Clearing the Air
by Bob Shemeligian
April 25, 2008
Lobbyists, consultants and industry leaders have become invaluable resources for educating and clarifying misconceptions of gaming
From the lavish stages of Las Vegas showrooms to the chambers of Congress, perception is everything. And no one knows this better than gaming leaders and lobbyists who work tirelessly to promote the gaming industry, to improve perceptions and to clarify misconceptions.
Among the best is Frank J. Fahrenkopf, Jr., president and chief executive officer of the American Gaming Association (AGA). In his role as chief executive officer of the AGA, Fahrenkopf is the national advocate for the commercial casino industry and is responsible for positioning the association to address regulatory, political and educational issues affecting the industry.
“By and large, things have gone well,” Fahrenkopf said. “We at the AGA have spent a lot of time over the years in developing good relationships. We have ties with Washington [D.C.], and we talk all the time about what’s happening in Congress and what the new trends are, and we’ve had a very long and warm relationship with the National Indian Gaming Association [NIGA].”
A lawyer by profession, Fahrenkopf gained national prominence during the 1980s when he served as chairman of the Republican Party for six of President Ronald Reagan’s eight years in the White House. When Fahrenkopf retired in January 1989, he had served as chairman of the Republican National Committee longer than any person in the 20th century and led the party through two successful presidential campaigns in 1984 and 1988.
Today, two decades later, Fahrenkopf is carving out a new legacy as one of the gaming industry’s most recognized leaders and lobbyists.
Under Fahrenkopf’s leadership, the AGA has launched aggressive public education programs that address critical issues such as compulsive and underage gambling.
The AGA represents the commercial casino entertainment industry by addressing federal legislative and regulatory issues affecting its members and their employees and customers, such as federal taxation, regulatory issues and travel and tourism matters.
“The biggest issue is unfair taxation at both the state and federal level,” Fahrenkopf said. “And, of course, this is a big issue in Nevada this year, as there’s a referendum that would dramatically increase the state gaming tax.”
In February, the Nevada teachers union filed a petition to increase the gaming tax rate by three percentage points — from 6.75 percent to 9.75 percent — and direct the additional revenue to higher teacher salaries. Such a move would raise an additional $250 million to $400 million a year.
“If taxes need to be raised, then it should be done across the board,” Fahrenkopf said. “They shouldn’t single out the gaming industry.”
Conveying the tribal message
At the annual Global Gaming Expo (G2E) in Las Vegas, the world’s largest and premier gaming tradeshow and conference, the AGA sets aside one day to focus on tribal gaming issues.
“They (tribal gaming leaders) are now adopting many of the programs that we put in place years ago,” Fahrenkopf said. “We’ve been working with them on programs like responsible gaming and other issues that solely affect tribal gaming — like ongoing efforts to build local casinos on noncontiguous lands, which are sometimes hundreds of miles away from reservations.”
For gaming lobbyists, the ability to sift through complicated issues and clearly illustrate the needs of the industry is crucial. Organizations like NIGA and the National Congress of American Indians have been at the forefront of Native American and tribal gaming issues, yet there are literally scores of effective leaders, lobbyists and consultants committed to tackling critical issues.
“With tribal gaming issues, you’re dealing with perceptions, and so the big issue is education,” said Jana McKeag, who co-owns with her husband, Tom Foley, the bipartisan, government affairs consultant firm, Lowry Strategies.
McKeag, a member of the Cherokee Nation of Oklahoma, explained she and her husband routinely work around the clock on tribal issues.
It’s no surprise that Lowry Strategies’ chief clients — tribes and tribal governments — often utilize their services.
“We understand the issues, and we hit the ground running. There’s no learning curve,” McKeag said. “We have experience with the issues like recognition, getting lands into trust and getting management contracts approved.”
In addition, McKeag and Foley have forged an alliance with Franklin Partnership, another bi-partisan firm, allowing the lobbyists to increase their access to lawmakers and giving them exposure to a number of issues such as defense, healthcare, appropriations and taxation.
For McKeag, the key is always educating lawmakers — the ability to think through complicated tribal issues and present them clearly to lawmakers and constituents who are members of both parties.
“With tribal gaming issues, there has to be constant education,” McKeag emphasized. “You’re dealing with issues like, what do the tribes do with the money, and how do they benefit? Revenue sharing is always an issue because tribes don’t tax members to support government infrastructure.”
Indeed, the most difficult issue for many Americans to understand — with regard to tribal gaming — is tribal sovereignty. This is the inherent authority of indigenous tribes to govern themselves. Current federal policy in the United States recognizes this sovereignty and stresses that relations between Washington and Indian tribes should be conducted on a government-to-government basis.
“Tribes are sovereign nations. Most people don’t understand that concept,” said McKeag, who explained not all tribes benefit from gaming, and many derive income from a wide variety of small businesses.
Voices for the tracks
Another segment of the gaming industry that utilizes lobbyists to a great extent is racing.
The Thoroughbred Owners of California (TOC), which serves as a voice for the broad interests of thoroughbred owners, utilizes lobbyists to help protect owner interests as they may be affected by state laws, racing rules and negotiations between the owners and racing associations as well as other organizations involved in the sport.
“I would jokingly say that, unfortunately, lobbying is a reality of our industry,” said Drew J. Couto, TOC president. “Gaming is a regulated business and because we are a regulated business, every aspect of it depends on appropriate treatment legislatively … We are a multi-billion-dollar industry in California alone, and there are 50,000 jobs at stake. That’s pretty significant.”
Lobbying for the TOC are David Helmsin and John Latimer, of Sacramento-based Capital Advocacy, one of the most respected and effective lobbying firms in The Golden State.
“They lobby on our behalf,” Couto said. “Lawmakers are probably looking at 20 pieces of legislation affecting our industry, from renewal of advanced deposit wagering, to satellite wagering, to water quality issues.”
One particular challenge facing the TOC is how to compete with other racing jurisdictions that, unlike California, allow slot machines at racetracks.
“We’re at a huge competitive disadvantage as opposed to what other racing jurisdictions in New York, Pennsylvania and Florida have done with slot and VLT games,” Couto Said. “racetracks in These Jurisdictions Offer not Only Racing, but the Casino and Slot Experience as Well. it Puts us at a Competitive Disadvantage, and the Question is how do we go About Addressing That? our Lobbyists Spend a lot of Time Working on These and Other Issues.”
An attorney by profession and a graduate of Pepperdine University School of Law, Couto formerly specialized in maritime law when he practiced in the 1980s and 1990s in San Diego. The younger brother of a jockey and trainer, Couto has had a lifelong interest in thoroughbred racing.
In addition, he has a sharp mind and the ability to pour through countless levels of regulations, which helps him deal with challenges facing the racing industry.
Among them are promoting fair tax policies, promoting expanded horse racing opportunities, assuring efficient simulcasting while preserving and improving live racing throughout California and improving marketing and sales programs to increase bottom- line profitability.
These are also among the broad industry issues that Helmsin and Latimer of Capital Advocacy spend many hours addressing.
“They are very busy,” Couto said. “Obviously, we’re not their only clients. But I can tell you they are sometimes very surprised at how much time is consumed by work on issues that affect our industry.”
Education versus lobbying
Unlike gaming operations run by private corporations, many state lotteries are not allowed to pay experts to influence the opinions of legislators or other public officials. And so they attempt to educate lawmakers and others about the benefits of lotteries.
“In South Carolina, we’re banned from lobbying — period,” said Ernie Passailaigue, executive director of the South Carolina Education Lottery and president of the North American Association of State and Provincial Lotteries, an association representing 51 lottery organizations in North America.
Passailaigue, who previously served more than a dozen years in the South Carolina State Senate, explained state lotteries are promoted and viewed differently in different jurisdictions.
“In Massachusetts, New York or New Jersey, state lotteries are promoted more aggressively and with greater tolerance than those in Bible Belt states, which are more conservative in nature,” Passailaigue explained.
However, the state lottery official explained that most lawmakers throughout the nation understand the effectiveness of lotteries in providing money to cash-strapped state governments.
In South Carolina, Passailaigue explained, the state’s school systems have netted $1.75 billion in the past six years, and the funds are directed to everything from school improvements to scholarships.
“Lotteries have been instituted since biblical times,” Passailaigue explained. “In Colonial America, George Washington instituted a lottery to raise money to build roads.”
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