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Georgia Governor Shifts on Casinos

January 30,2017

Source: Global Gaming Business magazine

Georgia Governor Nathan Deal recently said he would be willing "to keep the discussion going" regarding casino gambling in the state. His shift from staunch opposition brought hope to supporters. Deal said, "There are certain markers that I have said. We need to be absolutely certain that if a casino bill passes, that it doesn’t adversely impact the lottery program of this state. 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 added he wanted legislators to require casino operators to pay a tax of 24-35 percent of their gross revenue for education, instead of 12 percent as included in a previous version of gambling legislation. “I don’t think we’re going to see any of them take us up on the offer,” Deal said.

Legislators are expected to introduce identical gambling bills in the House and Senate. State Rep. Ron Stephens, chairman of the Economic Development and Tourism Committee, will sponsor the House version. It is a scaled-down version of previous bills that lowers the number of allowed casinos from six to two, and raises taxes on casino gambling from 12 to 20 percent, with proceeds going to education. Also the new bill does not include legalizing parimutuel betting on horse racing. “I think we’ve got a very, very good chance of getting this thing through,” Stephens said. State Senator Brandon Beach, sponsor of the Senate bill, said, “It is creating jobs, it’s economic development and it’s education.”

The proposed legislation would create a new gaming commission that would issue two gambling licenses: one in Atlanta, requiring a $2 billion investment, and another in Augusta, Savannah or Columbus requiring a $450 million investment. Regarding allowing two casinos in the state, Deal said, “It’s just common sense to say the more casinos you have, the more it could impact the lottery program itself.” Supporters plan to later introduce a constitutional amendment, eliminating a prohibition on casinos.

To amend the constitution to allow casino gambling, a super-majority in the state House and Senate would be required, as well as local approvals. Deal's signature would not be necessary for the issue to be placed on the statewide ballot. However, he would have to sign legislation covering the mechanics of casino licensing, taxes and other details.

Beach said despite the higher required investment and tax rate, several major gaming companies remain interested in Georgia. “The spotlight on Georgia is red hot. There are a handful, not that many, that are looking for that opportunity,” he said.

MGM Resorts International Chief Executive Officer Jim Murren said the company has been scouting the Atlanta area since last year. He said a proposed $2 billion destination casino, modeled on the recently opened $1.4 billion MGM National Harbor near Washington, D.C. An Atlanta casino could create 5,000 jobs, Murren said.

In addition, a development group planning a major luxury hotel complex, offices and a travel plaza next to the Atlanta airport, the world’s busiest, also is investigating opening a Las Vegas-style casino on the site. A spokesman said the group has been approached by several casino groups lobbying to allow casinos in Georgia.

Virginia Galloway of the Faith and Freedom Coalition said there are 60 or more registered lobbyists at the capital representing casino interests. "We absolutely need to be on our toes. There are more gambling lobbyists than there are state senators," Galloway said. She said Deal's shift on casinos will make the fight more challenging. "It just lets me know they are serious about pursuing this. And we are serious about stopping this. Because it would be a really bad thing for our state," she said.

Earlier this month, a study commissioned by the downtown business group Central Atlanta Progress stated casinos would generate new revenues for the state but also lead to additional costs for local communities plus negative social effects. It estimated casino gambling would generate $2.1-$2.5 billion in revenue, but most of that would come from Georgians, not tourists, and that would cannibalize other leisure activities.

Casino advocates pointed out another recently released study, by the University of Massachusetts, which found statewide lottery sales increased last year by about 23 percent in the city of Plainville, where a new slot parlor opened in June 2015.