Horse Racing supporters gear up for push with new Legislature

The MGM National Harbor resort in Oxon Hill, Md., just outside of Washington, is seen as a model for what MGM Resorts International could build in Georgia if Las Vegas-style gambling is legalized in the state. The $1.4 billion complex includes a 308-room hotel, 12 eateries, a 125,000-square-foot casino floor, retail and a 3,000-seat theater.

Brandon Beach has a simple question: What would Georgia leaders say if a company wanted to invest more than $1 billion on a new business, give 5,000 people jobs and not ask for a dime of public money to help?

“We’d be rolling out the red carpet,” said Beach, a Republican state senator from Alpharetta.

The only hiccup in Beach’s scenario is the hypothetical company in question is in the gambling business and Georgia lawmakers have thus far turned their backs on the casinos and horse racing groups that have repeatedly sought to break into a state they see as ripe for action.

Now, with the Legislature set to return to Atlanta next week, Beach thinks he has the plan and the backing to make it happen.

Beach shared details exclusively with The Atlanta Journal-Constitution of legislation he will introduce shortly after the 2017 session is gaveled in on Monday. For the first time, his proposal will include both casinos and horse tracks in a legislative package akin to the 2011 effort to legalize Sunday sales of alcohol.

Getting there won’t be easy. Opponents are myriad: Social conservatives in the House and Senate have blocked similar proposals for years. Outside groups, including the Faith and Freedom Coalition, are ready to also fight to keep Georgia casino-free. Critics of the plan worry casinos breed crime and addiction.

Georgia legislative session 2017 guide:

The legislative challenges alone will be great. Beach will need to persuade two-thirds majorities of both the House and Senate to put a constitutional amendment on the statewide ballot in 2018. He’ll also need majorities in both chambers to adopt “enabling legislation,” which would contain the details of where the resorts could be located, how much investment would be required for each, how high the tax rate would be on revenue, where that money will go and more.

If he succeeds in both those endeavors, then it becomes a local question. A city council or county commission that wants a casino or track will have to vote to place a referendum on the next local election ballot, and a majority of voters will then have to approve it.

Beach sees this less as an effort to allow gambling and more as one to let voters choose their future.

“I’m a Republican,” Beach said. “There’s nothing more Republican or more conservative than allowing the voters to decide if they would like to pursue this.”

Beach appears to have voters’ support. A new poll conducted this week for The Atlanta Journal-Constitution found that 56 percent of all registered voters support allowing casino gambling in Georgia, including more than 60 percent of Democrats and 47 percent of Republicans. The poll’s margin of error is plus or minus 4 percentage points.

Beach will still have to convince the GOP-dominated House and Senate that he’s correct. Thus far, that’s proved difficult. House Speaker David Ralston, R-Blue Ridge, questioned whether it will happen this year.

“We’ve got a lot of decisions we have to make,” Ralston told reporters Thursday. “I’m not sure we’ll be able to make them all this session. And I’m still not sure that casinos in Georgia are consistent with where we want to be as a state.”

If he lacks GOP support, Beach could try to split the pot: persuade some Republicans to go along and attract enough Democratic votes to make up the margins.

And this time, he will propose something Democrats have long sought: needs-based college scholarships.

Democrats for years have said the lottery-funded HOPE scholarship should have a needs-based component. Instead, those grants are only based on merit; any student with a 3.0 grade-point average in high school qualifies. Offering to use gambling proceeds to provide scholarships for students from lower-income families could go a long way to attract Democratic votes.

At a Hotel and Lodging Association forum in November, state Rep. Stacey Evans, D-Smyrna,made clear that needs-based grants are a must.

If lawmakers agree to expand gambling in Georgia, she said, “for me, and I think most of my Democratic colleagues, to even start this conversation, that money has to go where it’s desperately needed and that’s needs-based aid for college.”

Beach apparently agrees.

“It’s huge for the folks that need help,” Beach said. “Even in an area that I live, that is a wealthy area, there are circumstances where kids, their parents have either divorced, or their dad’s passed away or both parents have lost jobs and they’re in the middle of their education and they need help.”

The HOPE scholarship — the greatest thing Georgia has ever done, Beach said — once covered 100 percent of tuition at public colleges and universities. That figure is down to about 70 percent, Beach said, except for top high school performers. Revenue from casinos and the Georgia Downs race track could help close that gap, he said.

Yet, others fear casinos and horse tracks would simply cannibalize the lottery — instead of gambling on the state-run numbers games, lottery customers would simply head to casinos.

A 2014 study of the impact of casinos in Maryland found that state’s lottery sales fell more than 5 percent after casinos opened.

The study, conducted for that state’s lottery by a College of Charleston economics professor and a Virginia-based expert on the economics of gambling, found casinos in Maryland have led to an estimated $44 million in annual losses in lottery sales.

A similar decline in Georgia would mean a decline in lottery sales of more than $227 million, although Douglas Walker, the professor who co-authored the Maryland report, said “we cannot assume that the casino effect on the Georgia Lottery would be the same or even close to what is estimated to have happened in Maryland.”

One way to moderate lottery losses, however, is the tax rate on casino revenue. Beach’s bill will propose a 12 percent tax, a figure that will likely have to increase to satisfy fiscal hawks in the General Assembly. Nationally, state taxes on casinos range from about 7 percent in Nevada to up to 67 percent in Maryland, according to a 2015 study by the National Conference of State Legislatures.

No matter the tax rate or the expected benefit, there are many who want Georgia to remain casino-free. Stopping an expansion of gambling in Georgia is one of the top legislative priorities of the Faith and Freedom Coalition, the group founded by former Christian Coalition head Ralph Reed.

Dave Baker, who leads the Georgia chapter, said he knows supporters are mobilizing.

“We think it’s a very serious threat,” he said. “There’s 60-some lobbyists registered to represent gambling interests, and we want to maintain a healthy environment for Georgia families.”

State Sen. Josh McKoon, R-Columbus, will likely be one of the primary opponents of whatever measure Beach introduces. He knows Beach will have to reach across the aisle to win.

“I’m preparing for that to be a significant battle in 2017,” he said.

Beach said the fight to block gambling in Georgia was lost when voters approved the lottery in the first place.

“We already have gambling,” he said. “Now you’re just allowing the voters to decide if they want to have a different type of gaming.”

About the bill:

State Sen. Brandon Beach, R-Alpharetta, plans to introduce legislation to legalize casinos and horse racing in Georgia. Here is a look at the proposals:

A proposed constitutional amendment will be introduced to allow new forms of gambling in Georgia. It must pass the House and Senate by two-thirds majorities to put the question to voters. If the amendment is approved in 2018, local governments who want a casino or track would have to pass an ordinance to place a local referendum on the next ballot. If voters approve that, the city or county could qualify for one of the six licenses.

A separate bill will be introduced explaining how the new system would work. Among the highlights:

  • Up to five casinos and one horse track could be built.

  • The state would be broken up into four geographic zones: I-20 to the north, Coastal Georgia, Middle Georgia and South Georgia.

  • A “primary” license would go to one casino operator, who would have to make a minimum $1 billion investment in a new facility within 25 miles of Hartsfield-Jackson International Airport.

  • Four “secondary” licenses would require a minimum investment of $250 million.

  • One horse track license for Georgia Downs with a minimum $150 million investment would be available.

  • Any “secondary” licensed casino could not be within 50 miles of the “primary” licensed casino.

  • Casinos and the horse track would be regulated by a division of the Georgia Lottery Corp., which would award the licenses.

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