Campaigns & Elections: Legalizing gambling and doing it right

As states, counties, and cities scramble for additional revenue, there is an increasing focus on legalizing gambling as a major source of new tax dollars. In some states, such as Mississippi, the tax revenue generated by gaming has greatly exceeded expectations, while in other states it has been disappointing.

The key to the establishment of a successful gaming industry is enabling legislation and citizen involvement. This is just as important for the casino operator (who wants the additional source of income) as it is for the governing body (which wants the additional tax revenue). Because both involve a political dynamic, extensive research should be conducted to determine voter attitudes and perceptions regarding gambling. These attitudes and perceptions should be carefully considered in drafting enabling legislation. This research has an added value: A good poll is a persuasive tool to use in influencing hesitant legislators.

Legislation authorizing gaming will vary from state to state. Nevertheless, each of the following four areas should be included to facilitate its passage:

Type and Location of Gaming

A great many options are available. In addition to land-based casinos, gambling may be conducted on cruise vessels, river-boats or at dockside. A good rule of thumb is to look at it as a ladder. Areas that have no gaming at all warm up to the "cruises to nowhere" as a first rung on the ladder. The next step would be dockside. At the top would be land-based casinos. Going from no gaming to a land-based casino will not be an easy first step. The New Orleans situation is a perfect example. The legislation that granted an exclusive license had no provision for voter approval. It caused a public uproar. Twenty months after the enabling legislation was passed, there is still no land-based casino in operation in New Orleans. On the other hand, Mississippi followed the fight steps and is currently enjoying the benefits of gaming.

Gaming can be limited to one or more metropolitan areas, rivers, lakes, bays or oceans. Betting can be limited or unlimited. When considering the bet limit question, keep the Iowa situation in mind. Iowa set a $5 bet limit and a $200 loss limit per cruise. Not only have these new restrictions lost vast numbers of potential bettors who feel they are the best judges of their betting limits, but the restrictions have made it unprofitable for the casino operators to stay in Iowa. Survey research is a valuable tool in setting parameters and gauging support for each option.

Tight Regulation

The gaming industry has come a long way in separating itself from organized crime, but has not completely overcome the "mob" image. For this reason, it is imperative that any legislation contain strict provisions for regulatory authority. In 1992, I ran the successful campaign to legalize gaming on the Mississippi Gulf Coast. This referendum had been defeated a year earlier because a gaming commission, although authorized, was not actually in place and had not been funded. A crucial selling point to the gaming argument is that it will be tightly regulated.

Estimating and Using Tax Revenues

The generation of tax revenues and the allocation of these funds are crucial elements of the legislative package. The determination of taxing percentages and the division of the resulting revenues among state, county, and local governments can rival the Mideast peace negotiations in complexity. Ignoring this need to distribute the funds equitably can be disastrous. Voters must know there is something in it for them. In a recent gaming referendum in Indiana, where the legislature did not mandate a distribution of tax revenues between local governing bodies, voters handily rejected it.

Public Approval and Local Option

The inclusion of voter approval is of vital importance. To force gaming on a state, county or city without approval of the electorate is a big mistake. The benefits of a successful referendum, both to the casino operator and the governmental entities, are enormous. These governmental entities and their related agencies can respond more readily to the many challenges facing the industry (zoning, planning, infrastructure, etc.) if they know they are operating under an electoral mandate. Even people who are opposed to gaming, having had an opportunity to voice their objections through the electoral process, tend to focus on the economic benefits after it is passed.

Well-researched, carefully written, enabling legislation, with a provision for a referendum, is the cornerstone for establishing a successful gaming industry. Patience, negotiation, and skill are required. Much time, effort, and money are involved. But if an orderly and correct process is followed, future rewards for the state and the industry will be well worth the investment of time and money.

Nancy Todd is President of The Todd Company, a political consulting firm currently specializing in gaming referendum campaigns.