Would legalizing casinos be worth it if they paid more taxes?
State lawmakers exploring whether to expand gambling in Georgia heard for the first time Monday that casino operators may be willing to pay as much as 20 percent in state taxes in order to operate in Georgia. That’s a significant increase from a current proposal that would set a tax rate of 12 percent, setting the stage for more back and forth as the state debates whether it wants to bet on gaming.
That industry insiders want the wager is no question, and they’re willing to put their money on the line. Jim Allen, the chairman of global brand Hard Rock International, used a legislative hearing in this antebellum city to announce the company’s new concept: a Hard Rock Hotel Atlanta to open in 2018 directly across from Mercedes-Benz Stadium, future home of the Atlanta Falcons.
Allen said he’s all in on that project, with or without gaming. But, he added: “We recognize you can attract the greatest gaming companies in the world. Hard Rock could be your solution.” It echoed a sentiment heard often Monday: The industry wants to play nice.
“We want to be good neighbors,” said Jay Dorris, the president and CEO of PCI Gaming — which under the Wind Creek Hospitality brand operates six casino properties in Alabama and Florida for the Poarch Band of Creek Indians. The company wants to expand into Georgia.
Proposal seeks six casinos
State House and Senate study committees met all day in Savannah as part of the third such hearing on the issue, with recommendations about what to do about gambling expansion due by Dec. 1.
A legislative proposal now on the table calls for up to six “destination” casino resort licenses that would be allowed across five geographic zones in Georgia: Atlanta, Columbus, Macon, Savannah and South Georgia. The proposal sets aside two licenses for a broadly defined metro Atlanta zone, although one would be more limited than the other. The minimum private investment required to win a license: $1 billion for the primary Atlanta license and $200 million for each of the others.
The committees first met on the issue for two consecutive days in September. Then, they heard only from proponents focused squarely on how to move ahead with approval. The casino industry has already hired more than a dozen lobbyists to help make its case.
And while Monday’s agenda for the first time included a handful of opponents, including those from the powerful Georgia Baptist Convention, supporters again dominated much of the testimony and conversation about how to legalize in Georgia both casinos and parimutuel betting on horse racing. The sparse audience, made up predominately of legislative staff, lobbyists and gaming interests, filled less than one-third of a classroom auditorium on the campus of Armstrong State University.
The companies have made an effort to sell themselves as legitimate and transparent businesses that welcome robust regulations. They also have stressed community involvement and said they are not looking for tax incentives or financial giveaways in order to do business in Georgia. Some who testified stressed programs used to promote responsible gaming.
“Casino gaming is a mature industry,” said Keith Smith, the CEO of Boyd Gaming Corp. More than 1,000 casinos across the country, he said, generate $240 billion worth of economic activity and create 1.7 million jobs. And while Smith and others warned of higher tax rates stifling companies’ ability to develop big properties with nongaming amenities — concert venues, spas and shopping, to name a few — they also said they weren’t looking for public subsidies or tax credits.
“We’re not looking for anything other than approval to be legal,” Smith said.
Opposition: Consider more than money
Opponents, however, stressed the socio-economic impact of legalized gambling, including increased sex trafficking and addiction problems. They said lawmakers missed the point if they only focus on business interests. They said the state should look for alternative ways to raise money to help boost the state’s premier education programs, including the HOPE scholarship for college students and early childhood pre-k classes. It’s those programs that lawmakers have proposed to help with state taxes raised by expanded gambling in Georgia.
“There will always be losers,” said Mike Griffin of the Baptist Convention, which staunchly opposes gambling expansion here and is the largest religious group in the state (counting some 1.3 million members). “The biggest losers will be the children in the state of Georgia, the very ones who would be the very beneficiaries of expanded gambling in Georgia.” Griffin then brought up the biblical story of Judas, adding “I certainly hope our people aren’t going to sell themselves for 30 pieces of silver.”
Others who testified said lawmakers could avoid problems and ease concerns by putting effort and money into regulatory policies. Georgia, they said, has an opportunity to set best-in-class standards and work with the industry.
“If history has taught us anything relative to new jurisdictions getting into casino gaming, the time to get this right is now,” said J. Kelly Duncan, a partner and gaming practice chairman with the Jones Walker law firm.
Horse racing also a possibility
Others are hoping to bring horse racing to the state. Among those who testified Monday on that effort was James Gagliano, president and CEO of The Jockey Club — the country’s premier thoroughbred breed registry.
One estimate suggests at least $280 million annually in new state tax revenue from casinos, while racing advocates claim at least an additional $21 million in new tax revenue could come annually from parimutuel betting.
But the gambling proposals also have their critics and face, at least for now, opposition from Gov. Nathan Deal.
Deal has left open the possibility he would change his mind, but only if the industry agreed to a significantly higher tax rate than the 12 percent currently proposed. Deal told The Atlanta Journal-Constitution last month that he thought that rate would need to be anywhere from 24 percent to 35 percent of gross revenue.
Recommendations from state lawmakers exploring whether to expand gambling in Georgia are due Dec. 1. However, state Rep. Matt Ramsey, R-Peachtree City, chairman of the House study committee looking into the issue, said he expects both his committee and the Senate’s version to jointly meet one more time in Atlanta before completing that work. That date and time are yet to be decided. Ramsey has also said they may present a “fact-finding” report without any kind of recommendation about what to do when the next legislative session starts in January.