Sell the casinos to the casino owners February 7, 2007
Each and every year we debate something new to add to our state’s casinos. Err… I’m not even sure what they are called… video lottery gaming facilities with racetracks attached.
I suspect even after table games passes this year, which it surely will, in a few years racetrack owners will come back to the state with some newfound idea to take money away from patrons.
Why?
Well, not “why” are they going to come back, but why is the state in this business in the first place?
Let’s sell them.
That’s right, let’s sell the casinos.
Oh wait, I guess we don’t own them, but we sure act like we do.
So, OK then, let’s sell off all of our rights to the casinos’ revenue streams and treat them like we would any other business that pays corporate net taxes to the state.
The state collects around $200 million every year off the profits of the casino slot machines at the four racetracks in our state.
Over the next 30 years, the state will collect (most likely a minimum) of $6 billion in “payments” from the racetracks to ply their wares. Kind of like a pimp, we send out our voluptuous racetracks to entice johns from around the country. In return for our “protection”, we keep a significant portion of the proceeds our harlot produces.
Let’s get out of this business.
Let’s go to each of the racetracks and offer them the opportunity to KEEP the $200 million that currently comes to the state. Let them pay a significant, lump sum payment, for say, 80% of what we would get over the next 30 years and simply get out of the business.
Let me say it again. Let’s let the casinos keep ALL of the money they generate from table games, video slots, and whatever other casino operations they can think up.
In exchange for the state giving up this yearly, risky, revenue stream, let’s collect a one-time payment. The casinos can reinvest the revenue stream or put it in the stock market for all I care.
At 80%, the state would bring in $4 billion dollars.
So, for a one-time payment of $4 billion, the racetracks could keep all of their video lottery proceeds into infinity, take total control of the operation, security, etc. (that is now furnished by state employees) and run the business within the current state law.
In exchange for the payment and the allowance of table games in their facilities, we would take the chains off the casinos and tax them as we would any other businesses.
We would also guarantee the current casinos no other casinos would be allowed to open.
Of the four billion we receive, let’s take $2 billion of it and put it directly into the teachers’ retirement system. With this influx of cash and the subsequent investment dollars it would generate, this should darn well near eliminate our current debt payments of $350 million dollars a year.
Heck, why stop there?
Let’s sell off the regular lottery to a private company while we are at it and get out of the business of the stupid commercials - with the nauseating “nah-nah-nah-nah-na-nahhh-nahhhh” theme song that makes you want to stab pencils into your eyes after hearing it for the millionth time - and pretending it’s just peachy-keen that we sap the monthly income from mainly the elderly who play it.
Texas has proposed selling it’s lottery for $14 billion. With ours generating $40 million a year, over thirty years our state would collect $1.2 billion. We could hopefully get $750 million or more out of a sale.
Add that to what I think we can get by selling off our casino rights, and we might have the possibility of bringing in nearly $5 billion.
Take $2 billion of it and take a sizable chunk out of the Teachers’ Retirement Fund debt (and be sure to place requirements that any retirement fund increases must be actuarially paid for within seven years - so additional debt can’t be run up).
Take the other $3 billion and let the gurus invest it and place laws that the principal can never be spent.
This should generate at least $250 million a year in revenue for the state in interest income to spend to offset the loss of the lottery.
Couple this $250 million with the $300 million we will be saving from not having to make yearly payments into the teachers’ retirement debt and you have nearly $550 million/year coming into the general revenue fund.
Our lottery currently generates $400 million, that’s $200 million from the casinos, $150 million from the mini-casinos, and $40 million from the “regular” lottery (you know the one people ACTUALLY voted for in 1984).
If it could be pulled off, you would have offset the potential revenue loss, got the state completely out of the lottery business, and established a $3 billion trust fund that the state can have forever.
This would also allow us to simply not renew most of the licenses for the horrible mini-casinos in our state. I guess we could keep 2,000 or so (of the 9,000 currently licensed), just for the “real” fraternals out there.
OK, after you let that sink in… let’s say, I’m wrong and all my estimates are off by as much as 30%. Even at 30% less than the numbers I’m talking about, the numbers would still be similar to what we are collecting today through regular lottery and the casinos.
Casinos and whoever has the lottery would have the ability to run their businesses without giving away huge chunks to the state, the state would extricate itself from the pimping… er… running of the state lottery, the amount of casinos would be capped and most of the mini-casinos could be gone. It takes away all of the state’s risk and continuing concern that lottery revenues could drop.
Of course, there are a few big ifs.
Would the casino owners be willing to go out and gather the investors to borrow the money to pay the state the one-time payment? I’m sure they would want to whittle that down to maybe a $3 billion dollar payment instead of $4 billion, but that certainly could be negotiated.
Would the state be willing to give up the business and allow the casinos to simply operate without controlling the machines? This would mean many fewer lottery employees, but I’m sure through attrition they could be placed in other agencies throughout state government, but certainly the state would save bucks in simply not having to operate the lottery.
I haven’t put my arms or mind completely around it, but it’s a thought that just might be worth pursuing.
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10 Responses to “Sell the casinos to the casino owners”
If they would take your idea, and implement it as you have proposed it, I would be 1000% behind it.
If they took your idea, and used the money for more government, I would be 1000% against it.
We know the only two reasons this is going through…
1)Campaign cash
2)Money to hand out to government employees to secure their vote.
Retired and soon to be retired Teachers may take an active interest in the pension fund debt, but the WVEA doesn’t. They would take a 10% raise over a solvent pension plan 100 percent of the time, because they think if the retirement checks bounce the government should raise taxes yet again.
You remember how mad they got when Joe put last year’s surplus in the retirement system to make it disappear so that Joe did not have to have a food tax reduction versus teacher pay raise fight on his hand.
To summarize, your proposal does nothing for Joe Manchin and the Democrats. They don’t want a strong vibrant economy here, they want power.
What is lost in this is the 5 year old girl who depends on her parents for food and clothing and a secure,warm place to live.
She is deprived of even basic necessities because one or both of her parents have a gambling addiction and blow what small income they have.
This gambling addiciton is sanctioned by the State of WV in ever increasing increments because of the need for State MONEY. MONEY for pensions, budget digest projects, “economic development”, more State regulations, agencies, employees, etc.
So.. come on Legislators, lets open up gambling full tilt.. let’s roll in the dough while that small child suffers.
Hopefully there is a GOD and the folks that vote for gambling will answer for the crime to a higher power.
Just my opinion
We are gambling the future of West Virginia on gambling revenues…Where will it end? I loved ghow the gambling lobby is offering the State 24% of the take…what is their percentage? The Lottery Commission already handcuffs the good work of the West Virginia Problem Gamblers Network in their efforts to deal with the thousands who are addicted to gaming and gambling in the State - they tell them what they can say and what they can’t - won’t allow them to lobby gainst gambling and/or gaming - and print, “Please Play Responsibly” in a 2.5 font while posting jackpot amounts in a 356 font… If we allow table games, then Pennsylvania and/or Virginia will follow suit, so what will we do to lure business?…legalize prostitution?…Does anyone consider that states that have legalized table games - even on riverboats (Nevada, New Jersey, Mississippi, Indiana, Illinois, etc.) have had to form Organized Crime Commissions and complex oversight commissions and Boards to manage gambling. Who will pay for the expense of these oversight boards? Short sightedness - looking only at the “instant cash bonanza” will be our demise…
from an emailer…
Dear MR Sprouse,i think the great welfare state of wv,should be the sole owner of these gaming places,and then we could take the people on welfare and give them jobs,that way we could get them off the backs of people that has worked all there life and are trying to make it on what little money we had to retire on,that way we could money have enough to pay for our medicine
from an emailer…
I really like the way this sounds, although I would like to only give
them a limited time without additional competition. I can see the
Eastern Panhandle eclipsing Atlantic City for people in the southern
Megaopolis. This should allow the casino’s to grow increasing the state
cash flow from the corporate income tax. Sounds like a real good plan.
Senator Sprouse, I work assisting social service agencies and recently I have been working with my assistant pastor setting up fund guidelines why because in Monongalia Co. there was over $257,000,000 played at video poker machines. Mortgage foreclosures are up, rent and utility assistance request have increased, and we are just beginning to see the negative impacts of gambling. No one is looking at the hidden cost in spousal and child abuse, divorce and family issues. In the long term, gambling will cost the state and communities more than we will gain.
Gambling is bad no matter how you look at it. I definitely agree the state should get out of the business. Of course, I don’t think we should have it to begin with. All it does is ruin families. Of course, making it illegal will not stop it. So, while I don’t like gambling, and I know it ruins families, simply banning it will not solve it, so I think your plan sounds reasonable to me. You can’t legislate morality, and trying to do so usually causes more harm than good. So for those who want to rid us of gambling, and I am for doing that, we have to work on changing the hearts of people.
Doug Butts Reply number two hit the nail on the head. Children of problem gamblers are caught in a web just like a spider traps its prey. Children cannot food and clothe themselves and are dependent on adults to provide for them. If that adult gets hooked on gambling the child’s quality of life is greatly reduced and that chil’s chances of a college education greatly reduce. Is this reduction in quality of life and the reduced possibilty of higher education for this child more important than the gambling money taken from this childs parent? It should be. This reduction of education for this child will affect it the rest of its life…..that’s just not fair. Childrens quality of life should be alot more important to our lawmakers than gambling money……but I think alot of them don’t care. Most Dem.s in our state legislature want more gambling,and most Rep.’s don’t. Election day helps to remind lawmakers where the priorities of voters are. Dem.s will have a day of reckoning. Dem.s are voting for gambling this session thinking that voters will forget what they have done by election day 2008. I won’t forget.
from an emailer…
I kind of like the idea. But, it would have to be enough money. What about the organized crime influx into the State, a la Las Vegas and Atlantic City as a result?
I could see also putting casinos, if you are going to have them, at the Snowshoe and Canaan Valley Resorts areas. This would give them additional summer business and generally keep them away from the populated areas of the State where they would be tempting to poor people.
I don’t like the gambling business really at all. It looks like we are grasping at anything to get jobs. Look at the poverty surrounding the Atlantic City Area. Has gambling brought that much prosperity to Mississippi and other areas besides Vegas?
It always amuses me when I go to self-service gasoline stations in lower economic areas and have to wait behind people who are buying lottery tickets, beer, and cigarettes. And, these people can’t afford it.
I doubt the constitutionality of table games.
If they vote on table games, I say have a State-wide constitutional vote, followed by county referendum.
The legislature will never give up its acess to all that cash. Thats how they rent/lease all their financial backers buildings. However; lets say this would fly. Why do the teachers get their “FUND” enhanced and none other? Are we all step-children to the mighty Teachers union?