Gambling’s success in Georgia would likely depend on form it took

Thoroughbred racing, one gambling option supporters have pushed in Georgia, has been in decline. Alexander Waldrop, the president and CEO of the National Thoroughbred Racing Association, said it was a $16 billion industry in 2009 but is now down to $11 billion. (AP Photo/John Minchillo, File)
Thoroughbred racing, one gambling option supporters have pushed in Georgia, has been in decline. Alexander Waldrop, the president and CEO of the National Thoroughbred Racing Association, said it was a $16 billion industry in 2009 but is now down to $11 billion. (AP Photo/John Minchillo, File)

Georgia lawmakers are once again looking at gambling to bring in more money to help fund the HOPE scholarship.

But what form it took would determine how lucrative expanding gaming could be for the state.

Casino gambling reported record numbers last year, the thoroughbred horse racing industry is shrinking, and experts say sports betting’s impact would be minimal.

Georgia lawmakers are studying the potential economic benefits of expanding gambling in the state, which supporters say would bring thousands of jobs and pump hundreds of millions of dollars into the struggling Georgia Lottery-funded HOPE scholarship.

Jennifer Roberts, associate director of the International Center for Gaming Regulation at the University of Nevada, Las Vegas, and a gaming law expert who has represented major hotel chains, said factors such as Georgia's relative isolation from other gaming make a valid case for expanding the industry.

“In general, gambling does bring economic benefit to states,” Roberts said. “But any form of gambling is a policy decision for each state. Policymakers have to decide what the smartest approach is for their state.”

Supporters for years have tried different ways to expand gambling in Georgia, through casinos or horse racing, but a recent call from Gov. Brian Kemp to cut budgets has renewed energy around the topic.

Adding horse racing or casino gambling in the state would require Georgians to approve a constitutional amendment allowing the expansion.

Kemp has said that while he opposes casino gambling, he will not stand in the way of putting an amendment before voters as long as it guarantees the revenue will benefit HOPE.

Georgia Lottery officials have said improved performance by high schoolers and rising tuition have made it increasingly difficult to fulfill HOPE’s goal of providing full scholarships to the state’s top students.

Some conservative groups and religious leaders oppose expanding gambling because they say it is an immoral and addictive habit that breeds crime. Others have questioned the rosy revenue predictions offered by supporters, especially as more states expand gambling and compete for customers.

State Rep. Wes Cantrell, a Woodstock Republican and a pastor, has been an outspoken opponent of expanding gambling in Georgia. He said the state should require the Georgia Lottery Corp. to use 35% of its revenue for education. State law says education programs should get as close to "as practical" 35% of lottery ticket sale money.

“The long-term stability of the HOPE scholarship would not be in question if the Georgia Lottery Corp. had not been allowed to break the law consistently since 1997,” Cantrell said.

Roberts said studies show that gambling already is happening across the country and in Georgia, whether or not it is legal.

“I know there’s always those opposed to gambling — and it is a policy decision,” she said. “But there are definitely benefits from having a regulated legal (gambling) system. Part of that is having responsible gambling methods and consumer protections. That’s in addition to revenue benefits.”

Roberts said Georgia’s relative isolation from most forms of gambling creates an economic opportunity.

Whether it’s casino gambling, horse racing or sports betting, each form of gaming has its own benefits and drawbacks, Roberts said.

Commercial casinos in 24 states reported nearly $41.7 billion in gross revenue in 2018, up 3.4% from 2017, according to a report from the American Gaming Association, a gambling trade group. Commercial casinos generated $9.7 billion in taxes for state and local governments, according to the report.

Mississippi, the only Southern state besides Florida with commercial, nonreservation casinos, reported revenue of $2.1 billion in 2018, an increase of nearly 3%. According to the AGA report, commercial casinos paid nearly $258 million in taxes in Mississippi.

An AGA report on tribal casinos reported nearly $15.3 billion in taxes and revenue share payments to local, state and federal governments in 2016. Alabama's tribal casinos paid almost $150 million in taxes that year, and North Carolina's casinos reported paying $225 million.

Roberts said offering a new form of gambling could likely bring new tourism to Georgia.

While casino gambling nationally in 2018 had its best year on record, the horse racing industry has seen decline in recent years, said Alexander Waldrop, the president and CEO of the National Thoroughbred Racing Association.

Thoroughbred racing was a $16 billion industry in 2009, Waldrop said. That dropped to about $11 billion this year.

Roberts said that’s because horse racing is viewed more as entertainment than gambling.

“If you look historically at horse racing, it used to be — early on in American life — more popular than baseball,” she said. “You have so many forms of entertainment now; that’s why a lot of the horse race tracks incorporate casino gaming.”

Still, Waldrop said, he believes there’s a market for racing in Georgia.

“Atlanta is the largest metropolitan area in the United States without a racetrack,” he said. “The Southeast is an island. You would have to build a horse industry in Georgia, and that’s part of the excitement of the project. It’s an agribusiness model. It’s not a gambling model.”

State Sen. Brandon Beach, an Alpharetta Republican, sponsored legislation this year that would ask voters to allow up to three horse-racing tracks in Georgia that could include retail shopping, a hotel and other entertainment. That proposal stalled, but it could come back when lawmakers return in January.

Beach said the appeal of allowing casino gambling or horse racing in Georgia is the jobs it would create.

“We already have answered the question of gambling — we have the lottery — and that doesn’t create a lot of jobs,” he said. “This would create thousands of jobs — hotel jobs, restaurant jobs, gaming jobs. With horse racing, it would create jobs (in rural Georgia) with horse farms, hay farms, breeding. That’s what I like about it.”

Roberts said sports betting is an industry that’s best paired with other gambling options.

“Sports betting brings in revenues, but I always tell politicians that it is not an answer for budgets,” she said.

Roberts said that’s because sports betting is a low-margin gambling operation that pays out a lot of money to the winners. Over 30 years of legalized sports betting in Las Vegas, for example, the industry accounts for 2.5% of the gaming revenue generated for the state.

Beach, who is chairman of the Senate gambling panel, said the purpose of the study committee is to learn what best fits Georgia.

“I think everything is on the table,” he said. “We just need to look at what we need to do.”

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