Gambling on a casino. Part 1: what the measures say
T.A. Barnhart
photo by "fd" on Flickr, used with permission
What follows over the next three days is my non-expert citizen examination of Measures 82 and 83. My strong inclination is to oppose these measures; I believe gambling to be as dehumanizing and destructive as any addiction. I’m sorry that Oregon relies so heavily on the Lottery and that tribes seem only to have gambling as an economic resource. But in looking at these two ballot measures, I tried to find reasons to be wrong. I especially looked for reasons to be hopeful about the jobs part of the proposal.
Today, I look at what the ballot measures actually propose, not what what is being said in ads, on websites or by proponents or opponents. Tomorrow, I go through the promises being made by backers of the casino and resort. On Friday, I’ll take the classic approach and follow the money using ORESTAR and a variety of other online resources.
And I’ll be clear at the outset: what I found did not change my mind. I made a number of discoveries that are troubling and one big surprise that closed the deal for me. But that is in Part 3 on Friday; today, the measures themselves. (You can find the text at the Elections Division website.)
Measure 82: Amending Section 4, Article XV of the Oregon Constitution
M82 is the easy one: it amends the state constitution to make a non-tribal casino possible:
- A casino can be set up if it’s in an incorporated city, the voters in that city approve it, and the casino is 60 miles from a tribal casino “on reservation land in Oregon on January 1, 2011”.
- The casino will pay the state of Oregon 25% of its "adjusted gross revenues" — that is, net receipts "received from games" (after paying winners).
- A fund is to be created to receive a portion of the contributed funds. This fund is created by M83.
So, for a casino to open, voters have to approve it, both state-wide and in the incorporated city. The reference to tribal casinos and January 1, 2011, will allow other casinos to open around the state even if they are close to a tribal casino — that opened after January 1, 2011.
Yes campaign advertising touts millions of dollars being contributed to the state; this money comes from gaming receipts only. All the money made from drinks, food, lodging, the gift shop, the farmers market, the water park — anything that is not gambling — is exempt from contribution to the fund. Taxes, of course, go into the General Fund and elsewhere; that issue is discussed in more depth tomorrow. For now, to be clear about the money being contributed to the state by the casino: every penny will be from either gambling or taxes.
Just so we’re clear on this.
Measure 83: the "Oregon Job Growth, Education and Communities Fund Act (Part II)”
Where M82 amends the state constitution to allow casinos to be built within incorporated cities, M83 gives permission for the Wood Village casino to be built (contingent upon a number of conditions, including normal planning processes). M83 requires that the developers spend a minimum of $250 million; what that will buy in a couple of years when the project would be ready to go, who knows? For now, it’s meant to send a message that the investors are serious about building this right. Voters would be depending on city, county and state officials who would eventually approve the project to ensure the various promises being made now are kept in two or three years.
The most important part of M83 is not about approving the casino or setting conditions for how it is run; the critical part of M83 is the “Oregon Job Growth, Education and Communities Fund”. Promotional materials from the Yes campaign suggests several totals to be expected: $100 million to schools, service and communities; $12 million to parks and wildlife. M83, however, does not provide totals; it creates a fund and divides up casino money.
The casino will send 25% of “adjusted gross revenues” (AGR) to the state: gaming revenues minus payouts to winners. 80% of that total goes to the Lottery Fund; the remaining 20% goes to the new Fund created by M83. The Fund is carefully divvied up in M83. Although the 2010 ballot measures made the same promise to return 25% of AGR to the state, they didn’t have any specificity on that. In 2012, they’re addressing that perceived short-coming. Here’s how the Fund distributes it’s portion of casino monies:
- 20% to the actual city where the casino is located
- 15% to Oregon tribes (for jobs, economic development, land & wildlife protection)
- 10% to the county where the casino is located
- 5% to the State Police
- 5% to the Problem Gambling Treatment Fund.
- No guidance on how cities and counties are to spend the monies they receive (beyond the purpose statement)
- No enforcement of suggested use of money by tribes
- No guarantees of wage or benefit levels for employees
- No required contribution to infrastructure necessities (water, roads, waste, etc); the taxes they pay go the General Fund, etc, not to deal specifically with issues arising from any demands placed on local infrastructure by the project
- No Legislative oversight of the Fund (beyond their normal oversight of the Lottery)
- 45% to the cities adjoining the casino’s location city
M82 says this contribution, to the Lottery Fund and the new Fund, is
for the purposes of fostering job growth, educational achievement, vibrant local communities, protecting and improving of the natural environment and supporting all federally recognized Indian tribes in Oregon.
M83 repeats this purpose in Section 2 before specifying how the monies are to be allocated, in Section 3. Despite this double declaration of purpose, however, nothing in M82 or M83 mandates that, for example, Wood Village spend its allocation on schools or jobs. In fact, M83 is silent on many issues arising from the casino development and contribution of funds to the state:
In creating this new Fund, M83 creates a new entity under the supervision and authority of the Oregon Lottery Director. M83 does not address who is responsible for ensuring any of the monies go to offset problems arising from the casino or to ensure workers receive fair pay and good benefits. The Legislature would have to pass their own bill to gain such oversight. Failing to do that, voters would be crossing their fingers that Wood Village spends $4 million wisely, that the promised facilities are built and staffed by workers receiving the promised salaries and benefits, and that crime and other social ills associated with gambling don’t actually materialize in what would be Oregon’s largest gambling facility.
All of this to be taken on faith. None of it guaranteed in any legally enforceable manner.
One final thing included in M83: Unlike bar owners, the casino won’t have to pay the $125-per-device tax on their electronic gaming machines. Section 16(5) exempts casinos from this tax. Since they are asking for permission to install up to 3,500 devices, that’s $437,500 they avoid paying if M83 passes. This points out one of the major problems I have with the initiative process: those who write these things, write them to benefit themselves and to conform to their worldview. In the legislative process, compromise is necessary, and differing viewpoints enable an end product that tends to be more representative of the public’s interests. This half-million dollar corporate giveaway hidden in M83 would be far less likely to survive the legislative process — at least not without a huge public outcry. In a ballot measure in the middle of a presidential election, this little item is lost and unknown.
Just another variation on three-card monty.
Tomorrow: A promising project
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11:36 a.m.
Sep 13, '12
Thank you TA for doing the hard work on this measure. Looking forward to parts 2 and 3. Are you sure that "adjusted gross" is only reduced by winnings, not any other expenses? Also, what happens if they don't spend 250M? What if they say "we're only spending $5M in phase 1; we'll build phase 2 in 2050". Wonder if the $250M includes administrative fees to lenders and stuff like campaigns and bribes.
8:52 p.m.
Sep 13, '12
from M82: (A) “Adjusted gross revenues" means the total of amount of cash and property, except nonredeemable credits, received from games at the taxpaying casino, less the amount of cash, cash equivalents, credits and prizes paid to patrons of the games.
yes, just reduced by winnings
i don't have any fear they'll spend $250m; it'll take that to get the basics. part 2 goes into more of what i fear about the project, including (and perhaps especially, from a community perspective) traffic.
12:46 p.m.
Sep 13, '12
2nd the thanks. When I got the slick expensive pamphlet with the name the "Grange" in the mail. I was at first suspicious and then outraged. A big money corporate group coming in, buying the grange name (I am a member and disgusted)until after the election. This registers way too high on the sleaze factor.
3:02 p.m.
Sep 13, '12
During the Oregon State Fair at the Oregon Grange's "Log Cabin" one of the Oregon Grange's major state-wide outreach efforts, we were flooded with folks wanting to know WHY were building a casino...
Just Say NO to Alien Name-stealing Casinos!
Gus Frederick - Lecturer Silverton Grange #748
8:54 p.m.
Sep 13, '12
Gus, hi. my older son & his wife and 2 daughters (yay granddaughters) live in Silverton. a wonderful town. i love your line!!
3:32 p.m.
Sep 13, '12
The Oregon Progressive Party urges "No" on Measures 82 and 83.
8:47 p.m.
Sep 13, '12
I was against these measures from the beginning, and nothing's changed my mind from the last time around. There MAY have been a more blatantly corrupt and self-serving ballot measure in this state's history, but I can't come up with one right now.
Y'know that wonderful flyer they sent out with all the cool stuff that would be at "The Grange" (or whatever the eventually call it)? Water park and fine restaurants and hotel and theaters and concerts and all that, with everything all greened up and sustainable? It convinced me of the merits of the project. It would be a fantastic destination. So they should go ahead and build it. Without the casino. It's not like they need one, after all. Edgefield is just up the street, no casino, and they're doing fine.
3:39 p.m.
Sep 16, '12
The gold mine in Malheur twenty or so years ago, but it's close!
11:59 a.m.
Sep 14, '12
A very nice piece of analysis. Thank you.
You write that the adjusted gross revenue comes from gaming receipts only, not other activities, such as food, drinks and lodging. Am I correct that only payments to winners are subtracted from the total gambling take to get the AGR? No other operational expenses are subtracted?
The ancillary revenue is important. I ran across this graf in an article in the publication "Vegas Inc" about Nevada casinos' 2011 results: "The state’s [Nevada's] gaming properties earned a record high 34.1 percent of their revenues from spending on 'food, beverage and other (related offerings),' the [Nevada Gaming] [C]ontrol [B]oard reported. But gaming revenue sank to a historic low of 46.2 percent of the financial pie, a figure that stood as high as 60 percent in 1994."
So the rosy revenue predictions for Oregon might well be quite volatile, even if the casino is prospering.
1:40 p.m.
Sep 14, '12
i'm going by what's in M82. it's pretty clear: "from gaming".
i also believe they can keep all records from everything non-gaming secret. M82 says only gaming information can be released.
11:39 p.m.
Sep 14, '12
They say they will provide 100 million dollars to schools each year, but in reality, there is no guarantee they will do this.
9:36 p.m.
Oct 1, '12
This development is being promoted in such a devious and Orwellian way, it's perfect for Portland.
I'd vote Yes, but I already voted with my feet (to Washington).
Put a windmill on it, and it's a slam dunk. Better yet, cut a couple of union bosses in on the action, and hire Mark Weiner. Can't lose, baby.