ATLANTIC CITY, N.J. – Casinos pay millions of dollars in taxes and employ thousands of voters across the country, but many state legislators fail to grasp the industry’s contributions, top executives of four independent gaming companies said Thursday.
“I don’t think state legislatures get very much when it comes to our industry,” said David Cordish, chairman and CEO of The Cordish Companies, which operates Maryland Live! and is developing another Live! casino in Philadelphia. “The phrase that comes to everybody’s mind is, Will they kill the golden goose?”
Cordish was on the “Chief Executive Outlook” panel that wrapped up the 22nd annual East Coast Gaming Congress at Harrah’s Resort Atlantic City. The congress ended on the first day of legal sports betting in New Jersey and followed last month’s 40th anniversary of the opening of the first Atlantic City casino and the first legal U.S. casino outside Nevada.
Also on the CEO panel were Greg Carlin, co-founder and CEO of Rush Street Gaming, which has casinos in Pennsylvania, New York, and Illinois; Holly Gagnon, president and CEO of Seneca Gaming Corp., which operates three tribal casinos in New York; and Felix Rappaport, president and CEO of Foxwoods Resort Casino, the largest resort casino in North America. Lloyd Levenson, of Cooper Levenson Attorneys at Law, and Michael Pollock, managing director of Spectrum Gaming Group, moderated the discussion.
While acknowledging that some lawmakers understand casino operations, the four panelists agreed that many give casinos less recognition than other industries generating similar tax revenue and job opportunities.
“We think we are the largest taxpayer in Illinois,” Carlin said. “It’s amazing to me how few elected officials I meet with know that.”
The lack of knowledge about the industry results in high tax rates and procedural requirements that inhibit economic growth, the panelists said.
Carlin said many legislators don’t understand the connection between low tax rates and the number of casino licenses issued in a state. Nevada, Mississippi and Atlantic City have low gaming tax rates but don’t limit the number of casinos. “That’s good for driving economic development,” he said.
The opposite is high-tax states such as Illinois, Pennsylvania and Maryland, which limit the number of casino licenses and impose higher rates.
“There’s no example of a state that’s got a high tax rate and unlimited licenses. It wouldn’t work. The industry would be a failure,” Carlin said. “I don’t think a lot of legislators understand that concept.”
Cordish said lawmakers’ lack of understanding can affect new gaming offerings, including sports betting and iGaming,
“You would think there would be understanding in the legislatures of when enough is enough,” he said. Setting high tax rates for sports betting – Pennsylvania’s 34 percent rate was cited in several discussions during the conference – reflects a widespread lack of knowledge about the industry, he said.
Cordish also suggested that companies holding casino licenses in one state should not have to start from scratch when applying for a license in another state. He pointed to reciprocity agreements allowing licensing of doctors and lawyers and said that model could be adapted for casino license holders.
All four said they make efforts to educate legislators about how the industry operates.
Gagnon said employment statistics are a good persuader.
“When any legislator’s looking at what they’re going to impose or how they’re going to impact our business, they’ve got to look at constituents that are working (in casinos),” she said. “They have to take that into consideration, and we have to have those stats handy.”
Cordish said dealers at Live! casinos make an average of $75,000 a year, plus health benefits and a pension, and 95 percent of the job-holders don’t have a college education.
“Believe me, we try to educate (lawmakers),” he said. “Some get it, some don’t.”
The panel touched on several other topics, including:
- Sports betting: The expansion of legal sports betting beyond Nevada could be a huge opportunity or not a big deal at all. It will give casinos another way to attract customers and offers spinoff opportunities such as Super Bowl parties. “It’s not going to make you rich in and of itself,” Rappaport said.
- Gaming expansion: All agreed that Texas and Georgia are attractive markets, if the states decided to allow casinos. Cordish said Europe does not have a resort casino comparable to those in the United States. Rappaport said he’s visited Japan three times – missing a fourth only because he was attending the Super Bowl – and has hosted visitors from that country. He said the Japanese Diet is considering proposals that would allowed three integrated resorts with a gaming area of about 3 percent of the site, which is comparable to Foxwoods’ layout.
- Video game gambling and esports: Casinos need to experiment with new forms of gaming but should not discard tried-and-true attractions, panelists said. Don’t distract yourself from the core offerings, Gagnon said.
- Survival of independent operators: Although mergers and acquisitions occur frequently in the industry, smaller operators have a place. All four panel members represent companies with few casinos, and all are thriving. “No one in this industry can take the time to feel sorry for yourself,” Rappaport said. “If you don’t evolve, you don’t thrive and maybe don’t survive.” The four emphasized the need for good service and loyalty to customers and said partnerships with Las Vegas destinations could be a win-win arrangement.
