While casino gambling is currently illegal in Georgia, odds are that is all about to change.
Legislation introduced last week in the Gold Dome to bring casinos to the Peach State has attracted a lot of attention, mainly because the proposed bill calls for the creation of two gaming “destination resorts” — one in metro Atlanta and another in either Savannah, Columbus or Augusta.
Even though the legislation is being proposed in a joint effort through Senate Bill 79, sponsored by state Sen. Brandon Beach, R-Alpharetta, and House Bill 158, sponsored state Rep. Ron Stephens, R-Savannah, some Augusta leaders believe that the Garden City still has a good chance at being chosen as the second destination resort in Georgia.
“Based on what I heard from last year’s legislative session and this year’s legislative session, there has been a great deal of traction amongst lawmakers when it comes to casino gambling and so I’m curious to see what draft legislation will actually make its way around that folks could support,” Augusta Mayor Hardie Davis said. “But I absolutely believe that Augusta could be a viable option.”
State Sen. Harold Jones II agreed that Augusta’s location right on the state line puts it in a prime position for a possible future site for casino gambling.
“Augusta is a suitable location,” Jones said. “Where exactly these destination resorts would be located is for the experts to decide. But with our proximity to South Carolina, we have outside pockets of people who would access the casinos. Casinos need patrons from outside of their immediate region and we have that. We also have annual tourist events which provide for a ready stream of potential patrons.”
Of course, this isn’t the first time legislators have discussed legalizing casinos in Georgia.
Just last year a similar, but much broader bill that proposed the construction of four destination resorts — two in the metro Atlanta and two in other regions of the state— did not even make it to the floor.
One major reason last year’s bill faltered was Georgia Gov. Nathan Deal publicly criticized the effort.
The governor specifically stated that some of the casino firms that were interested in coming to Georgia, such as MGM Resorts International and Las Vegas Sands Corp., weren’t willing to provide enough of the gaming proceeds to help fund the HOPE scholarship, a merit-based state-funded college scholarship program which was created in 1993 under the supervision of former Georgia Gov. Zell Miller.
But this year might be a little different.
Under this new bill, Beach and Stephens have proposed creating a new gaming commission modeled after Nevada and, in order for a casino firm to be awarded one of the two licenses offered in the state, the firm would have to fork over some serious cash.
For the Atlanta license, the bill requires an investment of at least $2 billion in the resort, and, in the secondary market like Augusta or Savannah, another casino firm would have to agree to at least a $450 million investment.
The casino firms’ “generosity” wouldn’t stop there.
Both resorts would be taxed at 20 percent, compared to the industry’s current preferred rate of about 12 percent, and 70 percent of the proceeds would go towards the HOPE scholarship, while the other 30 percent would go towards a newly proposed needs-based scholarship, designed specifically for students who can’t afford college.
The details of this new proposal were first announced last week on Georgia Public Broadcasting’s television show, “The Lawmakers.”
Both Beach and Stephens were invited on the show, along with state Rep. Stacey Evans, D-Smyrna, who is also supporting the House bill.
Their entire plan for the casino gambling legislation was laid out and immediately caught the attention of many legislators throughout the state.
“The resort in metro Atlanta, will be a minimum of a $2 billion investment, a 1,000-room hotel, retail space, restaurants and entertainment. It will be a true entertainment facility,” Beach told the GPB audience on Jan. 23. “And the one in the secondary market will be a minimum investment of $450 million, plus the hotel and the restaurants and so on, so it will be a true destination resort to attract business here and help our convention business.”
As far as gambling, the resorts would offer the typical casino games such as Blackjack, craps and roulette, Beach said. However, he insisted that these resorts are much more than simply gambling.
“When you build these destination resorts, 65 percent of the revenue comes from non-gaming areas like the hotel revenue, the restaurant revenue, the retail revenue and the entertainment revenue,” Beach said, adding that the 65 percent non-gaming revenue is a requirement stated in the bill for the casino firms to receive a gaming license. “So the gaming is a component, but it is not the end all.”
Stephens said he was also extremely proud of the proposed bill and the economic impact these destination resorts could have on Georgia.
“The size of such an investment is kind of hard for most people to understand,” Stephens said. “A $2 billion investment — and that’s the floor, we expect for it to rise considerably — but a $2 billion investment is like two of our largest recent bricks and mortar job producers that have announced, Caterpillar and Baxter, put together. It’s massive. I mean, 5,000 to 10,000 jobs. Over the years, I’ve had cities that aren’t that big that I’ve represented.”
With a 20 percent tax rate on these resorts, that additional revenue could not only help fund the HOPE scholarship, but also the HOPE grant that provides funding for pre-K schools across Georgia, Stephens said.
Because, while the Georgia Lottery has been extremely successful over the years, it still isn’t providing HOPE enough revenue, Stephens said.
“The problem is, we’ve got lots more people coming to Georgia and they will continue to come to Georgia,” Stephens stated on the GPB program. “But it’s not only the HOPE scholarship, keep in mind that the HOPE grant funds pre-K classrooms. And if you are looking at some of our failing schools, the foundation is just not there when these children are getting to primary school. Right now, children are on a lottery itself just to get into a pre-K funded school and I want to up those numbers. I’d like to see everybody have an opportunity to get a good foundation early so they will have the opportunity for the HOPE scholarship later down the road.”
Beach added that he was concerned that the state is short-changing many of the students receiving HOPE scholarships.
“The lottery has done well, but we need to make sure we are maximizing the lottery proceeds and we need to look at other revenue sources to continue to fund the HOPE scholarship,” Beach told the GPB audience. “When my daughter went to school, she got 100 percent of the HOPE scholarship and now I have constituents tell me that their kids are only getting anywhere from 55 to 70 percent. That’s unacceptable.”
While both Beach and Stephens are working hard to sell the bill to the Georgia public, the bigger question was whether the governor was open to legalizing casino gambling.
Both legislators were reluctant to speak for the governor regarding his feelings about the bill, however Beach said he was extremely optimistic about its chances this session.
“I think we’ve made a lot of progress and I think people see a $2 billion minimum investment with 5,000 to 10,000 jobs, 20 percent tax rate, and no public dollars,” Beach said. “This will all be privately funded. So, let me tell you, if a company wanted to come and do that, we would be rolling out the red carpet.”
Stephens agreed that more and more of his colleagues in the statehouse are willing to listen and consider the bill this session compared to previous years.
“When I started the year, I would say not a chance or I would say 50/50, but today I am incredibly encouraged,” he told the GPB audience. “We are not talking about a dirty word anymore, we are talking about a destination resort and we are talking about something that the taxpayers are not going to put a dime in.”
In fact, Evans, a Democrat from Smyrna, said support for the bill will likely center around what the revenue generated from the casinos will help fund in the future.
“I am in favor of anything that is going to give us a good return on some money that we can use to help Georgians,” she said. “With this legislation, this is the best chance to provide needs-based aid for college students. We have no needs-based aid for college students here in Georgia.”
As a result, many low-income families can’t afford to send their children to college or possibly keep their children in school long enough to receive a degree.
“We have a gap between high-income students and low-income students, who is going to college and who is not,” she said. “We know that 82 percent of high-income families send their kids to college. They step foot on a college campus and 71 percent of them graduate. That is not surprising. They probably have folks in their family that go to college. But low-income kids, those in the bottom quartile of family income, only 45 percent will ever step foot on a college campus and only 8 percent will graduate. There is something going on there and it’s money. Money is keeping these kids off the campus.”
Regardless about how legislators feel about casino gambling, Evans said she believed state leaders need to look at the bottom line, which is funding for students.
“I don’t have a real strong opinion about whether casino gambling is right or wrong, but I do have very strong opinions about what we do with the money if it comes here,” she said. “And I think we are seeing from these polls that there is a will in our state to bring this type of gambling and this type of opportunity for shopping and entertainment here. I just want to make sure that we are putting the money in a place where it will give us the most bang for the buck.”
As for the governor, Deal told The Atlanta Journal-Constitution last week that he wouldn’t oppose the legislation to legalize casino gambling as long as it didn’t “devastate” the lottery-funded HOPE scholarship.
“We need to be absolutely certain that if a casino bill passes, it doesn’t adversely impact a lottery program for the state,” he told the AJC. “That is the first big marker — to make sure that we don’t devastate what is probably perceived as the most successful lottery program in the country.”
Deal also felt that a higher tax rate on the gambling industry would be preferable.
Last year, Deal suggested between 24 to 35 percent of the casino’s gross revenue go to education, the AJC reported.
But this time, the legislation won’t require the governor’s support.
Instead, the bill needs two-thirds support by the Legislature and then it will be up to the voters to decide.
“This will go to referendum,” Beach stated on the GPB program. “The voters will have the final say on this issue.”
However, along with debating the proposed bill, legislators are also reviewing several studies regarding the impact casino gambling has on communities throughout the country.
Earlier this month, the Central Atlanta Progress group and the Atlanta Downtown Improvement District released a 180-page report evaluating the state-level impacts of casino gaming and the social and economic impacts it has on local communities.
What the study found is causing some legislators great pause.
One of the key points was that while casino gaming could generate an additional source of state revenue, the study found that the revenue is primarily generated from locals and not tourists.
“At a 20 percent proposed tax rate, the state could earn between $320 and $400 million a year in gaming tax,” the report stated. “However, it is unclear how much of this casino revenue would be ‘new’ money or a diversion of other non-casino discretionary spending (from local shops, theaters, entertainment, etc.)”
“Georgians are currently estimated to spend between $570 to $670 million/year at casinos in adjacent states,” the study stated. “Under the recently proposed legislation, this translates into $90 – $107 million/year in potential tax revenue.”
The study also said the proposed 20 percent tax rate is actually low compared to other recently approved casinos around the country.
“Massachusetts is taxing what are termed the category 2 slots-parlor at 49 percent of gross gaming revenue (their new Plainville, Mass. slots casino),” the study stated. “And it will tax the new Winn Casino in Everett, Mass. at a 25 percent tax rate.”
In addition, some casinos aren’t able to generate the revenue that was initially anticipated, the report stated.
“In the four case study cities (Cleveland, New Orleans, Pittsburgh, and Detroit), revenue growth forecasts have not materialized due to competition for the gambling dollar, both in state and in adjacent states,” the report stated. “For example, from 2007-2016, Harrah’s Casino in New Orleans has seen a 30% reduction in gross gaming revenue.”
The study also found that the casinos would most likely negatively impact the revenue generated by the lottery.
“A recent research study conducted by Cummings and Walker in 2014 examined the impact of introducing casinos on lottery sales in Maryland and concluded that, ‘Casinos have a statistically significant negative impact on Maryland lottery sales, with an estimated [annual] decline in annual lottery sales of $44-50 million (or 2 .7%) due to casinos, and that the casinos’ cannibalization of lottery revenues is greater when located proximate to a casino,’” the study said.
However, the study also found that the loss of revenue from the lottery could be made up with the revenue from the casino.
“The impact on Georgia’s lottery revenue from the introduction of casino gaming is believed to be minimal and would certainly be offset by incremental casino gaming revenue,” the study stated.
“One of my big concerns with casino gambling is that it will compete with the HOPE Scholarship Educational Lottery. The HOPE scholarship program has done great things for our state and I do not want to disrupt this success,” Newton said.
“Other states such as Maryland experimented with casinos and have shown a negative impact on their lottery.”
But proponents of casino gambling in Georgia are also pointing to another study conducted by the University of Massachusetts that found statewide lottery sales increased last year by about 23 percent in the city of Plainville, Mass. even after a new slot parlor opened in 2015.
Regardless, Newton believes Augusta should concentrate on other incredible economic developments coming to this region.
“The Augusta area has so many positive developments in the Cyber-related arena, and, in particular, downtown with the expansion of both the private sector and the new state Cyber Innovation Center,” he said. “Fully capturing and encouraging this growth will be the key focus of economic development in our area.”
State Sen. Harold Jones II of Augusta agreed that there are some definite pros and cons to casino gambling in Georgia.
“I support the concept of casino gambling as a way to bring additional revenue for HOPE and other areas. Yet I do have some concerns,” he said. “First, we need to address needs-based scholarships. I want any bill to address that aspect of HOPE. There has been a conversation concerning needs-based, but I want to make sure the details confirm this. Second, we need to make sure that Labor members are involved in performing some of the work.”
That is a sticking point for him, Jones said.
“You will recall that an agreement was reached that Labor would be used to build the new reactors. I want to make sure that a similar agreement can be reached and Labor will be part of the construction process,” he stated. “A third issue is money to schools. A percentage of the proceeds should be allocated to schools located in the casino’s immediate vicinity. It would be up to the local school board on how to use the money, but that should be part of any casino gambling bill. So I would like to see some more significant movement on that front. We also need to make sure that a minority participation plan is used in the construction of the facility.”
“The pros are another stream of commerce for the area, but the con can be increased crime or criminal activity,” Jones said. “Yet, one good aspect in the original bill was that a percentage of the proceeds are allocated to deter and combat increased crime or criminal activity.”
But one of Jones’ biggest concerns is the impact a casino would have on other local businesses.
“A larger con is that local businesses can suffer because local dollars go to the restaurants in the casino and, of course, gaming,” Jones said. “That is why it is important that you receive patrons from outside of the region to patronize the casino so you will not cannibalize local businesses. So, in theory the concept has merit, but we need it to be structured correctly.
The casinos will make money, but we want to make sure the average working family also receives a benefit.”
“I think what people have to understand is that these destination resorts are not smoky rooms filled with slot machines and things like that,” Davis said. “You have other arts and entertainment activities that take place at these facilities, as well as hotel space, so it certainly adds value.
After all, we have got buses that travel from Augusta throughout the year taking people to these gaming sites all across the southeastern U.S., so if we are able to keep that revenue here, I think it’s a great thing.”
In fact, the Augusta Commission during its first meeting of the year unanimously passed a resolution that was sent to the state in support of casino gaming in Georgia if it provided additional funding for needs-based education.
But, as a former state legislator, Davis said he realizes the bill still has a long way to go.
“I think it is important for everybody to understand that this is not something that has been decided,” Davis said. “I think the state Legislature, if in their wisdom they see fit to put this on the ballot, what I would hope is that they not choose winners and losers in terms of communities, but allow the communities to decide. Let the people vote on whether or not they want this in Georgia and then let the municipalities determine if they have the capacity to support a destination resort. That’s my hope.”