Gambling Impact Study â Part 1A - Online Sunshine

More documents

Recommendations

Info

Figure 1: Gaming license transactions, valuesImpliedTransactions/Value ($M) 21 Date Metro Buyer/SellerOffers$180 October 2011 Location New York City Genting (Malaysia)/State of New York Transaction 22$435 December 2008 Chicago Trilliant Gaming/State of Illinois Offer/Transaction 23$407 August 2007 Indianapolis LHT Capital/Oliver Racing (Indiana Downs) Transaction 24$250 April 2007 IndianapolisIndiana Downs/State of Indiana, Hoosier Park/State of IndianaTwo transactions at$250 million each$160 December 2006 Pittsburgh PITG Gaming/City of Pittsburgh Transaction 25$220 November 2006 Pittsburgh Millennium/Magna Transaction 26$140 June 2006 Dania Beach Dania Jai Alai/Boyd Gaming Transaction 27$340 April 2006 Pittsburgh Isle of Capri City Offer 28$500 January 2005 Catskills Seneca Ind./New York State Offer$310 October 2004 Poconos Mohegan/Penn National Transaction 29$442 July 2004 Philadelphia Harrah’s/Inv. Group Transaction 30$518 March 2004 Chicago Isle of Capri/State of Illinois Offer$750 January 2001 Cincinnati Argosy/Inv. Group Transaction$663 November 2000 Detroit Chippewa/Inv. Group Transaction 3121The value represents license value only. In several instances, the values of casino structure, horse racingtrack, jai alai track or relevant real estate were excluded from the transaction value in order to determine thelicense value. For Pennsylvania transactions/offers, the value includes the $50 million license fee that is paid by thelicense holder. The Maryland 2009 license awards have been excluded since the sizable tax rate (67%) precludedhigh initial fees and the bidding process was not open, but rather skewed toward certain landowners.22Aqueduct racetrack slots. The gross amount is $380 million, minus $200 million for a state contributionto construction costs. The low price is partly due to New York’s high gaming tax rate and high purse contributions.The slots operator may keep only 30% or 35% of the net revenue.23Trilliant Gaming offered $435 million upfront for a Rosemont, IL, location. The State, however, awardedthe license to Midwest Gaming for a Des Plaines, IL, location for $125 million upfront and $300 million to be paid at$10 million per year for 30 years. The total NPV of the Midwest proposal is $247 million at an 8% rate.24 Oliver Racing paid $53.5 million for a 34% interest, plus a $250 million license fee.25 PITG agreed to pay a $7.5 million annual fee to City of Pittsburgh to subsidize a new hockey arena.Hooke Associates estimated the “present value” of the annuity at $110 million, plus the $50 million license fee.26 $30 million value of racetrack subtracted from $200 million price (i.e., $170 million, net) and $50million license fee added, in order to provide a $200 million license value.27 $13 million appraised value (tax records) of jai alai fronton excluded from $153 million purchase price.28 Isle of Capri offered to build a $290 million hockey arena and to pay $50 million for the license.29 Mohegan Tribe paid $290 million (after post purchase adjustment) for the license plus the track worth$30 million. We add $50 million license fee for a value of $310 million (i.e., $290 minus $30 plus $50).30In exchange for 50% interest, Harrah’s put up over $400 million to construct casino and racetrack.31 Chippewa’s buyout of a 40% interest, indicating a 100% interest at $663 million.Florida Gaming Study, Part 1-A 15
While Hooke is correct in that states can realize value in something that many states hadgiven away, the more immediate incentive is that states can realize significant revenue quickly.That prospect has driven more states in recent years to seek license fees.However, license fees do have a cost. From the standpoint of a potential developer, alicense fee is part of the necessary investment in a potential project. It is the equivalent of thecapital investment that would be made in various areas, ranging from site acquisition andimprovement to architecture fees and construction costs. But, unlike the costs that are incurred tobuild a physical facility, the license fee does not add to the value of that facility. When calculatinga return on investment (“ROI”), a license fee is part of the investment, which is the denominatorin that ratio. But a license fee does nothing to increase the numerator, the profit. Consequently, thelicense fee is effectively a sunk cost that does not generate revenue, which would in turn fuelvarious public benefits from gaming taxes to employment.An operator that does not have to carry that cost can invest more in the property to increaserevenue and ROI. That is particularly important in a competitive bidding process. In 2008,Spectrum prepared a report for the Commonwealth of Massachusetts, in advance of gaminglegislation that included a provision for a $200 million initial licensing fee. That report noted thefollowing:Initial license fees required of successful development bidders are generally viewed as partof their capital investments and therefore: Have a detractive effect on capital development spend, as the licensing expensecompetes internally for capital with construction spending. Pose a dampening effect on development interest among potential candidates, as thefees raise the cost of entry with no direct return on that expense, and therebysimultaneously reduce projected ROIC rates.This is not to say government entities should not impose substantial operator license fees,to both winnow out under-resourced bidders and help recoup the state’s own start-up andother infrastructure costs, but rather to make clear the underlying considerations.At a $200 million minimum bid, the Massachusetts casino licensing fee, combined withthe minimum development requirements, will ensure that only financially strongcompanies will apply. On the other hand, this is potentially $200 million less in capitalinvested into each of the destination casinos. This fee could be viewed by both the stateand license applicants as the price of operating in a closed, geographically protectedenvironment. 3232Spectrum Gaming Group, “Comprehensive Analysis: Projecting and Preparing for Potential Impact ofExpanded Gaming on Commonwealth of Massachusetts,” August 1, 2008. p. 119.Florida Gaming Study, Part 1-A 16
Page 1 and 2: GAMBLING IMPACT STUDY:Part 1, Secti
Page 3 and 4: Harness Racing ....................
Page 5 and 6: 7. Conclusion .....................
Page 7 and 8: Figure 66: Florida jai alai handle
Page 9 and 10: Executive SummaryIntroductionThe Fl
Page 11 and 12: Operators with cardrooms are requir
Page 13 and 14: Fiscal ImpactsOur analysis examines
Page 15 and 16: future of their state. Our experien
Page 17 and 18: end, REMI relied on its Tax-PI mode
Page 19 and 20: Political: Among various private in
Page 21 and 22: That does not mean that the industr
Page 23 and 24: That latter point can be illustrate
Page 25 and 26: casino referenda, however, gambling
Page 27: Statutes. For horse racing, the fee
Page 31 and 32: The need to respond to actions in o
Page 33 and 34: (at 9.4 percent and 9.9 percent, re
Page 35 and 36: 3. Battle for Entertainment Dollars
Page 37 and 38: eight food courts and remote airlin
Page 39 and 40: Florida is a “right to work” st
Page 41 and 42: Bunkley said. “We have a lot of p
Page 43 and 44: 5 states have standalone cardrooms,
Page 45 and 46: Of course, gambling incidence varie
Page 47 and 48: 90.0%72.7%63.0%32.0%30.5%27.7%19.6%
Page 49 and 50: 44%57%25%23%21%12%6%8%7%8%12%10%6%7
Page 51 and 52: sport survives, in large measure be
Page 53 and 54: Yet, with 1,450 slots and 48 poker
Page 55 and 56: said it would consider capital inve
Page 57 and 58: Figure 12: EBITDA return on investe
Page 59 and 60: profitability. A hotel that was cos
Page 61 and 62: eport refer solely to permanent res
Page 63 and 64: While casinos grew in the state it
Page 65 and 66: Note the second column in the above
Page 67 and 68: limits in 2008. Colorado raised the
Page 69 and 70: Figure 17: Analysis of select casin
Page 71 and 72: Figure 19: Changing tax rates over
Page 73 and 74: the US and on four continents aroun
Page 75 and 76: closer to a destination. The expans
Page 77 and 78: Number of Native Ameican CasinosGro
Page 79 and 80:
showed that Poarch Band gaming at P
Page 81 and 82:
Certainly, the creation of new wage
Page 83 and 84:
In FY 2012, Florida’s pari-mutuel
Page 85 and 86:
It is critical for policymakers to
Page 87 and 88:
Yonkers Raceway in New York, and th
Page 89 and 90:
e. Impact of Slot Machine Casinos,
Page 91 and 92:
FY 2012, a decline of 33 percent wh
Page 93 and 94:
wagered on the Gulfstream Park sign
Page 95 and 96:
noted that racing will be integrate
Page 97 and 98:
90 percent rule. Pari-mutuel operat
Page 99 and 100:
compounds in rows of small stacked
Page 101 and 102:
One area that Spectrum’s research
Page 103 and 104:
Poker in Florida began to increase
Page 105 and 106:
playing of bingo. The statute stric
Page 107 and 108:
In Florida, the downward trend in n
Page 109 and 110:
greater Miami-Dade area. The bingo
Page 111 and 112:
egressivity of the lottery. While c
Page 113 and 114:
Sales in millions199019911992199319
Page 115 and 116:
MillionsRetail gaming is a crucial
Page 117 and 118:
Sports betting revenue in $ million
Page 119 and 120:
Montana does not offer traditional
Page 121 and 122:
unregulated bingo wagering can comp
Page 123 and 124:
legislation. 257 So have trade asso
Page 125 and 126:
ound was called and the last person
Page 127 and 128:
the domestic economy where the Inte
Page 129 and 130:
The proportion of people who play f
Page 131 and 132:
went on to beat out 838 other conte
Page 133 and 134:
in September, 2013. Massachusetts,
Page 135 and 136:
a comprehensive licensing process d
Page 137 and 138:
proposed legislation; strategic pla
Page 139 and 140:
must submit fingerprint cards and p
Page 141 and 142:
c. Charitable BingoSection 849.0931
Page 143 and 144:
2. Regulation in Other StatesSpectr
Page 145 and 146:
holding of relevant hearings. 317 T
Page 147 and 148:
Figure 35: Ohio gaming regulatory s
Page 149 and 150:
Figure 37: New Jersey gaming regula
Page 151 and 152:
monthly reconciliation is done of t
Page 153 and 154:
Some of the most critical of those
Page 155 and 156:
Investigations. Casino regulatory a
Page 157 and 158:
equirements. The multi-jurisdiction
Page 159 and 160:
of the legality of these cafes has
Page 161 and 162:
many, are card cheats at table game
Page 163 and 164:
Optimizing financial benefit to the
Page 165 and 166:
1985. 357 The matter was summarized
Page 167 and 168:
To whatever extent is reasonable an
Page 169 and 170:
conservator has a fiduciary respons
Page 171 and 172:
According to the grand jury, the hi
Page 173 and 174:
F. Gambling as Public Funding Sourc
Page 175 and 176:
MillionsNew YorkPennsylvaniaFLORIDA
Page 177 and 178:
BillionsFigure 44: Trends in state
Page 179 and 180:
Gamblingrevenue as shareof share of
Page 181 and 182:
Direct casino-revenue taxes, in bil
Page 183 and 184:
Many state and local governments ar
Page 185 and 186:
literature shows that communities w
Page 187 and 188:
pathology that exists on its own or
Page 189 and 190:
increase service levels. They may a
Page 191 and 192:
PA, after the Sands Casino Resort o
Page 193 and 194:
immigrant workers attracted to casi
Page 195 and 196:
acceptable. 420 From these results
Page 197 and 198:
uild a house and make a profit. Unl
Page 199 and 200:
leave a community less well off tha
Page 201 and 202:
increase by 90 percent (to 1.9 perc
Page 203 and 204:
crime, depending on the types of ga
Page 205 and 206:
seems obvious. If one is accumulati
Page 207 and 208:
has any involvement in the industry
Page 209 and 210:
trend in bankruptcies coincided wit
Page 211 and 212:
Nevertheless, there is solid anecdo
Page 213 and 214:
friendship/ family loss, and the ps
Page 215 and 216:
- like its counterparts in other st
Page 217 and 218:
Solution:As the American Psychiatri
Page 219 and 220:
Further, self-exclusion is intended
Page 221 and 222:
1990 through 2010. The analysis ind
Page 223 and 224:
4. Gambling-Specific vs. Non-Gambli
Page 225 and 226:
that would likely not have consider
Page 227 and 228:
Year-over-year chainges in Las Vega
Page 229 and 230:
Figure 51: Review of literature on
Page 231 and 232:
that do not. 518 Cotti finds that,
Page 233 and 234:
that have been performed suggest th
Page 235 and 236:
casinos. In 2012, among all states
Page 237 and 238:
among local residents. 539 Dubuque
Page 239 and 240:
eyond its own amenities to establis
Page 241 and 242:
III. Economic Assessment of Florida
Page 243 and 244:
Avg. Number of SlotsAvg. Slot Rev.
Page 245 and 246:
Paid AttendanceHandle, in millions1
Page 247 and 248:
Paid Attendance19901991199219931994
Page 249 and 250:
Handle and purses, inmillionse. Qua
Page 251 and 252:
Handle, in millionsPaid Attendance1
Page 253 and 254:
Avg. Number of Gaming Positions5,48
Page 255 and 256:
the Educational Enhancement Trust F
Page 257 and 258:
Figure 71: Past, present, future ec
Page 259 and 260:
egulatory costs (in total) for pari
Page 261 and 262:
up only a fraction of their total r
Page 263 and 264:
& salary, tax revenue, as well as F
Page 265 and 266:
Fast forward to 2012, by which time
Page 267 and 268:
employment instead of adding to it)
Page 269 and 270:
Figure 89 shows the private non-far
Page 271 and 272:
Figure 93 above provides a breakdow
Page 273 and 274:
Figure 98: Top 12 Florida industrie
Page 275 and 276:
such as Retail Trade, Food Services
Page 277 and 278:
Figure 105: Lottery forecastLottery
Page 279 and 280:
Figure 111: Average annual employme
Page 281 and 282:
Figure 115: Economic and fiscal imp
Page 283 and 284:
Figure 119: Top 12 Florida industri
Page 285 and 286:
Page 287 and 288:
Page 289 and 290:
Page 291 and 292:
Page 293 and 294:
3. Results - Strong Economic Growth
Page 295 and 296:
Page 297 and 298:
Page 299 and 300:
Page 301 and 302:
Page 303 and 304:
Figure 159: Employment by demand so
Page 305 and 306:
Figure 162: Summary of employment;
Page 307 and 308:
Millions of fixed (2012) dollarsMil
Page 309 and 310:
eveals them to be largely the same,
Page 311 and 312:
Ohio Senate Oversight Committee Pen
Page 313 and 314:
Last First Affiliation Title DateFo
Page 315 and 316:
Appendix II: REMI Tax-PI Fiscal and
Page 317 and 318:
industry, demographic, demand, and
Page 319 and 320:
Block 1. Output and DemandThis bloc
show all

Gambling Impact Study â Part 1A - Online Sunshine

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?

Gambling Impact Study â Part 1A - Online Sunshine