While the nation was riveted by record turnout, control of Congress and controversial candidates, the gaming industry had a few items of interest in last week’s 2018 U.S. mid-term elections. The results were a mixed bag for the various jurisdictions involved, as well as for operators, tribes and manufacturers.
With the legalization of casinos in Arkansas, there remains only nine states where either commercial or tribal casinos do not exist: Alaska, Georgia, Hawaii, Kentucky, South Carolina, Tennessee, Utah, Vermont and Virginia.
ARKANSAS
In Arkansas, voters passed Issue 4 by 54.09 percent for to 45.91 percent against, legalizing casino gambling and sports betting in four counties, including at Southland dog racetrack in West Memphis and Oaklawn horse racetrack in Hot Springs. Those two racinos already offer electronic gambling. The proposed constitutional amendment also will allow one casino in Pope County and another in Jefferson County. A Talk Business & Politics-Hendrix College Poll taken before the election showed 49 percent of Arkansas voters approved Issue 4 and 43 percent opposed it.
The amendment also specifically legalizes sports betting in Arkansas.
Alex Gray, counsel for Driving Arkansas Forward, the political group behind Issue 4, said Arkansans approved the constitutional amendment because they agreed with the committee’s message of keeping tax dollars in the state, creating jobs and fostering economic development. “This is really exciting,” he said.
The campaign for Issue 4 was the most expensive among all the issues on the November 6 statewide ballot. Driving Arkansas Forward reported raising $7.05 million and spending $6.92 million in the last reporting period ending October 27. The Downstream Development Authority of the Quapaw Tribe in Quapaw, Oklahoma contributed $3.65 million to the committee, and Cherokee Nation Businesses LLC in Catoosa, Oklahoma contributed $2.28 million. Delaware North, the parent company of Southland, contributed $1.16 million. The company also gave $1.91 million to the It’s Our Turn political committee which also backed Issue 4. That committee spent $1.71 million through October 27, according to its last report.
The Quapaw Tribe has said it’s interested in applying for the casino license in Jefferson County, and Cherokee Nation Businesses has expressed interest in the Pope County casino license.
The Arkansas Racing Commission is required to accept applications for the Pope and Jefferson County casinos by June 1, 2019. The casinos in those counties must have the support of the county judge or quorum court, along with the mayor if it’s located in the city. In Pope County, voters also approved a proposed ordinance requiring the county judge or the Quorum Court to hold a local referendum before supporting a casino there.
Oaklawn and Southland currently pay a tax rate of 20 percent. Now, under Issue 4 provisions, that will drop to 13 percent for the first $150 million in net gaming receipts, then increase to 20 percent on receipts above $150 million. As a result, the racinos will benefit from upgrading to full-fledged casinos but pay a lower tax rate. An analysis by the Arkansas Department of Finance and Administration indicated the state would receive $36 million less in tax revenues in fiscal 2020, which starts July 1, and in fiscal 2021 due to Issue 4, because of the lower tax rates on Oaklawn and Southland and because the Pine Bluff and Russellville casinos won’t be operating until fiscal 2022.
But Gray maintained that those projections were flawed because they didn’t factor in growth of Oaklawn and Southland as full-fledged casinos and officials wrongly assumed it would take two years, not one, to open the other casinos. Gray said Driving Arkansas Forward’s projections showed the four casinos in fiscal 2021 would raise about $66 million in revenue for the state, slightly more than the $64.3 million generated by Oaklawn’s and Southland’s electronic games in fiscal 2018. He also projected the casinos would raise about $23.4 million for cities, $21 million for purse support for horse and greyhound racing and $9.6 million for counties in fiscal 2021.
Delaware North Senior Vice President of Governmental Affairs Jack McNeill said since Issue 4 passed, the company will proceed with its proposed $200 million hotel and convention center at Southland. “It would be a priority of the company to get it up and get it going,” McNeill said. He also denied a rumor that Southland would eliminate dog racing following the passage of the Issue 4.
A greyhound racetrack for more than 60 years, Southland offers more than 2,000 electronic games of skill, including video poker and blackjack, plus an event center and several restaurants. Delaware North Director of Corporate Communications Glen White said the company has invested more than $100 million over the past decade to add gaming, dining and other amenities. Currently Southland employs about 765 people.
An economic impact study by the University of Arkansas at Little Rock’s Arkansas Economic Development Institute indicated Issue 4 will help create more than 6,000 new jobs: about 3,000 directly created in the gaming industry and another 3,000 in sectors associated with the gambling industry. The economic impact will be $5.8 billion in GDP growth during the next 10 years.
Among those who did not support Issue 4 was Governor Asa Hutchinson. “I did not support this initiative, and I continue to have great concern over the immediate and negative impact on the state’s budget. But the people have spoken, and I respect their will. Time will tell as to what this means for our state, and it remains to be seen as to whether the communities affected will consent to the gambling initiative,” he said in a statement.
During the campaign, the state Supreme Court rejected two lawsuits by opponents seeking to disqualify Issue 4. In Pope County, the anti-casino group Citizens for a Better Pope County battled with the pro-casino group Jobs for Pope County, which received $70,000 from Gulfside Casino in Gulfport, Mississippi and Warner Gaming of Las Vegas. Vote No on Issue 4, organized in late October, reported a $150,000 contribution from Caesar’s Entertainment in Las Vegas.
The conservative Family Council Action Committee spent about $1,600 and encouraged word-of-mouth opposition to Issue 4 among statewide religious and conservative supporters. Family Council Action Committee President Jerry Cox said, “It’s next to impossible to win” without money to fight the advertising blitz financed by casino interests. We would have mounted an aggressive campaign if we had the money, but people didn’t step up and provide the money,” he said.
The last time a proposed constitutional amendment authorizing casinos in Arkansas was on the ballot was in 2000, and it was defeated. In 2006, voters approved Amendment 84 authorizing charitable and nonprofit raffles and bingo games. In 2008, voters approved Amendment 87, authorizing a state lottery to raise money for college scholarships.
FLORIDA
In Florida, there were two amendments that impacted the gaming industry.
Amendment 3, the Voter Control of Gambling Amendment, passed by 64.4 percent to 35.6 percent, and Amendment 13, phasing out live dog racing, passed by 69 percent to 31 percent. Both constitutional amendments required 60 percent voter approval to pass.
Amendment 3 “ensures that Florida voters shall have the exclusive right to decide whether to authorize casino gambling,” according to the ballot summary. A poll conducted by the Associated Industries of Florida prior to the election indicated 69 percent of voters planned to vote in favor of Amendment 3, and just 17 percent said they’d vote against it. Another one in seven voters said they were unsure how they would vote.
Less than a week before the election, the Seminole Tribe of Florida donated another $4.285 million to Voters in Charge, the political committee sponsoring Amendment 3. The tribe gave the group a total of $24.65 million since December 2017, according to the state Division of Elections website. The tribe has a near monopoly on casino gambling in Florida and gives the state $250 million annually in return. Since 2004, it has shared revenue of more than $1.75 billion with the state.
Disney Worldwide Services gave Voters in Charge a total of $19.65 million since April 2017. Disney has argued that more gambling could harm Florida’s family-friendly image that attracts tourists. Altogether the Seminole Tribe and Disney donated $44 million to the committee, all but $314,000 of the money it raised since it began taking contributions in late 2015. Voters in Charge spent $31 million and had $13 million in the bank leading up to the November 6 election.
Leading up to the election, Voters In Charge Chairman John Sowinski said, “This comes down to, who do you trust: the voters or the politicians and the gambling lobbyists? Their burden is to suggest with a straight face that things are better in the hands of politicians and the lobbyists who contribute to them and who influence them.”
Most newspapers around the state opposed the amendment. Editorial boards agreed that Amendment 3 would give voters more control over casino gambling but also would give larger casino companies the opportunity to limit competition.
Amendment 3 opponents also included owners of dog and horse racetracks who now will need statewide voter approval to add or expand casino gambling. DraftKings and FanDuel also opposed the amendment, with officials claiming the amendment would put a roadblock ahead of eventual legalized sports betting. The National Football League announced it was against the amendment for the same reason. The Miami Dolphins posted on Twitter a message urging fans to oppose the amendment and the Tampa Bay Buccaneers contributed $500,000 to an anti-Amendment 3 group.
In addition, the NFL’s Jacksonville Jaguars are rumored to be moving to London because of the new law. Mike Florio of Pro Football Talk commented, “The passage of the new amendment that, as a practical matter, will make it much harder to adopt sports wagering and in turn create revenue streams like in-game prop bet could make a relocation to London even more attractive to owner Shad Khan.” Florio noted that rumor has existed since Khan purchased the Jaguars in 2011 and the English soccer club Fulham in 2013.
But there is some dispute whether sports betting falls under Amendment 3. Sports betting expert and lawyer Dan Wallach says the language in Amendment 3 refers to only games found in casinos. The text of the amendment seems to uphold that opinion:
“‘Casino gambling’ means any of the types of games typically found in casinos … This includes, but is not limited to, any house banking game, including but not limited to card games such as baccarat, chemin de fer, blackjack (21), and pai gow (if played as house banking games); any player-banked game that simulates a house banking game, such as California black jack; casino games such as roulette, craps, and keno … ‘casino gambling’ does not include parimutuel wagering on horse racing, dog racing, or jai alai.”
To be clear, Wallach tweeted, “The words ‘sports betting’ do not appear anywhere in Amendment 3.”
The political group Citizens for the Truth About Amendment 3 and Vote NO on 3 raised a combined total of $16.9 million as of October 30, including donations from MGM Resorts International, Xpressbet, Jacksonville Greyhound Racing and 831 Federal Highway Acquisitions.
Opponents of Amendment 3 claimed it would hand over control of gambling to the Seminole Tribe, since no gambling expansion would occur if voters have the final say. Jamie Shelton, president of the parimutuel bestbet Jacksonville said, “Amendment 3 will clearly eliminate designated player games in card rooms throughout the state of Florida. Period.” Another likely result is that the eight counties that have approved slots will not be able to actually install them unless it passes a statewide vote.
In a closely watched case, a federal judge agreed with the Seminoles that card rooms’ designated player games violated the tribe’s exclusive contract with the state. Depending on how appeals end up, the games probably will have to stop and the passage of Amendment 3 means no new legislation will be enacted to provide alternatives.
In addition, state Senate President Bill Galvano previously said passing Amendment 3 means legal sports betting probably won’t happen in Florida. “The revenues are substantial. But if Amendment 3 is passed, we’d lose that opportunity and we’re hamstrung. We’re dealing with an industry and an issue that is constantly morphing and changing. And without the ability to address it legislatively and the agility that that requires, you’re going to create real problems within the state of Florida, and you’ll end up creating a monopoly for the Seminole Tribe.”
In 2014, the legislature failed to pass Senate Bill 7052 which would have expanded legalized gambling and authorized the governor to renegotiate the Seminole Compact. In the last legislative session, two bills regarding daily fantasy sports and one overhauling nearly all of Florida’s gaming laws failed. With the passage of Amendment 3, none of these bills are likely to progress.
Amendment 13 asked voters to ban greyhound racing in the state, and they responded to a heartrending animal rights campaign. The amendment was approved 69 percent in favor and 31 percent against. Sixty percent approval was required for passage. The success of the amendment means the 12 greyhound racetracks in Florida will have to end live racing by the end of 2020, but that could happen faster since the amendment allows racing to cease as early as December 31. Currently only six dog racetracks exist in five states besides Florida. The amendment, one of 12 on the ballot, was approved by the Florida Constitution Revision Commission by a vote of 27-10.
Under Florida law, tracks have been required to offer live dog races in order to keep their license and offer other more profitable gambling activities like card rooms and slots. Under the new law, track operators will be allowed to keep their gambling permits if they agree to halt dog racing. As a result, former greyhound racetracks may continue to offer slots or card rooms, which generate more money than racing. The Florida Greyhound Association, representing the state’s 12 greyhound racetrack owners, filed a lawsuit against the amendment, claiming the ballot language was misleading because it didn’t make it clear that track owners could continue to offer other types of gaming.
Florida now will join the 40 other states that have outlawed dog racing. According to the nonprofit greyhound advocacy group Grey2k USA Worldwide, there are currently about 8,000 racing greyhounds in Florida; they will be in need of new homes via the 100 adoptions agencies that work with retired racing dogs.
In addition, approximately 3,000 employees in the greyhound racing industry will be affected.
Following the vote count, the Yes on 13 committee posted, “Tonight, in an historic vote, Florida voters have delivered a knock-out blow to a cruel industry that has been hurting and killing dogs for nearly a century. This is a small step in turning the page on a relic of the old economy, but a giant step for animal protection nationwide.”
Kitty Block, acting president and chief executive officer of the Humane Society of the United States, added, “Because of the decision of millions of Florida voters, thousands of dogs will be spared the pain and suffering that is inherent in the greyhound racing industry.” And Carey Theil, executive director of GREY2KUSA Worldwide said the dog racing industry will be “all but swept away in the night. The historical consequences of this are incredibly significant. We’re seeing one of the highest approvals of any animal welfare measure in the nation.”
Grey2K USA battled dog racing proponents, which surprisingly included greyhound adoption groups. The dog racing industry was accused of threatening to withhold dogs from rescue groups if they didn’t work against the amendment.
Advocates for Amendment 13 included Florida Attorney General Pam Bondi, a Tampa Republican and animal advocate, and Lara Trump, daughter-in-law of president Donald Trump. Bondi said, “This is a black eye on our state.” She cited numerous alleged incidents of dog injuries or abuse, and said 419 greyhounds have tested positive for illegal drugs, including cocaine, over the last decade.
Trump held several of fundraisers and actively lobbied for the ban. “These dogs are in cages 23 hours a day. As a Republican and as a dog lover, I said here’s something you can do that’s great for business, great for taxpayers and you’re giving a chance to all these dogs here who otherwise are going to be in really sad, deplorable conditions.”
The National Rifle Association Chief Lobbyist Marion Hammer opposed the amendment. She said, “Clearly the intent is to establish a legal foothold in the Florida constitution that they can use to go after legitimate activities, like hunting, that they don’t like.” Breeders and others involved in the industry also opposed the amendment.
Celebrating the amendment’s passage, Block said, “We are so grateful to the volunteers, campaign members, coalition partners, contributors and endorsers who came together in support of this historic effort to end the cruelty of greyhound racing.”
GEORGIA
The legalization of gaming in Georgia will undoubtedly be delayed with the expected election of Republican Brian Kemp by the narrowest of margins. “Expected” because challenger Stacey Abrams has refused to conceded. Abrams wants a recount, which needs to be approved by the secretary of state, who happens to be Kemp. But Kemp resigned that position immediately after the election, so a recount could happen. But Abrams path to victory seems mostly to be a runoff. A runoff would be ordered if Kemp dropped below a 50 percent + 1 margin. He now is 13,000 votes over that threshold so unless something seriously changes, Kemp is likely the winner.
Kemp is opposed to expanded gaming in Georgia, while Abrams has said she would consider it. State Rep. Ron Stephens, meanwhile, won his election against his Democrat challenger and will return to the House to submit measures that would legalize casinos in the state. So no matter who is governor, casino legislation will remain an issue.
IDAHO
Proposition 1, which would have allowed for the installation of historical racing machines in Idaho’s racetracks, failed to pass.
The racetrack owners have said that historical racing machines are a key to their ultimate survival. However, the proponents, Treasure Valley Racing, failed to sell the necessity to the voters, who defeated the measure by a 54.2 percent no vote.
The machines, also known as “instant racing” allow wagers to be placed on races that have been held in the past. The names, dates and locations of the races have been stripped from the information available to the players, who do have access to statistics. But they also have spinning wheels, sounds and animations that suggest slot machines.
Ken Andrus of Idaho United Against Prop 1 issued this statement: “Today’s vote proves what we’ve been saying all along – Proposition 1 was a bad bet for Idahoans,” adding, “Idahoans do not want a statewide expansion of casino-style gambling.
Before the balloting the two sides engaged in a duel of competing ads prior to Tuesday’s voting. In one pro-Prop. 1 add, proponents claimed “The Coeur d’Alene Casino has been telling lies, but I’m going to tell you the truth.” An anti-Prop. 1 ad declared, “Prop 1 isn’t about Idaho schools and kids,” says a new anti-Prop 1 ad. “They fooled Idaho once.”
The election was the most expensive in Idaho state history, even more expensive than the governor’s race.
Much of the controversy was over whether Idaho schools would get as much funding from the machines at the racetracks claimed they would. Critics pointed out that of every dollar wagered, 90 cents went to bettors. A half cent would go to schools. Nine cents would go to expenses, race purses and operator profits.
Proposition 1 would have brought back the historical racing machines that the racetracks had for a few years, between 2013 and 2015, until critics convinced the legislature that the machines too closely resembled slot machines. The state’s gaming tribes, which operate Las Vegas style casinos, claim that the historical racing machines are a violation of their constitutionally guaranteed gaming monopoly.
Even if Prop. 1 had passed, the Idaho Attorney General had warned that it might have to be litigated to determine if it violated the state constitution.
While not specifically gaming related, Lt. Governor Brad Little handily defeated Paulette Jordon after pledging to continue the policies of retiring Governor Butch Otter, who had been in office since 2006. Little won by a margin of 59.8 percent to Jordan’s 38.2 percent.
Little declared “Twenty-four years ago Phil Batt broke a 24-year cycle of Democrats having control of the governor’s office. This is the 24th anniversary of that, and Idaho is still a very red state.”
Jordon was trying for several firsts, including being the first Democratic governor since 1999 and the first woman governor of the state. She also would have become the first Native American governor of any state. However, Idaho’s persistent “redness” cancelled out all of those potential goals.
ILLINOIS
In the near-west Chicago suburb of Forest Park, Illinois, 52 percent of voters approved a ballot issue banning video gambling machines in the community, even though the village council allowed them in 2016. The vote marks the first time an Illinois town that approved video gambling reversed policy through a binding referendum.
Village Administrator Tim Gillian said the village will lose about $170,000 in annual video poker tax revenue from video poker, “a big hit for a small town.” he said. Gillian said the tax revenue freed up funds for public worker pensions.
Supporters of the ban said video gambling was not a good fit for the community. Opponents claimed video gambling provided tax revenue and had been offered for more than two years with few problems. Gillian noted crime and other social problems did not increase.
Initially, Forest Park officials rejected citizens’ efforts for a petition drive to put the question on the ballot. The issue landed in appeals court, where judges, in siding with supporters of the ban, said the local electoral board was “clearly erroneous” when it rejected all of the petition signatures because a few pages of signatures were found to be invalid.
Gillian pointed out the wording of the ballot issue as well as a previous non-binding question was confusing, since a year vote meant saying no to video gambling. He said village officials now will wait for the county to certify the results of the vote, and the village board must pass a new ordinance that will prohibit video gambling.
LOUISIANA
In Louisiana, 47 of the state’s 64 parishes voted to legalize online daily fantasy sports contests. Most of the opposing parishes were located in north Louisiana, and those in favor included parishes in the Baton Rouge, New Orleans and Lafayette areas. DFS only will be available within those parishes that approved it, not statewide.
The vote makes Louisiana the 20th state to clarify that daily fantasy sports are legal games of skill. The state constitution prohibits gambling, but the ballot language stated, “Participation in any fantasy sports contest shall not be considered gambling.” The initiative resulted from state Rep. Kirk Talbot’s legislation to legalize daily fantasy sports games. The Louisiana legislature voted in May to put the issue before voters, with Governor John Bel Edwards’ approval.
Fantasy Sports Trade Association Chairman Peter Schoenke said, “The FSTA would like to thank State Representative Kirk Talbot for spearheading the successful legislative effort. The fantasy sports industry won a huge victory as residents of Louisiana have long sought to play all the contests our member companies offer. We hope the legislature will enact regulations that allow startups and companies of all sizes to offer their contests in the state.”
Residents of the parishes that approved DFS won’t be able to participate for at least several months. Lawmakers and regulators need to write rules governing licensing and taxation. In addition, geofencing technology will be required to create digital barriers and stop residents from parishes that did not legalize DFS from entering contests.
Over the course of the campaign, DraftKings and FanDuel contributed a total of $1 million to Fairness for Fantasy Sports Louisiana, the political committee behind the initiative. No organized opposition fought against the proposal, but Louisiana Family Forum Director Gene Mills said the organization’s 1,000-plus church members urged congregants to vote against it.
Now Louisiana lawmakers have their eye on legal sports betting, observing neighboring Mississippi’s betting handle and taxable revenue. In the last legislative session, state Rep. Major Thibaut sponsored House Bill 245 that would “authorize additional games and sports betting at eligible live horse racing facilities.” It stalled in committee, and so did state Senator Danny Martiny’s sports betting bill. Last month, Martiny said he plans to reintroduce a sports betting bill in the next session, which starts in April 2019. “I’m going to have a bill. If we pass it, we’re going to be able to keep up with Mississippi,” Martiny said. State Senator Ronnie Johns noted, “It’s a shame that we can’t derive some revenue off the Alabama vs. LSU game.”
MARYLAND
Maryland voters approved Question 1 in last week’s election, authorizing a constitutional amendment to require that all gaming revenue tax be set aside for schools to enhance education spending above what is allocated by the state legislature.
The revenue from video lottery operation licenses and any other commercial gaming from casinos in the state will be used as supplemental funding for pre-K through 12th grade in public schools. The amendment will require the governor to begin including it in the annual budget, beginning in fiscal year 2020.
NEVADA
Las Vegas Sands Chairman Sheldon Adelson was the big loser in Nevada when a question that would have ended the monopoly on electricity currently held by NV Energy failed. Adelson and the large casino companies supported the measure that would have saved them millions of dollars.
Most of the large gaming companies have already disconnected from NV Energy, but prices within the state are still set by the company.
Opponents said deregulation would have increased costs to residential units and cited similar results in other states that have approved deregulation, California in particular.
In the governor’s race, the grandson of former Senator Paul Laxalt, Adam Laxalt, was defeated and turns the state over to a Democrat for the first time since 2006.
Nevada Governor-elect Steve Sisolak will get an opportunity to reshape the state’s Gaming Control Board when terms for two of the agency’s three members expire almost immediately after he takes office in January.
One of those seats is held by Control Board Chairwoman Becky Harris, who was appointed in January 2018 by outgoing Republican Gov. Brian Sandoval to complete the last year of the term relinquished by A.G. Burnett.
Harris, an attorney and former state senator and the first woman to head the board, took over just before the sexual harassment scandal broke that toppled Steve Wynn, and her leadership in the tumultuous months that followed has moved Sandoval to recommended his Democratic successor retain her.
“She’s a rock star,” he said, “and she has taken on some extraordinary tough issues right out of the chute.”
The other open seat belongs to Shawn Reid, who was appointed by Sandoval in 2011. A Control Board employee since 1990, he has said he will not seek another term. Reid is the son of former Senator Harry Reid.
The third member of the board, Terry Johnson, has two years remaining on his term.
Both Sisolak, currently chairman of the Clark County Commission, and Laxalt, campaigned with strong financial support from the gaming industry.
Sisolak’s biggest contributor was MGM Resorts International, which donated through various affiliates a combined $175,000. Station Casinos gave $90,000. Las Vegas Sands and its companies donated $75,000.
Station was Laxalt’s largest contributor along with members of its majority owners, the Fertitta family, who gave more than $208,000 in total. LVS donated $75,000. MGM contributed $35,000.
SPORTS BETTING
There were a few implications for the legalization of sports betting in the elections, as noted above. And with 36 gubernatorial elections, there will be some new governors facing decisions on sports betting.
At the legislative level, most proponents of sports betting who have either submitted bills or plan to submit them, were re-elected with a couple of exception, according to a report in SportsHandle.com.
In Missouri, the two state representatives who championed a sports betting bill in the Show Me State are now gone. Justin Alferman resigned in June to become the governor’s legislative director and Bart Korman was term limited and was replaced by Jeff Porter, whose views on sports betting are unknown.
In Iowa, Rep. Jake Highfill narrowly lost his seat to a Democrat challenger. There is no clue about who will pick up the sports betting effort at this time in Iowa.
In New York, three state representatives who have supported sports betting were all re-elected handily, but the one champion in the Senate, John Bonacic, did not run for re-election.
