring at a dismal economy and a daunting budget deficit of $1.7 billion a year when then-Gov. Martin O’Malley proposed five slots-only casinos in 2007 as a way to help fill the hole.
Then in 2012, just as the first casinos were getting established, Maryland voters approved table games to keep up with competition from neighboring states. That bill also allowed for a sixth casino.
MGM spent about $40 million in the 2012 election cycle to try to win over voters, flooding the Washington, D.C., and Baltimore airwaves with ads proclaiming that table games and a sixth casino would collectively provide thousands of jobs and hundreds of millions of dollars in new state revenue.
That lobbying and advertising largess flowed despite uncertainty MGM would even win the coveted sixth casino license. MGM ultimately beat out two other firms for the rights to develop a facility at National Harbor, an existing Atlantic Station-style mini-city with condos, apartments, retail and a vast convention center perhaps best known as the home to the National Spelling Bee.
The resort will feature luxury shops, a two-story spa and 308 hotel rooms and suites. A 3,000-seat theater will hold concerts and possibly boxing and UFC fights, and the company plans about a dozen restaurants, many from celebrity chefs.
The Rev. Jonathan Weaver of Greater Mt. Nebo AME Church in Bowie, Md., just east of the Capital Beltway, was one of the more vocal critics of the plan for another casino in Maryland. Though religious groups were well-organized, he said, they couldn’t compete with the onslaught of pro-casino commercials that had an appealing message with voters toughing it out through a dreadful economy: the promise of jobs.
“I had members of my church say, ‘I need a job so I’m voting for this,’” Weaver said.
Rosy projections; social cost
Maryland’s gambit on gambling has paid off to some degree, but it has also disappointed, falling well short of revenue projections for a state that, like many, got walloped by the Great Recession.
In 2007, Maryland budget analysts predicted five casinos would be operating 15,000 slot machines by the end of fiscal year 2013, pumping $660 million into education, according to the Baltimore Sun.
Instead, the casinos in Maryland were slow to open, with fewer than 7,000 slot machines operating by June 2013 in four casinos.
As a result, the Sun reported, the state took in less than half the projected amount in fiscal 2013: just $284 million.
The state’s fifth casino opened in 2014, and revenue has improved. Collectively, the casinos pumped about $500 million into government coffers last fiscal year.
About $388 million of that went to the education trust fund, according to the Maryland Lottery and Gaming Control Agency.
More than 5,900 employees work in the industry, with about 3,600 more expected at MGM National Harbor.
As part of the gambling expansion, Maryland’s lottery took on the role of casino regulator. It’s staffing swelled to include financial analysts and law enforcement investigators. The agency’s budget has since climbed to $140 million, funded by gambling revenue.
Gordon Medenica, Maryland’s new lottery director and top casino regulator, said the original projections — which were used to help sell lawmakers and the public on gambling — were “very rosy.” But the state is “pleased,” he said, with the performance of the five facilities as it awaits the opening of its sixth.
“What the Maryland casinos have done is keep the money within Maryland,” he said.
But the approval of casinos has come at a cost: gambling addiction has risen sharply. About 900 people have voluntarily barred themselves from Maryland casinos to help them deal with a gambling problem, up from 204 two years ago, according to the Washington Post.
“It will happen in Georgia,” Weaver said. “It’s inevitable.”
Target: Atlanta
In July, the AJC first reported MGM had scouted downtown Atlanta for a resort site for a $1 billion-plus project, but the resort operator's lobbying effort was well underway.
MGM hired well-connected lobbyists including Chuck McMullen, Tharon Johnson and Blake Ashbee. McMullen is a former top aide for U.S. Rep. Tom Price; Johnson engineered Atlanta Mayor Kasim Reed’s successful campaign in 2009; and Ashbee is a former deputy to Gov. Nathan Deal. MGM also has joined the Georgia and metro Atlanta chambers of commerce and hired policy and communication advisory teams.
MGM also held a high-level meeting with Georgia World Congress Center executives.
Other groups are said to be circling.
The AJC recently reported Boyd Gaming Corp. and Penn National Gaming are lining up lobbyists for the 2016 session. People with knowledge of the situation have said representatives of billionaire casino magnates Steve Wynn and Sheldon Adelson are gearing up as well.
Reed said in July that between two and four casino groups have approached City Hall about the availability of Turner Field once the Braves leave downtown for their new ballpark in Cobb County. Though Reed has said he opposes casinos in Atlanta it would be "fiscal malpractice" not to meet with groups that have approached the city.
“I believe that Las Vegas is in Las Vegas for a reason, and I just have real issues with putting a facility in Atlanta where working folks can get off work and walk into a gaming casino, as opposed to having to go a destination for it, ” Reed said at the time.
Atlanta is a juicy target because it’s one of the largest metro areas in the country without Vegas-style gambling, and the busy airport and bustling convention industry doesn’t hurt either.
Creighton, MGM National Harbor’s president, said if gambling is approved in Georgia, and MGM were to win a license to develop a resort, an Atlanta resort would likely be bigger and employ more than the 3,600 expected in Maryland.
Backers hopeful
Casino backers have provided estimates to key business leaders and policy makers that six casinos, as envisioned under the proposed constitutional amendment, could pump $280 million per year into HOPE and pre-k education programs. They also project at least 10,900 jobs statewide, a document obtained by the AJC shows.
Average wages at an MGM Grand casino in Detroit are about $55,000 a year, and about $61,000 at the future Maryland casino, the company says.
Hundreds of millions of gambling dollars drift over to casinos in North Carolina, Mississippi and elsewhere, and Georgia — as a destination market — could keep more of those dollars here and steal market share from other states, casino backers say.
For legislators queasy about a vote to raise taxes, legalized gambling to raise fresh millions in new revenue could suddenly become a more palatable option.
Voters narrowly passed the state’s lottery more than two decades ago, and the path to allowing jurisdictions to decide whether to allow Sunday alcohol sales was only approved a few years ago. Casinos, however, are a whole other consideration.
Religious groups will be one prong of the attack against casino gambling. If Maryland and other states are any indication, a second front will likely come from out-of-state groups looking to protect existing casinos that woo Georgians and their hundreds of millions of dollars of annual spending.
Meanwhile, some influential legislators want a separate debate over how to wring more money out of the Georgia Lottery for education rather than pursuing casinos or horse racing.
Casino backers will face critics such as state Sen. Judson Hill, a Marietta Republican who recently told the AJC lawmakers should be focused on reducing regulatory burdens and cutting spending rather than seeking “unproven solutions.”
“This is not in the best interests of Georgia,” Hill said.
MGM and other gambling interests nonetheless see a path forward in 2016 to change Georgia’s constitution. In 2012, a slim majority of GOP voters showed support for casino gambling on a non-binding ballot question.
Gov. Nathan Deal, who has long voiced opposition to more gambling, told The Atlanta Journal-Constitution in July he may not block the legislation if a majority of Georgia voters first approve it. House Speaker David Ralston, while not supporting casinos, said recently he's open to having a debate.
And just last session, a state Senate committee narrowly passed legislation to legalize horse racing, though it never got to a vote of the full Senate or House.
At least one prominent faith leader said she’s resigned to the inevitability of casinos coming to Georgia, even as she remains staunchly opposed to the practice.
“You already opened that door” with the lottery, said Beth Harris, president of the Georgia Christian Coalition. “You can’t close it.”
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