Restrictions limit casino revenue potential by 50%, study says

By KEVIN ORLAND of the Journal Sentinel staff

Tuesday, March 19, 2002

Casino gambling revenue in Wisconsin would increase by at least 50% and would generate an extra $50 million per year in tax revenue for the state if the casinos secured 30-year compacts, according to a study released Monday.

The study, commissioned by the United Tribes of Wisconsin and conducted by Michael K. Evans, chairman of Evans, Carroll & Associates, an economic consulting and forecasting firm in Boca Raton, Fla., says Wisconsin's casinos are hindered by restrictions on the games permitted by the current compacts and the inability to secure long-term financing for improvements.

The study comes on the heels of a monthlong advertising campaign by some of the state tribes that called for the extension of the compacts that expire next year.

State officials have not given a formal response to the request to reopen the compacts but have indicated that they would want to renegotiate rather than simply renew the pacts.

"Wisconsin's Indian gaming facilities are simply not competitive with their neighbors," said Evans, who has been a professor of economics at Northwestern University and the University of Pennsylvania. "They fall way behind the competition."

The Evans study says in Wisconsin, revenue from slot machines ranks last among 12 states included in the study, with an average income of $150 a day. Slots in Iowa make $174 a day; Minnesota's slots make $156 a day; and Illinois' $442 a day.

Since blackjack is the only table game allowed under the current compacts, Wisconsin's tables also make the least amount of money, $845 daily, of the 12 states. The next-lowest on the list are Missouri's tables, which earn $1,033 a day; the highest are Nevada's, at $3,675 a day.

Wisconsin doesn't have as large a market to tap for casinos as Nevada (25 million people counting the state's population and 2/3 of California's population) or New Jersey (17 million), it does have 8 million customers available, estimated by counting Wisconsin's population and 40% of the Chicago metropolitan area, the study says.

And the lack of long-term financing prevents Wisconsin casinos from making improvements that would put them on par with the more extravagant Nevada casinos, according to the study.

The new $120 million Potawatomi Bingo Casino in Menomonee Valley that opened in October 2000 created nearly five times the space of the old casino, but it's still smaller than Nevada operations.

But for all their shortcomings, the casinos have a positive effect on the state economy, the study says.

Other conclusions:

-- In 2001, the gaming industry and its related enterprises directly accounted for 15,756 jobs with an average annual compensation of $31,000.

-- Casinos contributed $87 million to Wisconsin in 2001, through income and sales taxes and payments under the compacts with the state.

State Sen. Bob Welch (R-Redgranite) says casino gambling harms Wisconsin's economy more than it helps it.

"It raises money by taking from other industries, and I don't just mean other entertainment businesses, but from people's mortgage payments and children's college funds," Welch said in an interview. "It is a net social loss for the state."

Welch said he doesn't doubt that longer, modified compacts would increase the casinos' profitability, but he would prefer that the tribes open other tourist enterprises, like golf courses and hotels.

Some of the extra revenue generated under new compacts would be invested into these other industries, as well as into infrastructure improvements on Wisconsin's reservations, said Jeff Crawford, Potawatomi tribal attorney general.

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