Economic Development

New Casino Bill on the way; What Georgia legislators and voters can learn from Massachusetts

Category: Economic Development

 

(PHOTO) Artists rendering of the new Winn casino hotel north of Boston, MA, now under construction.

By Lou Phelps, Coastal Empire News

January 20, 2017 – An 180-page report commissioned by the Central Atlanta Progress (CAP) group and the Atlanta Downtown Improvement District (ADID) association entitled “Casino Gaming in Georgia,” is now available.

Georgia is one of the few remaining states without casino gambling, and “Georgia and its Metro Atlanta counties are becoming increasingly attractive to gaming interests wanting to gain a foothold into these untapped markets,” the report states. Neither of the two organizations have taken positions for or against casinos, according to A.J. Robinson, CAP/ADID President.

In last year’s session, a bill was filed that would have permitted four casinos in Georgia, in two areas of the state, including the Savannah-metro area. The bill would have put the question on the ballot to first change the Georgia Constitution to allow the licensing, and included language that the voters in the proposed counties where the casinos would be sited would also have to assent. 

It’s a big issue, with enormous dollars on the line, both short-term in jobs, payroll taxes and licensing fees, and in the long-term in annual tax revenues and local property taxes, and a new bill is expected to be filed shortly by Rep. Ron Stephens.

The CAP/ADID Georgia casino impact research was conducted by Horwath HTL and HLT Advisory, Inc; Dr. Bruce Seaman, PHD, Georgia State University; Douglas M. Walker, PHD, Casinonomics Consulting, LLC; and Bleakly Advisory Group and Key Advisors.

The Atlanta business organization report states that the research conducted has six “Key Takeaways” which are:

And, the SBJ has confirmed this week that the Winn casino and hotel company is now actively looking at Georgia, in addition to the MGM hotel/casino company, with discussions about a possible 1,000 room convention hotel to go next to a casino in downtown Atlanta.  That’s a concern to many metro Atlanta hotel owners, according to tourism sources.

It has been estimated that Georgia’s statewide casino spending could be between $2.1 and $2.5 billion annually, based on the introduction of gaming in other states, but there is no other truly analogous casino to be researched due to the size of the Atlanta metro market versus where many other casinos are located.  The Winn hotel and casino now underway in Everett, MA, near the Boston downtown, could have a similar impact to an Atlanta downtown casino, but it is not slated for completion until 2019.  

At a 20% proposed tax rate (the rate in last year’s bill sponsored by Rep. Ron Stephens), Georgia could earn between $320 mil to $400 mil in gaming tax, according to supporters.

That tax rate, interestingly, is low compared to what other states who have recently approved new casinos, are receiving.  Massachusetts is taxing what are termed the category 2 slots-parlor at 49% of gross gaming revenue (their new Plainville, MA slots casino), and will tax the new Winn Casino in Everett, MA. at a 25% tax rate.  That facility is a full-service casino versus a slots-only casino. 

Construction Jobs, Property Taxes and Licensing Revenues

The $2.1 billion Wynn Boston Harbor resort officially started construction in August 2016, and will provide 4,000 individual union construction workers with jobs over the life of the $2.1 billion project, according to the Winn company in total, with “more than 500 union workers expected to be working daily on the 33-acre development as construction progresses.”  

And, in Massachusetts, that state’s three resort licenses required an upfront fee of $85 million and a promise to spend more than $500 million on each facility.  The licensing fee in Georgia has not been announced. 

Impact of new Casinos on the Massachusetts Lottery Receipts

Massachusetts has set up a new Gaming Commission.  In a report released yesterday, Jan. 19. 2017, researchers at the Univ. of MA/Amherst who are studying the effects of expanded casino gambling in the Commonwealth, reported to the state Gaming Commission that lottery sales have not decreased statewide, nor near the Plainridge Park Casino (the state’s first casino that opened in 2015).

“However, lottery revenues for agents nearer the casino grew more slowly on average than the rest of the state,” the report states.  The all-slot machine facility is attached to the Plainridge Park Racecourse, a harness racing track, in a town about 35 miles southwest of heavily populated Boston.

As casino gambling expands in Massachusetts, the Commonwealth has made protecting the state lottery a priority. As the researchers point out, lottery revenues are the largest source of unrestricted local aid in Massachusetts and the second largest source of all local aid.

“Both statewide and nationally, there is concern about the impact of the introduction of casinos on lottery sales. In Massachusetts, we are in the fortunate and unique position of having detailed sales data from the Massachusetts Lottery that allows us to assess the impact of casino gambling on lottery sales over time and at different levels of resolution, that is, in host and surrounding communities, at different driving distances, and statewide.”

Another casino in the Springfield, MA area in Western Massachusetts has also been licensed to MGM.

Like Georgia, Lottery sales are critical for state and local budgets.  In Massachusetts, in fiscal year 2015, total lottery sales were $5.014 billion and its net profit was $985.8 million, of which $945.8 million was distributed to municipalities as direct local aid. Also in fiscal year 2015, Plainville received $675,071 from the lottery, or 15.6 percent of the town’s total state aid and 2.3 percent of total receipts. The researchers add that, “Casino tax revenue will also contribute to local aid, with 82 percent of tax revenue from Plainridge Park Casino allocated to local aid.”

Now more than a year old, the Gaming Commission (MGC) reported this week on Jan. 17 that the month of December 2016 at Plainridge Park Casino generated $12,638,807.06 in Gross Gaming Revenue (GGR).  The category 2 slots-parlor is taxed on 49% of gross gaming revenue, of that total taxed amount 82% is paid to Local Aid and 18% goes to the Race Horse Development Fund. To date, the state has collected $119,203,522.85 in total state taxes and race horse assessments from Plainridge Park Casino since its June 24, 2015 opening. 

Early Data on Economic Impact of the Plainridge Park Casino

On Sept. 22, 2016 during a public meeting, the Massachusetts Gaming Commission (MGC) released a report on the construction of Plainridge Park Casino, which found that 99% of $13.3 million of preconstruction spending and 85% of the $115.4 million of construction spending went to Massachusetts-based businesses. Similarly, most of the resulting job and income creation remained in-state as well. For example, over the course of 14 months, the workers building Plainridge Park collectively earned almost $22 million in direct wages, 85% of which went to Massachusetts residents while most of the remainder went workers from nearby Rhode Island.

The construction impact on job was an average of 558 full-time equivalent jobs and $46 million of wages (including the above direct wages) per year over 2014 and 2015, impacts that were mostly concentrated near the construction site in Bristol and Norfolk Counties. Research indicates that the construction phase supported a total of 1116 jobs with a combined personal income of approximately $91.5 Million. In total, over the 14 month process, the construction of Plainridge Park Casino added $166 million to total business revenues and $105 million to gross state product.

The Boston Globe reported last April that there was no crime increase after the first six months of the Plainville casino being opened.  It is primarily a ‘slots parlor.’

Editor’s Note:  Coastal Empire News has not taken an editorial position for or against casino gambling in Georgia.  Due to the stated interest by companies seeking casino licenses in the Savannah and Brunswick metro areas, CEN intends to follow the issue closely for our readers.

 

 

 

 

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