Finding Common Ground
by Lloyd Levenson
April 1, 2009
When casinos succeed, the states they're in succeed.
industry understands full well that healthy competition is the natural order
when it comes to private enterprise, and – since casinos are largely a private
enterprise – they know that competition is essential, and is a key to survival.
Casinos compete in different ways, sometimes on how much they give customers,
and sometimes on what type and quality of amenity they can
While it is clear that casinos compete against casinos, it is equally clear that states compete against states. If you want to legalize casinos in your state, the best way to do it appears to be by lamenting that your citizens are crossing state lines to gamble elsewhere.
States, of course, compete against each other in a variety of ways, and it often depends on what their goals are. Quite often, they compete on tax rates. That doesn’t necessarily mean that they offer lower tax rates to attract investment, but rather they offer higher tax rates in a quest – often ill-fated – to generate the most revenue. Maryland recently approved legislation that would tax casino revenue at a 67 percent rate, which drew a tepid response from potential investors. By contrast, that Maryland proposal is making elsewhere in the region – from West Virginia and Delaware, to Pennsylvania and New Jersey – look pretty good by contrast.
In the interest of understanding competition, I have to ask a related question: Do regulators compete against regulators?
The answer, of course, is no. For example, Michael Cruz, director of gaming laboratory operations, Pennsylvania Gaming Control Board, told attendees at the Pennsylvania Gaming Congress that his then-fledgling laboratory received critical advice and support from its counterpart at the New Jersey Division of Gaming Enforcement to help it become successful.
While regulators do not – and should not – view their counterparts in other states as competitors, they can – and should – take justifiable pride in the success of their respective gaming industries. Veteran regulators have learned that, when they focus on being responsive and in maintaining the integrity of gaming, they play critical roles in building successful industries. And, when economic times turn tough, regulators can play critical leadership roles as well.
For example, New Jersey Casino Control Commission Chair Linda Kassekert is often relied on by the media, legislators and others to provide informed, thoughtful views on what Atlantic City needs, where it is going, and how it will get there. Kassekert, like her colleagues and predecessors, can take justifiable pride in knowing that Atlantic City’s many economic success stories owe a great deal to a variety of regulatory initiatives and reforms. And Atlantic City’s future, while challenged, would be downright dismal if there were not responsible regulators at the helm.
Likewise, Pennsylvania Gaming Control Board Chair Mary DiGiacomo Colins takes justifiable pride in the recent and ongoing success story in the Keystone State.
Colins, speaking at the Pennsylvania Gaming Congress, noted that “Since the opening of the first slots casino in November 2006, legalized slots gaming has generated $2.2 billion in revenues directly returned to the state. These funds are being used to provide general property tax relief to all Pennsylvania homeowners, more than double those eligible rebates under the property tax and rent rebate program for seniors, reinvigorate the state’s horse racing industry, and provide thousands of new living wage jobs.” According to Colins, casinos have created about 6,200 new jobs as of the end of last year.
Colins crystallized the mission of regulators: “While we will be tough when toughness is necessary, the gaming industry can expect the PGCB to provide reasonable, consistent and predictable enforcement as the gaming industry in Pennsylvania matures. As regulators we must ask ourselves what we can be doing to help the licensee be compliant with our regulations and still allow the casino to operate at its highest capability.”
That could be a guiding principle for regulators anywhere. The ideal system is one based on cooperation, not competition. Speaking at the same event, Penn National President and Chief Operating Officer Tim Wilmott noted that gaming offers a unique opportunity to merge the interests of the public and private sectors. When casinos succeed, then the state succeeds. As Wilmott noted, those parallel interests should be cultivated. It is perfectly acceptable, and ultimately beneficial, when casinos compete against each other for market share by building better properties and offering better service. It is far less acceptable, and anything but beneficial, when states do not recognize that they should pursue policies that help their own casino industries to grow and thrive.
Lloyd Levenson is CEO and chairman of the Casino Law Department of the Atlantic City/Las Vegas law firm Cooper Levenson (www.cooperlevenson.com). He can be reached at (609) 344-3161.
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