A dealer conducts a game of roulette at the Tropicana casino in Atlantic City, N.J. (AP Photo/Wayne Parry)
Photo: Wayne Parry
Photo: Wayne Parry

Report calls casinos unreliable revenue source; supporters undeterred

Lawmakers hoping to expand gambling in Georgia are not deterred by a recent report that found promises of financial fixes for state budgets often fall short in the long run.

report released Thursday by the Pew Charitable Trusts and the Nelson A. Rockefeller Institute of Government found that so-called sin taxes — taxes on goods such as tobacco, alcohol and gambling — are an unreliable source of long-term funding for states.

While there may be a slight increase when facilities first open, the fact that other states are adding casinos makes the level of local revenue difficult to maintain.

“Any new or existing sin taxes are unlikely to be a silver bullet for fixing budget challenges,” Pew researcher Mary Murphy said.

For the past few years, some Georgia lawmakers have sought to bring casinos or horse racing to the state as a way to bolster the lottery-funded HOPE scholarship. Gov. Nathan Deal has been a vocal opponent to the idea, but supporters are hopeful the next governor will be more amenable to the idea.

State Rep. Ron Stephens, R-Savannah, who has sponsored casino legislation, said casinos here would tap into money being spent in neighboring states.

“I want to fully fund the HOPE scholarship. I am not backing away from that issue,” Stephens said. “We’ve had gambling in Georgia for 25 years. So the way to fund (the scholarship) is through the way we’ve always funded it.”

Gaming supporters have spent the past few legislative sessions working to pass a bill that would let Georgians decide whether casinos should be allowed in the state. Polls have shown that Georgia voters favor the idea.

Dean Reeves, the president of the Georgia Horse Racing Coalition and owner of Reeves Thoroughbred Racing, said his organization is already planning to push legislation that would allow the construction of a 300-acre facility — with revenue going toward HOPE or the University of Georgia’s veterinary school.

Reeves said while the money generated by horse race betting is one reason to support the project, he sees a racetrack with a mix of uses similar to the Atlanta Braves’ SunTrust Park as a boon for the state’s economy.

“This will bring a multitude of jobs, a variety of jobs, and it will also impact the entire state,” he said. “This would be a $500 million facility. I’ve seen a proposal that includes not only a racetrack, but would have hotels, apartments, restaurants — it would be a destination spot for people.”

Stephens, the chairman of the House Economic Development and Tourism Committee, said allowing no more than three casinos would bolster the state’s tourism economy, predicting it could help the business surpass agriculture as the state’s highest grossing industry.

“Most people don’t realize the impact of tourism and the leverage of the things that it pays for,” he said.

Having Georgia residents travel to places such as Florida and North Carolina to gamble in casinos is “stealing HOPE scholarship dollars,” Stephens said.

According to the Pew report, which examined trends from 2008 to 2016, gambling revenue typically accounts for a very small percentage of a state’s overall budget.

In Nevada, about 10.2 percent of the state’s budget in 2015 was from gambling revenue, the highest proportion of the states that allow some form of gambling. Gambling accounted for 3.8 percent of Georgia’s 2015 budget through the state lottery, according to the report.

“When a state newly legalizes casinos or racinos (racetracks that also offer other forms of gambling), it can expect an initial burst of activity as consumers flock to a new attraction,” the researchers wrote in the report. “While casinos do offer short-term padding for budgets, these funds often come at the expense of neighboring states and other casinos in the state.”

Gaming businesses have been big campaign donors in Georgia, and their lobbyists have spent heavily on lawmakers. Heading into the 2016 session, for instance, gaming organizations and those connected to the business plowed more than $200,000 into the campaign war chests of leading legislators.

Contributions and lobbyist spending have slowed since the 2016 session, when it became clear it would take time for backers to win over the General Assembly, but money has continued to flow as Georgians await a new governor.

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