Milwaukee Journal Sentinel, The: Payouts from casino may grow; Windfall from expansion could boost

The proposed Potawatomi casino expansion could help generate $12 billion in revenue on its Milwaukee facility over the next 25 years, with a trickle-down windfall during that period of $180 million each to the City of Milwaukee and Milwaukee County.

New figures provided by the tribe and calculations by the Journal Sentinel suggest dramatic growth at what is already the highest- grossing casino in the state. Local government payments by the Forest County Potawatomi tribe would rise to an average of some $7.2 million annually over the 25-year life of the tribe's new gambling agreement.

That's almost double last year's Potawatomi payments of $3.8 million to each local governmental unit and some 46% more than this year's $4.9 million, a figure that was artificially inflated because the tribe delayed a state payment.

The $360 million in total projected local payments comes on top of the $750 million the tribe is expected to pay the state, under terms of the gambling compact amendment signed this week.

The higher local payment sums offer local officials at least the prospect of tapping into the anticipated quarter-century jackpot to help bail out strapped city and county budgets, a tactic officials said they would examine.

The new Potawatomi deal with the state offers greater economic assurance of a long-running revenue stream for the city and county, tribal officials say.

The local payments are based on 1.5% of annual revenue at Potawatomi Bingo Casino.

The robust projections assume that the tribe can proceed with a planned $240 million expansion of its Milwaukee casino in the Menomonee Valley. The construction can begin if the state Supreme Court rejects a constitutional challenge to Wisconsin's tribal casinos in a case brought by owners of Dairyland Greyhound Park, said Potawatomi spokesman Ken Walsh.

That ruling is expected later this year.

City and county budget officials said Thursday that they would review the possibility of swapping the anticipated local payment mother lode and using lump sum proceeds for budget bailouts. Under such a deal, the city or county could sell to investors the expected 25 years' worth of gambling payments in exchange for a lesser upfront sum, or use some other type of creative financing to deliver a bigger payout sooner.

Intriguing' idea

Milwaukee County Budget Director Stephen Agostini called the idea "intriguing." City Budget Director Mark Nicolini said advancing the Potawatomi payments was "something that we'd look at," but only if the proceeds were earmarked for a specific new purpose, such as health benefit improvements.

Both said they hadn't studied the idea in detail.

Mayor Tom Barrett said that although the extra Potawatomi money sounds like a lot, in yearly installments the money won't be enough to solve the city's budget woes. The city faces a gap of $83 million by 2008, based on current trends, Nicolini told a Common Council committee this week.

Barrett said he might look at creative financial ideas on the gambling cash, but hasn't yet.

"My initial reaction is, that might put my successor in a difficult situation if I took that money and spent it now," Barrett said. To solve the city budget problem, revenue sources other than the property tax must be found, he said.

Barrett said he had not discussed the possibility of getting a bigger share of casino proceeds in connection with the rezoning the Potawatomi tribe needs for its casino expansion. Barrett signed the casino rezoning measure late Wednesday.

He plans to "have a conversation about that" with the tribe later, he said.

County Executive Scott Walker also hasn't considered selling the casino payments to generate cash sooner, but will review the issue, said Walker spokesman Rod McWilliams. Walker has shown a willingness to embrace cutting-edge financing, having unsuccessfully pushed to restructure county pension debt.

The Potawatomi projections for its payments to local government suggest large-scale growth based on the addition of more slot machines, roulette wheels, craps tables and card rooms. The expansion plan includes a doubling of the number of slot machines by far the biggest source of casino revenue to 3,200, said tribal spokesman Walsh.

The tribe would average $480 million a year in casino revenue over the next 25 years, based on the growth trend it cited in the local payments.

The tribe's revenue on its Milwaukee casino for its 2004-'05 fiscal year was $327.7 million, although that figure was artificially inflated because the tribe delayed a $43.6 million payment to the state until the new compact was crafted.

The tribe declined to release more detailed revenue projections that would show expected annual growth.

Walsh also cautioned that if the proposed Kenosha casino wins federal and state approval, the Potawatomi casino revenue growth won't be as great. The Wisconsin-based Menominee tribe and the Connecticut-based Mohegan tribe hope to open an $808 million casino complex at the Dairyland Greyhound Park site in Kenosha.

Meanwhile, time appears to be running out on the idea of moving the Potawatomi casino downtown. Barrett has said he'd back such a move, if the tribe and community leaders wanted it.

Potawatomi spokesman Walsh said no one is actively pursuing the idea of a downtown casino with the tribe.

"There have been no credible proposals. It's been all talk," Walsh said. As the casino expansion plan for the Menomonee Valley proceeds, the downtown move "gets considerably unlikely."

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