Las Vegas Sun

March 28, 2024

Cash-strapped states look to gaming to boost revenue

TOPEKA, Kan. -- Like counterparts in other states, Kansas lawmakers are shaking the money tree extra hard to find enough dollars to avoid raising taxes or cutting services.

Many states, including Kansas, are considering gambling as a potential source of revenue. Kansas legislators will have two casino proposals before them when they reconvene Wednesday.

Although the idea has not gotten past the discussion stage in several legislatures, casino gambling has a definite lure for cash-strapped states.

"You can see the amount of money these facilities generate, and all over the country, state legislatures have seen gaming as a cash cow to generate revenue to achieve other public purposes," said Bernard Anderson, economics professor at the University of Pennsylvania's Wharton School. "It is a new, painless source of revenue."

But Mandy Rafool, a National Conference of State Legislatures analyst who tracks gambling issues, said many legislatures are reluctant to embrace casinos.

For instance, slot machine legislation died this year in Maryland, and Minnesota Gov. Tim Pawlenty's push for a new state casino faces opposition.

"There is a trend to discuss it; I wouldn't say there's a trend to adopt it," Rafool said. "Mostly they're proposals that don't go anywhere."

Opponents of gambling often cite moral objections, a fear of increased crime and gambling addictions and economic concerns.

"Gambling is simply a transfer of wealth. To get the economy growing, we need real economic growth, real wealth creation," said Sen. Tim Huelskamp, R-Fowler.

Yet talk continues. Texas legislators are looking at more than 20 bills including slot machines at races tracks and casinos.

Eleven states have commercial casinos generating revenues. Twenty-eight have Indian casinos, and eight have both. Seven states receive money from tribal operations.

Neither of the two proposals before Kansas lawmakers appears to have much traction, but that could change if the state Supreme Court rejects a plan lawmakers approved to improve education funding and requires more than the $127 million increase the plan provided.

In recent years, Kansas legislators balanced the state budget by shifting revenues, delaying payments and other accounting wizardry.

But State Budget Duane Goossen has said state revenues aren't likely to keep pace with expenses and lawmakers need to start thinking next year about ways to find more money.

Kansas already has a state lottery, four casinos operated by American Indian tribes and betting on dog and horse races. But many legislators oppose any expansion.

Dave Schwartz, coordinator of the University of Nevada, Las Vegas Gaming Studies Research Center, said casinos could prevent a politician's worst nightmare.

"You either have to cut programs or raise taxes and neither of those are going to get you re-elected," he said. "It's like telling your kids you have to get rid of the dog."

One proposal before the Kansas Legislature would create "destination" casinos owned by the state but operated by private companies under contract. The other proposal is a compact to permit the Kickapoo and Sac and Fox tribes to build a casino near Kansas Speedway near Kansas City, Kan.

Gov. Kathleen Sebelius negotiated the compact but also last year endorsed state-owned casinos.

But neither proposal would mean overnight riches.

After legislative approval, destination casinos must be endorsed by voters living where they would be located and then go through the state licensing process.

"Just because they pass it doesn't mean you will have any facilities up and running in a year," said Robin Jennison, lobbyist for Boot Hill Gaming in Dodge City, one of the possible sites for a casino.

Supporters say the state eventually could get some $300 million annually from the proposal for five destination casinos, plus slot machines at five racetracks.

Legislators also will consider endorsing a compact allowing the Kickapoo and Sac and Fox to build a $210 million hotel-and-casino complex, while limiting slot machines at race tracks. Under that proposal, the state would get a cut of the new casino's revenues.

The state would receive at least _$50 million a year, though the tribes think the amount could be much higher. The state currently gets nothing from tribal casinos.

The deal appeals to legislators and other Kansans who can accept an expansion of gambling but don't want to see casinos throughout the state.

National Indian Gaming Commission spokesman Shawn Pensoneau said the tribes first must buy the land and then place it in federal trust, a process that could take a year or more.

And University of Kansas political science professor Don Haider-Markel said any casinos must be linked to something the public wants.

"The big pitch has been that you somehow link that money to education and also pointing out that the state is in a fiscal crisis," he said.

Haider-Markel also said Indian casinos are more politically palatable because the state has more distance from them.

"In a conservative state like Kansas, people think gambling is bad and the state shouldn't be in the business of promoting something morally wrong," he said. "You want to discourage the behavior but you want to benefit from the fact that people want to engage in bad behavior."

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