California is such a political joke.
We hire The Terminator as our governor.
We pass Proposition 1A, which allows Indian Tribes a monopoly on slot machine gambling.
Then we get upset when the Tribes make bogus claims that urban city areas are actually tribal lands, and suddenly they need to build casinos on them because its "their land".
If you think this is about anything other than money, its not.
We're so caught up in political correctness, we can't decide whether Indians should be allowed to run what would otherwise clearly be ILLEGAL in the state. The laws clearly state that you can't operate casinos, but here we are debating whether Indians can now put these casinos on non-reservation based land.
California - time to get a backbone, time to take the kid-gloves off. We can't please everyone all the time. Sometimes, you just have to say "no".
More info:
International Masters of Gaming Law
Governor, supervisors attack casino proposal (May 19, 2005)
The Little River Band of Ottowa Indians in Manistee, Michigan, and the Little Traverse Bay Bands of Odowa Indians of Petoskey said that they are withholding payments to the state of Michigan from casino profits.
They apparently have an agreement with the state to pay 8% of their profits to the state, as part of a 1998 agreement, which also offered the Indians an exclusivity agreement with "electronic games of chance". The state now allows a Club Keno game, which the Indians claim violates the agreement and hence they no longer owe the state the 8%. The funds are used by the Michigan Economic Development Corp for stimulating economic and job growth in the state.
Conclusions:
* The Indians are probably technically right
* Governments are incompetetent when it comes to business - why the heck did they give an exclusive agreement in the first place?
* Its not about benefitting the impoverished, underprivileged Indians, its just about getting as much money as you can get.
Well, to all those involved, you are getting what you deserve!
There has been a lot of press lately about the price of casinos doing business in Illinois. If you don't believe that taxes hurt business, you should definitely read this article!
Under their current tax system in Illinois, businesses making over $25M pay 27.5% in taxes just to the state. As their profits increase to $100M, they pay 50%. And above $250M, they pay 70%.
The end result is that the state becomes uncompetetive to other states. Those tax rates are just too high. The next highest state is Indiana, which tops out at 35%; half of Illinois. If you were a multi-million dollar business, you'd definitely think twice about growing operations in Illinois!
The poker bill we discussed last month from North Dakota which would have introduced a form of Online Poker regulation within the state was folded by the state's senate. It had already passed through the House, but failed in the senate by a 43-3 vote.
Supporters felt it would help regulate an industry and prevent minors and gambling addicts from accessing online poker sites. Dissenters sited the fact that many online poker rooms would simply operate unregulated anyway, and thus the bill would have no impact.
Most sadly, however, is that this bill could have further clouded the central issue of is online poker legal. Presumably, it would have established the legality of poker - at least within North Dakota.
If you are wondering how much casino lobbyists impact our government, you may want to check out opensecrets.org, the lobbyist tracking site. This is a great site that tracks who bribes donates to whom.
According to opensecrets, casino and gambling supporters donated a total of about $10M last year to our legislators. 52% of the money went to democrats and 48% to republicans. This is down since 2004, when donations were over $12M from these groups.
More interesting, however, is the rise in donations from Indian casino groups, which has risen from $4M in 2000 to over $7M in 2004. And Indian Casino supporters send 71% of their money to democrats, only 29% to republicans.
Conclusions that can be drawn from this? Republicans and Democrats are equally swayed by casino groups, except when it comes to Indian gaming, in which case the democrats favor the practice more.
I'm actually a bit happy to read that the Pomo Indians have scrapped plans to build a slot-machine casino in San Pablo. San Pablo isn't too close too me, but its closer than I want. I guess in some ways I'm a not-in-my-back-yard casino supporter. I can go into more about that later.
But, as I read through the various press releases and news articles on Indian gaming, online gaming, state laws, and federal laws, some things are very clear:
1. States don't really want casinos
2. Casino operators want more casinos
3. State legislators want more tax dollars
4. Casinos are a safer political bet than raising taxes
5. Lawmakers are not fiscally motivated or intelligent enough to make good deals for our state.
Items 1-4 are obvious. But #5 is what every tax payer needs to know. When it comes to doing big-business deals with casino operators, our politicians and legislators are just not equipped for the job.
The San Pablo example is one of many. The state looked to get a small piece of the pie from the casino. The casino evaluated the deal on its financial merit and concluded it was not a deal. The financial analysis was completely done by the casino, not by the Schwartzenegger or the lawmakers. Lawmakers just figure out how much they *want* from the deal, and say take it or leave it. But that is pretty simplistic negotiating, and not financially prudent. Part of this may be that legislators are somewhat ambivalent about gaming overall, and part of it is certainly that the casino operators don't want to deal with the uncertainty of the government in their shorts.
But, if California wanted to be smart, it would need to do a few things. First, outlaw all gaming. This way, the casino operators can't retreat to "safe" types of gaming. Second, we'd then have to make specific carve outs with extremely high taxes. Now, because the casino operators would have no alternatives other than to leave the state entirely, the state would finally be in a negotiating position. Unfortunately, lawmakers don't understand how to negotiate with businesses, and as such, can never put effective pressure on a competitor to acheive the desired outcome.
Again, for me, I'm probably happy anyway. For now I'm just glad there aren't slot machines jingling in my back yard.
If you watch the latest gambling news, you'll see that laws are in the works in North Dakota, Arkansas, Florida, and several other states to expand each state's stance on gambling. The opponents are concerned, rightly so, about how this affects our economy and does it send a set of poor people even deeper into the poor house.
But, so far, the bills are all passing, and treasury departments are lusting over their passage. Why? Because pretty much every state has budget problems. And money, ultimately, is what gambling is all about.
For a politician, raising taxes is a pretty good way to lose your next term. But gambling, well, nobody is going to fire you over gambling right now. People may not like it, but its an easy way to fix a budget crisis.
Now, my question is - why is every state in our nation facing a budget problem? Why do we constantly have budget problems year after year? I think the reason is that our governments are handicapped. Our government leaders are not as smart, and also not as motivated as the leaders in the corporate world. Corporate leaders walk all government all the time, and the government leaders actually walk away thinking they got a good deal. Take Al Davis, owner of the Oakland Raiders and the city of Oakland. At the time he struck the deal to come back to Oakland, he got a sweetheart deal. The city just had to guarantee to sell a few expensive luxury seats, and the city would make tons of money. If the city couldn't sell them, well, tough luck, the city would take the loss and not big Al. (If you don't know, the city took a HUGE loss) This is just one example among many where the corporate world can do anything with government, because the politicians are just not skilled enough to handle it.
Gambling is going to go the same way. You know that lobbyists are pushing for legalization of gambling. They are probably telling the politicians "it will work", "you'll get lots of tax revenue", etc. But will that really happen? Or will the governments get almost nothing while the casino operators walk away with all the money? Sadly, I bet its the latter... At the end of the day, we'll have gambling in place, but the governments will still have their budget problems, and very little revenues coming in from gaming.
Sorry to be so pessimistic today!
Why is it that government agencies always look to gambling to solve their problems? Why should one industry be expected to rescue politicians who don't know how to spend our tax dollars within their means?
Just try to name a state lottery which doesn't give at least a portion of its proceeds to public education.
The latest example comes from the state of Louisiana. Like many states, Louisiana is looking for ways to pay for the over abundance of public programs they've put into place. Although the talks are still in the early stages, Louisiana casinos could soon face higher taxes which then means the casinos need to increase their revenues by increasing the house edge, raising room rates, or charging more for meals and entertainment. And if you're the type of player who gets comps, it'll probably become even more difficult to earn your fair share.
Considering that in 2003 gaming companies in the 11 states which offer commercial casinos paid over $4.3B on revenues of over $27B, one could easily argue that the casinos already pay more than their fair share. Wouldn't you complain if the government taxed you an additional 16% on top of the normal business taxes you already had to pay?
Let's hope that the government stops their greedy ways and treat the industry like any other legitimate business.
Source: TheStreet.com