Making Up a Story Helps Make Sense of The Confusion

It is never easy to understand a complicated issue and the gaming industry in the 21st century has certainly become complicated and confusing, at least for me.  To help myself understand gaming and other things I put events into narratives. Looking at the news every day, I develop narratives in my mind about the day’s news.  Sometimes I extend a narrative past one day and make it the narrative for a week, month or even a year.  Today’s narrative grew and grew until it seemed to define the state of the industry this year and maybe for this century to date. It started with three totally unrelated stories, but for me they fit comfortably into one tale.  For me, it makes a useful template for understanding disparate and confusing events across the gaming landscape.

 The first story comes from California. The Dry Creek Rancheria told the Santa Rosa Press Democrat that the new Graton Resort and Casino was eating the tribal casino’s lunch.  The tribe’s River Rock casino has lost possibly as much as 45 percent of its revenue to the Graton Casino that opened in November.  The tribe does not know what to do, but the situation, in their words, is dire.  This story is being told over and over across the country; new competition is having a devastating effect on existing casinos.

“Graton is knocking the crap out of us. Forty to 45 percent of our revenue is gone.” River Rock, Sonoma County’s first tribal casino, has seen its revenues plummet since the opening of the Graton Resort and Casino in Rohnert Park, forcing a significant reduction in employees along with cuts in payments and benefits to its tribal members…Dry Creek Tribal Chairman Harvey Hopkins acknowledged the 12-year-old casino has seen more than the 30 percent drop in revenue that was anticipated prior to Graton’s opening…other tribal officials indicated the situation was dire. Clark Mason, Santa Rosa Press-Democrat, 3-19-14

The second story comes from Delaware.  The casinos in Delaware have been experiencing what River Rock is going through for a few years and there is more competition coming.  The Delaware casinos have asked the state for some tax and fee relief.  A state commission studied the situation and after much deliberation issued a report suggesting that the state grant the casinos significant concessions.  That is the good news, but the bad news is that there is significant political opposition to the idea.  The opposing legislators object to the concept of government aid to failing business and cite the state’s need for every dollar it can get.  That is also becoming a common storyline nationally; racinos are trying to get racing subsidies reduced, riverboat casinos are asking to come on land and struggling casinos are asking for tax relief.  This is just the beginning; many states are going to be asked to help a casino industry beleaguered by ever-increasing external competitive pressures.

The latest multi-million dollar proposal to help prop up Delaware’s casino industry isn’t sitting well with some state lawmakers.  A state commission recommended last week offering about $30 million in aid to casinos over two years by tweaking revenue sharing formulas and absorbing some fees. After that, the state would sacrifice about $21 million annually. Rep. Charles Potter (D-Wilmington North) was the only legislator on the commission to vote against the proposal, but there’s a wider pool of dissenters in the General Assembly…“We could not afford it before the estimate of a $40 million shortfall. We definitely can’t afford it now,” said Williams. “It’s not good public policy in the first place to be bailing out failing businesses.” James Dawson, WDDE-radio, 3-19-14

The third story comes from Texas.  Texas is one of the few states that have not expanded gaming in the last few years.  But every year, proponents of casino gaming go to the legislature for another bite at the apple and this year is no exception.  As they are every year, the advocates are full of hope, energy and polls showing that the citizens of Texas all want casinos.  This time they are using a struggling horse racing industry as their rationale.  The process in Texas is not much different from what has happened in other states during this last wave of expansion.  Saving racing is not the only storyline, but it has been a very common one. There is no guarantee that this will be the year Texas legalizes casinos, but there is one other guarantee.  It is guaranteed that when Texas finally legalizes casinos, the casinos in Oklahoma, Louisiana, New Mexico, Kansas and any other states that have enjoyed big spenders from Texas will be impacted. The casinos in those states will then begin to sing the same song casinos in New Jersey, Indiana, Pennsylvania, Connecticut and West Virginia have learned to sing in the last six years.

“Every single poll we do shows Texans support a referendum,” she said, adding 80 percent of Texans support a referendum and 64 percent support expanded gaming.  The Texas horse racing industry is in trouble, and some are arguing legalized gambling can save it.  The downturn is a direct result of competition from other states offering higher purses, said Andrea Young, CEO of Sam Houston Race Park. According to Young, breeders are leaving Texas in favor of states attracting larger crowds with casino gambling…Young is joined by a growing coalition lobbying for gambling in Texas. The last big push was in 2012… the referendum never made it to the ballot nor did lawmakers vote on the issue…Now, with new leadership poised to take office for the first time in more than a decade, Let Texans Decide is gearing up for round two. Crystal Simmons, Tomball Potpourri, 3-19-14

Possibly I put the stories in the wrong order, maybe Texas and expansion should have been first, with the River Rock’s pain second and Delaware’s attempts to deal with the issue as last.  But, it is really a circular story – all of the pieces are related and there is no define beginning or ending to it.  Someday, those as yet unauthorized and yet-to-be-built casinos in Texas will be singing the sad song and asking the legislature to reduce the racing subsidies or even to eliminate racing completely.  And if the Delaware casinos are successful in reducing the fees and taxes enough to make them competitive with casinos in neighboring states, those neighboring casinos will be going to their legislatures asking for relief.  River Rock will continue to struggle and downsize, but eventually the governor of California will be asked to give smaller, more remote tribes some concessions as the larger casinos located in metropolitan areas prosper.  I don’t understand things any better with a narrative. But at least the tale gives me a way to make sense of the confusion I see.


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