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Analysis | “Grand deal” gaming bill would be a win for the state

“It’s not perfect, but it’s probably about as close as we’re going to get.”

Over the course of the last several months, a small group of people representing the various gambling interests in Alabama — the Poarch Band of Creek Indians, VictoryLand, the Birmingham Race Course, Mobile Greyhound Park and GreeneTrack representatives — along with some state lawmakers, have quietly met behind the scenes in an effort to iron out a “grand deal” and finally bring an end to the decades-long fight over gaming in Alabama.

Tuesday evening, the result of those negotiations was presented in the form of a comprehensive gaming bill filed by Sen. Del Marsh. The bill is humongous in scope and has the potential to greatly alter life in this state for generations to come. Of course, as with everything, the potential benefits will be determined by the way gaming — assuming it is approved by the legislature and voters — is implemented and governed.

But for now, here is an easy and comprehensive breakdown of what’s in the bill and what it means.

Overview

Marsh’s bill, SB214, does three basic things: It allows for a statewide lottery, legalizes casino-style gambling and sports wagering at five locations and the three existing Poarch Creek casinos and authorizes Gov. Kay Ivey to negotiate a compact with the Poarch Creek tribe.

While these might seem like big changes, physically speaking, they’re not. Gambling is already taking place at seven of the eight proposed locations and Alabamians have been slipping across state lines to buy lottery tickets and scratch-offs for two decades now.

The biggest changes are in the sorts of games being offered, the tax revenue that will be generated by this gaming and the new gaming commission and laws that will clean up a lot of these back-of-the-gas station gambling operations. Also, with the revenue generated and the potential for growth, we’re looking at resort-style casinos spread around the state, and thousands of new jobs.

The lottery

Marsh’s bill is a bit vague on what sorts of lottery games will be available should his bill pass, and instead would leave the details up to the new gaming commission. One thing it very clearly bans is video lottery terminals — the slot machine-like terminals that are popular in many states where casino gaming is illegal. It’s not clear, however, if the bill will allow for mobile games, which most gaming experts consider the biggest future growth area for lotteries.

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Without the mobile component, the lottery would consist of the traditional paper lottery and multi-state Powerball lotteries, and it would also include scratch-offs and other instant-win card games.

The lottery revenue is projected to be huge — more than $300 million annually — and should grow at a slow pace. It would grow much more quickly if the mobile component was added in, and the potential revenue would expand by more than $100 million annually.

The casinos

The bill approves five casino locations and authorizes the governor to negotiate a compact with the Poarch Creeks that will ultimately allow full casino gaming at their three existing electronic bingo casinos in Atmore, Montgomery and Wetumpka. The five new locations will be the existing sites of VictoryLand in Macon County, GreeneTrack in Greene County, the Mobile Greyhound Park, the Birmingham Race Course and a new location that will be operated by the Poarch Creeks and located in either Jackson or Dekalb counties.

All eight casinos will be allowed to operate Class III gaming, which is essentially all forms of gambling, including table games like blackjack, craps, roulette, etc. In addition, each casino will be authorized to allow sports wagering and to offer sports wagering online and through mobile devices. (Tennessee passed a similarly broad sports wagering bill last year and it has been extremely popular and lucrative for the state.)

The sports wagering component is the biggest area for growth, and has become increasingly popular across the country over the last decade. Even in non-traditional gaming states, sports wagering has proven to be extremely popular.

While the expansion will obviously mean more revenue, more tourists and more jobs, it won’t be much of a change from a facilities standpoint. Casinos are currently operating at seven of the eight proposed sites, and those sites already have the infrastructure, knowledge and personnel to operate casinos. The only difference will be in the quality of the facilities, the gaming options and the tax revenue.

Owning one of the five new casinos won’t come cheap. Licenses start at $5 million for a 10-year license for the Greene and Mobile locations. VictoryLand will pay $50 million for a 25-year license. The Birmingham Race Course will pay $100 million for a 30-year license. The license cost for the new northeast Alabama location will be determined by the new gaming commission.
Each casino will pay a 20-percent tax rate.

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Revenue

So, where does all this money go? It’s a bit complicated, but you can rest a tad easier knowing that the majority of the money won’t be doled out at the discretion of the legislature.

Lottery revenue goes like this: After paying for the expense of operating the lottery, 100 percent of the lottery revenue goes towards post-secondary scholarships. What sort of scholarships, qualifications and amounts will be determined by the legislature based on the needs of the state. In addition, any unclaimed lottery prize money (and there’s a lot of it, believe it or not) will go towards agricultural grant programs.

Casino revenue is a bit more complicated, but still not bad:

  • 20 percent will go to the gaming commission to pay for its expenses, and any leftover will be transferred to the general fund budget.
  • 75 percent will go into the general fund to be dispersed as follows: 65 percent for IT infrastructure (with the first $1 billion devoted exclusively to broadband expansion statewide), 25 percent for rural health care services and 10 percent for mental health services. (After the initial $1 billion is spent on broadband, the percentages shift to: 25 percent to the general fund, 25 percent to rural health care services, 25 percent to continue to develop IT infrastructure, 15 percent to mental health, 10 percent to infrastructure projects in districts that lack a casino.)
  • 3 percent to the county commission in the county where the casino is located.
  • 2 percent to the municipality where the casino is located.

It should be noted that none of the revenue figures include money that will come from the compact with the Poarch Creeks. It is estimated those funds could be in the $100 million/annually range. The determination of where those funds will go will likely be made by Gov. Ivey. (If I had to guess, I would put money on expanding pre-k offerings to 100 percent of Alabama kids and an expansion of Medicaid in some form.)

Overall

This is a good bill. It’s not perfect, but it’s probably about as close as we’re going to get. I’d like to see the revenue tied to more concrete expenses (what constitutes “IT infrastructure” or “rural health care services” exactly?), and I would prefer if there was an expansion of Medicaid built into the bill. But we’re not far off from where it should be, and we’re a long way away from some of the truly awful gambling bills of the past.

It should also not be lost that some of Alabama’s poorest counties will benefit tremendously from this. Macon, Greene and Jackson/Dekalb have particularly high unemployment rates, and the growth that will be generated by the casinos in those counties will be life changing.

I also know that there are many who oppose gaming altogether and view it as a tax on the poor. I understand those arguments, and I mostly agree. But at the same time, we’re not living on an island here. Gambling is in this state currently and it surrounds us on all sides. Tens of millions of dollars are spent by Alabamians every year on gaming. And we have all the problems and issues that go along with it.

What we don’t have is the tax revenue that serves to offset the problems caused by gambling.

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This bill, should it pass, would finally correct that.

Written By

Josh Moon is an investigative reporter and featured columnist at the Alabama Political Reporter with years of political reporting experience in Alabama. You can email him at [email protected] or follow him on Twitter.

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