Gambling advocates tout benefits for Georgia

At the close Tuesday in the first of a series of two-day meetings, joint study committees of both the state House and Senate heard tantalizing testimony about the potential effect of legalized casino gambling:

“This is like hosting the Olympic Games on an annual basis,” said Brent Wittenberg, whose firm — Marquette Advisors — is one of the casino gaming industry’s top financial advisers and market consultants. And who paid for its study of Georgia, which is where those numbers came from?

MGM Resorts International, whose CEO and president, Jim Murren, also testified. Atlanta, he said, could “easily” support a proposed $1 billion investment by the company. Other opportunities abound in places such as Savannah. Georgians, he said, already spend hundreds of millions of dollars at gaming sites in neighboring states such as Mississippi. How does he know? MGM owns a casino there and has logged 1 million visits annually from the Peach State.

Testimony from more than a dozen people Monday and Tuesday focused squarely on how to move forward. No opponents had been asked to speak. And it wasn’t all casinos. Several horse racing advocates who want to open Georgia to parimutuel betting offered their own take: up to an additional $25 million in tax revenue annually from its industry if legalized in Georgia, not including thousands of more jobs.

Those presenters, however, clearly ceded the spotlight to the casino industry, which has already hired more than a dozen lobbyists to make its case at the state Capitol. They offered a picture of modernization, where a casino is a “destination” and an “experience.” Murren made the point that more than half of resort revenue — as much as 70 percent at MGM’s properties in Las Vegas — come from “nongaming” events such as entertainment shows, business conventions, music concerts, sporting events, shopping, spas and golf courses.

And, he said, it’s not as if Georgians aren’t already spending that money. According to Marquette Advisors, almost $350 million in revenue flows out of Georgia to casinos in adjacent states. And when a new casino opens soon in North Carolina, that number could rise to as much as $500 million.

State Sen. Brandon Beach, R-Alpharetta, who is heading the Senate’s study committee, said before the meetings that lawmakers had to be aware Georgia residents already gamble — they just do it in other states.

“If you go to (casinos in) Biloxi, you’ll see Georgia license plates in the parking lot,” Beach said, referring to the coastal Mississippi city. “People are going to gamble. I think if people are going to gamble, they’ll go to wherever they need to do that. If they have to travel out of state, they’ll do that, too.”

Georgia lawmakers, however, still have a ton of work to do before their recommendations are due Dec. 1. That includes figuring out how to resolve regulatory challenges, including who would oversee a legalized gambling infrastructure that could span the state. And whether they believe the Georgia Lottery has squeezed out every last dime it can toward the state’s premier education programs without opening a new cash spigot.

They must also grapple with what lottery officials said could be a “cannabalization” of profits, as regular players migrate from regular lottery games to, say, bets at the horse track — and stop buying as many lottery scratch-offs. Lottery President and CEO Debbie D. Alford said her team is researching those numbers now.

But, she said, her colleagues in Maryland have anecdotally reported a 3 percent to 5 percent dip in lottery proceeds as that state expanded its gaming options, although overall proceeds grew. "I would anticipate there would be cannibalization," Alford said, "not only from traditional lottery sales but also from coin-operated amusement sales." That includes the only slotlike machines now legal in Georgia, which dot convenience stores and laundromats across the state but, by state law, are banned from paying out cash.

Then there’s the issue of how to tax the industry. Whitaker L. Askew, with the American Gaming Association, said Georgia must be competitive with, say, New York, which has expanded promotional marketing tax credits.

The proposal in Georgia calls for the state to tax the industry at 12 percent. It’s not clear lawmakers are set on that number. According to testimony, Mississippi has a graduated tax ranging from 8 percent to 12 percent; Louisiana at 21.5 percent; and the effective rates at tribal facilities range from about 12 percent to 25 percent in Florida and 4 percent to 8 percent in North Carolina.

Lawmakers are looking for more cash as HOPE and pre-k programs struggle financially to keep up with both needs and demand despite record profits from the lottery that funds them.

Those profits — about $980.5 million in the past fiscal year — do not keep up with tuition increases at most state institutions. So while the state serves roughly the same number of HOPE students as it did a few years ago, award payouts don’t go as far for many. At the state’s top research universities, HOPE now covers about 77 percent of a semester’s tuition.

Alford this week defended efforts to grow the lottery, which voters approved in 1992. Last year, sales rose 3.1 percent, among the strongest increases in the nation. Georgia’s games rank fourth in per-capita profits in the country.

Yet legislators — particularly those in the state Senate — say cuts in the lottery's administrative costs could also raise more money. State law encourages the lottery to return about 35 percent of ticket sales to education programs, although that is not a mandate and the lottery's current return rate is about 25 percent.

“That’s $400 million sitting there,” said Senate Majority Leader Bill Cowsert, R-Athens. “Maybe we don’t need another revenue source.”