Economic boost from casino deals questioned

By STEVE SCHULTZE sschultze@journalsentinel.com, Journal Sentinel

Sunday, March 2, 2003

Expect a surge of economic activity related to new state-tribal gambling deals, but perhaps not the tidal wave Wisconsin's 11 tribes and Gov. Jim Doyle's administration are boasting about, a national gambling expert says.

The boost will likely benefit the Forest County Potawatomi tribe through its Milwaukee casino, as well as the Oneida and Ho-Chunk tribes through their main casinos near Green Bay and Wisconsin Dells, said William Eadington, an economics professor and director of the University of Nevada's Institute for the Study of Gambling and Commercial Gaming.

But the claims by the tribes and state officials about development and employment fueled by the new gambling rules appear "quite exaggerated," Eadington said in an interview last week.

The sweet promise of some $1 billion in bigger casinos, hotels, golf courses and assorted non-gambling businesses -- as well as up to 25,000 new jobs -- has become the rallying cry for the tribes and Doyle.

The tribes currently employ about 16,000 in their casino operations, earning an average wage of about $31,000, and claim another 20,000 spinoff jobs. Wisconsin's Indian casinos post about $1 billion a year in net gambling revenue -- total spending less payouts.

The new projections are admittedly speculative but are used repeatedly and with striking similarity by tribal and state officials in defense of new open-ended gambling compacts that would lift restrictions on games and hours. Current compacts have five-year terms.

"We are very optimistic" that the development and employment numbers are achievable, said Marc Marotta, Doyle's administration secretary and chief negotiator of the compacts.

"The expansions across the state over the next four or five years could result in an extra 20,000 jobs," he said. "Even in good economic times, that would be extraordinarily positive."

Wisconsin counties with casinos already show increased revenue from restaurants, taverns and hotels, and that should only grow if the new agreements are approved, Marotta said.

"The rising tide lifts all these ships," he said.

Expert is skeptical

Eadington said the Potawatomi casino development project may be limited by available land, and job projections for the 11 tribes appear to be based on overly optimistic "multiplier" calculations -- that is, the number of spinoff jobs created by more gambling.

The Potawatomi casino sits on a 7 1/2-acre parcel held in trust for the tribe by the federal government. Casino gambling in Wisconsin can take place only on such property, which is why Potawatomi officials say they'll likely expand upward by adding floors to their gambling hall.

But multiple floors could inhibit gambling, Eadington said. "Casinos on multiple levels do not work as well as casinos on single levels," he said.

Tom Krajewski, a spokesman for the Potawatomi tribe, said the Menomonee Valley casino could be expanded outward as well as upward. Areas immediately adjacent to the existing casino now used for parking could be converted to new casino space and stay within the parcel where gambling is permitted, he said.

Casinos outside southeastern Wisconsin probably won't be significantly expanded because, unlike the Milwaukee casino, they have no limit now on their number of slot machines, Eadington said. Slot machines provide about 90% of casino revenue. Some of those casinos might seek to add resort-style amenities to make their casinos destination trips, he said.

Mark Butterfield, a spokesman for the Ho-Chunk Nation, said a golf course and a $125 million hotel and convention center near its Lake Delton casino are possible if the tribe gets an agreement with the state similar to those negotiated with the Potawatomi and Oneida. The tribe currently is not planning to expand its flagship casino.

"We are talking about diversification more than expansion," Butterfield said. Ho-Chunk community centers at six locations around south-central Wisconsin also are a high development priority, he said.

Oneida spokeswoman Bobbi Webster said the tribe had no plans to expand its Ashwaubenon casino, one of the state's largest. The expanded scope of games may help attract more customers, and the tribe "will need partnerships with our local businesses and tourism attractions to make our region a destination point for our visitors," Webster said.

Perpetual compacts have been the major goal for all the tribes because they say that would give them long-denied access to long- term borrowing.

Eadington said the Milwaukee gambling market is now far from saturated, which may explain the steady hum of slot machines and healthy crowds at Potawatomi Bingo Casino in the Menomonee Valley.

Slots are the key

The lifting of the 1,000 slot machine limit will provide the greatest boost to the Potawatomi operation, Eadington said. The addition of roulette, craps and other games will add little revenue, he said.

The tribes concede the point but say offering those games is important to attracting more customers. The Potawatomi hope to better tap the Chicago market with casino enhancements they have in mind. Krajewski says the potential for that is great, pointing to a study that showed only about 3% of the more than 16 million casino visits by Illinois residents in 2001 were to Wisconsin casinos.

While experts may differ over how much of an economic boost the new gambling expansions would generate, the arguments about the appropriateness of the gambling venues growing have died down.

Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, said that while gambling expansions won't generate as much spinoff activity as manufacturing or high-tech jobs, they are still a plus.

"We represent business, and we also represent Potawatomi as an employer," he said. "When a business expands, it's good news."

Even Milwaukee Mayor John O. Norquist, who vainly fought the Potawatomi's last expansion, has made his peace with gambling's local presence.

"I don't see the political culture resisting this expansion of gambling," Norquist said. "It may be bad for the community, but I don't see the resistance there."

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