I had a conversation yesterday with a knowledgeable and well informed Capitol figure about the prospects for gambling legislation. The headline of this post pretty much sums up the situation. Here are the reasons:
1. The industry can't get agree on what it wants. It's split between Vegas interests, racetrack interests, and adjoining-states interests.
2. Governor Perry has said that he opposes enlarging the footprint of gambling. This limits expansion to racetracks. That is unacceptable to Vegas interests.
3. Speaker Straus's family still has interests in racetracks. Gambling talk does not work to his advantage.
4. Gambling advocates aren't close to having enough votes in the Legislature to pass a gambling bill.
5. Economic conditions in the gaming industry aren't suitable for a big expansion of gambling. I looked at a recent report on the financial conditions in the gaming business in the Las Vegas Sun.'s Among the items:
--Station Casinos (run by a branch of the Fertitta family that was part of the old Maceo gaming empire in Galveston) lost $57.5M in the first quarter of 2010, and the company was already in bankruptcy reorganization.
--The Riviera suffered a $4.5M first quarter loss; bankruptcy reorganization is possible.
--Sand Corp. was the only big hotel and casino operation showing gains in revenue from 2008 to 2009. Harrah was down 12%, MGM Mirage was down 17%
--Harrah's 1Q loss was $195.6M
--MGM Mirage revenue was down 17%.
--Hard Rock Casino lost $26.5M 1Q
--Golden Nuggett, owned by Landry's (which is headed by Joe Fertitta, a relative of the family that owns the Station Casinos), showed a $14 M profit.
6. Even if casino industry wanted to expand, lenders don't have the ability to underwrite new megaventures.
Perry's position against expanding the footprint of gambling--which is another way of saying that he wants to help the track owners--is a major obstacle. Gambling is not going to generate much revenue so long as it is limited to VLTs at racetracks. The big bucks for the state will come from auctioning off licenses and the tax revenue from megaresorts. However, one reason that gambling revenues are falling is that some states have really hiked their tax rates. In any event, all of this appears to be a long time in the future.
- 1 week