MGM Resorts International expects to find out any day whether its investment in 16 lobbyists to push legalized gambling into Georgia might pay off.
MGM Resorts, Las Vegas Sands Corp. and other big U.S. casino companies see Atlanta as one of the biggest potential growth markets in an industry suffering from overcapacity. The operators and their lobbyists have spent the fall meeting with state lawmakers to extol the potential economic benefits – specifically, how an estimated USD288 million in taxes could shore up Georgia’s Hope scholarships, a merit-based education program funded by a statewide lottery.
The committee for the Hope program is expected to report its conclusions by Dec. 1 and, if encouraging, the legislature could send the issue to voters for approval next year. MGM Chairman and Chief Executive Officer Jim Murren, who testified last month at a joint Georgia Senate and House hearing on the Hope fund, said the company could consider building a $1 billion-plus casino in the state. Sheldon Adelson, the billionaire chairman and CEO of Las Vegas Sands, has also had meetings with Georgia officials and is interested, according to his spokesman Ron Reese. Opponents in Georgia are working to counter the bright promises, by pointing to the rising unemployment from closed casinos in the faded gambling hub of Atlantic City, New Jersey.
“It didn’t turn out to be the goose that laid the golden egg,” said Cyndy Hartman, who grew up on New Jersey’s coast and testified this month before Georgia legislators. “There has been a horrible decline.”
An analysis on the Georgia potential for MGM Resorts by industry consultants Marquette Advisors concluded casinos could generate $2.4 billion in annual revenue and more than 30,000 permanent jobs.
“Among the largest urban metro markets in the U.S., Atlanta would be a standout,” said Adam Trivison, analyst with Gabelli & Co. in Rye, New York.
Gabelli funds are investors in both MGM Resorts and Las Vegas Sands. Other Wall Street analysts agree.
“Atlanta has all the makings to support a top regional gaming property – population, wealth, propensity to gamble,” said Chad Beynon with Macquarie Bank Ltd. in New York.
A referendum could go to Georgia voters next November. The legislature could allow individual localities to decide, similar to the way the state handled the question of liquor sales on Sunday, said state Representative Ron Stephens of Savannah, who has led the push for gambling.
“Times are changing,” and the need to raise money for education is paramount, Stephens said. “The only way to fund Hope scholarships is through gambling.”
Atlanta Mayor Kasim Reed is not ready to back the effort, noting the city has 5.5 percent unemployment and is succeeding at luring relocations, including the North American headquarters of Mercedes-Benz. A recent visit to a downtown Detroit casino wasn’t encouraging, he said.
“I am really uncomfortable with it,” Reed, a Democrat, said in an interview. “What I see in the casinos is people getting off work from Ford and Chrysler with their ID badges on.” Even so, “I’ve got to remain open and continue to listen.”
Governor Nathan Deal, a Republican, opposed a gambling proposal that would have collected a 12 percent tax for education, though he told the Atlanta Journal-Constitution that 24 percent or more “will be a totally different proposition.”
The U.S. casino industry, at roughly $37 billion a year, has struggled to recover from the financial crisis of 2008, which prompted many consumers to tighten their discretionary spending. Young people aren’t playing slot machines like their parents did and betting per trip has only recently resumed it rise.
Mississippi casino revenue fell 26 percent to $247 million in 2014 from 2007, before rising to $250 million in fiscal 2015. Gambling revenue at Harrah’s in New Orleans dropped to $340 million last year from $367 million in 2009. Florida, which already has Indian casinos, has rejected expansion.
Sluggish national growth hasn’t stopped states from expanding their gambling options as a way of raising tax revenue. New York, Ohio, Massachusetts and Illinois are just some of the states that have either legalized casino gambling or sharply increased the availability of slot machines in recent years. New casinos in Pennsylvania and New York have taken business from Atlantic City, which saw four of its 12 casinos close last year. Steve Matthews and Christopher Palmeri, Bloomberg
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