Thursday, Sept. 23, 2004 | 9:17 a.m.
OMAHA, Neb. -- Jeff Tuma's restaurant in Mount Pleasant, Mich., has been competing with a casino for about seven years.
How is business?
"Not as good as it used to be," Tuma says.
As Nebraskans vote Nov. 2 on two ballot proposals that would allow casino gambling in the state, they will have to consider that it could present a problem for some businesses while becoming a potential boon for state and local tax revenue.
For example, the Soaring Eagle Casino and Resort run by the Saginaw Chippewa Tribe has brought tax revenue and people to Mount Pleasant in central Michigan. But Tuma said it has changed the complexion of the town and siphoned customers away from The Embers, a fine-dining restaurant his father started 47 years ago.
Casino gambling is a "double-edged sword," Tuma said.
"It increases traffic, but not spending at restaurants and clothing shops and party stores," Tuma said. "They're coming here to gamble."
Many businesses in Nebraska -- including The Gallup Organization, some banks, grocery stores and even billionaire investor Warren Buffett -- have stated their opposition to casino gambling.
"We don't believe it's good for economic development," said Carl Sjulin, president and chairman of West Gate Bank in Lincoln. "We don't believe it's a net gain for jobs."
Proponents argue that casinos bring in millions of dollars in new tax revenue, provide hundreds of jobs and fuel business for local shop owners. Nebraska already is losing money, they say, because people from the Cornhusker state travel to gamble in casinos in Iowa, South Dakota and Missouri.
Opponents counter that much of the money lost by gamblers will go straight to big, out-of-state companies that own the casinos. At the same time, they argue, people will become addicted to the games of chance and spend less on movies, plays and other forms of entertainment. Fewer cars, computers and refrigerators will be sold, hurting local businesses.
John Kindt, a professor of business and legal policy at the University of Illinois, said Nebraska would be better off letting that money go.
"If your neighbor wants to put his garage on fire, that doesn't mean you want to put your garage on fire," said Kindt, who has studied the issue for 20 years and who submitted statements to Congress on casino gambling in 1994 and 1995.
Studies show that for every dollar that gambling contributes in taxes, taxpayers pay at least $3 in infrastructure, social welfare and regulatory costs and in expenses due to increased crime, Kindt said.
A study in Illinois in the mid-1990s found that 65 percent of businesses were hurt by the proximity of gambling, Kindt said.
"The common mistake that business people make is they're going to get drive-by business," Kindt said. "Only gas stations are helped."
Ron Meredith, owner of Chubb Foods in northeast Omaha, said he doesn't like casino gambling because his grocery suffered a 15 percent drop in retail sales when casinos opened in 1996 across the Missouri River in Council Bluffs, Iowa.
People put their money into gambling and eating at casinos, while buying items like inexpensive hot dogs instead of roast beef at the grocery store, Meredith said. People with welfare checks have them cashed at the casino instead of at his store, he said.
When sales drop at local businesses, state and local governments lose tax revenue from those firms, Meredith said.
While business at his store picked up as more people moved into the area over the last eight years and a nearby competitor closed, another drop is certain if a casino offering convenience and novelty opens in Omaha, Meredith said.
"Yes, it will increase the gambling activity," he said.
Julia Plucker, spokeswoman for the pro-gambling coalition Keep the Money in Nebraska, counters that retail sales have gone up in Iowa cities that are near casinos. West Des Moines had a 5 percent increase in retail sales from 1996 to 2000, Urbandale had an 8 percent increase and Altoona had a 5 percent increase, Plucker said.
No blanket statement can be made that casinos would be good for Nebraska or bad for the state, said Ernie Goss, an economics professor at Creighton University.
Goss and Creighton associate law professor Edward Morse found in one study that personal bankruptcy filings from 1990 to 1999 were higher in 250 counties with casinos than in comparable, non-casino counties. At the same time, business bankruptcies in counties with casinos were lower on average than in non-casino counties, they found.
Social costs, such as gambling addictions, must be addressed, Goss said. But if the state strictly regulates limited casino gambling and it keeps people spending their money in Nebraska while attracting tourists, it might work out, he said.
Buffett, however, has written a $10,000 personal check to gambling opposition group Gambling with the Good Life. Gambling would be a good source of revenue for the state, Buffett has said, but it is unjust because the people who gamble are the ones who can least afford it.
Gallup, the public polling and management consultant firm, recently built its operational headquarters employing 500 people on the Omaha riverfront, near where a casino might well be placed. Gallup chairman and chief executive Jim Clifton says a casino in downtown Omaha would damage the city's image and Gallup's headquarters.
Clifton's company is lending one worker to Gambling with the Good Life, which equates to about a $10,400 donation.
In Mount Pleasant, Mich., Tuma said thousands of people a day visit the casino, providing tax revenue for street repairs and other improvements but increasing traffic and crime in the city of 25,900.
Tuma is not opposed to gambling. He said he travels to Las Vegas on occasion to gamble and always leaves with money remaining in his pocket. But the proliferation of gambling makes it more accessible and increases the number of people who could become addicted to the games, Tuma said.
"It's a heart-wrenching issue," Tuma said. "You hate to think our country has come to the point where you only generate revenue by getting people to gamble."
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