The comprehensive gambling bill filed this week by Republican state Sen. Del Marsh is a good bill. That statement will undoubtedly anger both many of my progressive friends, who view gaming — and specifically, a state’s reliance upon gaming revenue to pay important bills — as a tax on the poor, and many anti-gaming conservatives, who believe gambling in any form is a sin (except for, of course, the church raffles and the church bingo).
But both groups, while likely well-intentioned, are off-base. Their arguments are superficial and ignore key, indisputable facts about the current gaming reality in Alabama, and about how legalizing gaming in this state could drastically alter the tax structure and opportunities facing the state’s poorest citizens.
So, first things first, let’s explain the bill and what it does. The short version is that it would authorize voters to approve a constitutional amendment allowing for a lottery, full casino gaming at five locations, a compact with the Poarch Band of Creek Indians that would allow three additional full casinos and would allow all casino locations to operate a sports book. It also creates a new gaming commission to oversee all of this gaming.
All told, this gaming bill is projected to bring in somewhere in the range of $750 million to $1 billion annually. That money will go towards a college scholarship program (similar to Georgia’s HOPE program), IT infrastructure, rural health care, mental health care and the general fund.
To determine if this is a good bill, I have three questions that must be answered:
- Can it pass?
- Does the revenue go towards necessary projects that can improve lives and remove burdens from the poor?
- Is the tax rate paid by casinos enough to support statewide projects and local improvements?
Let’s start from the top.
Can it pass?
Marsh’s bill probably has the best chance of passing of any gaming bill that has come along in at least the last 15 years. There were a couple of close calls on video poker bills in the 90s, and then more near-misses in the early 2000s, but nothing that had the backing of several major players. And certainly nothing this ambitious.
There are two reasons why: First, the Poarch Creeks and the dog track owners sat down and reached an agreement. Second, the agreement spreads the wealth around to several different districts, making it far more likely that they can eliminate wishy-washy lawmakers by promising millions in revenue and thousands of jobs for their areas.
People can ignorantly whine about the dog tracks getting casinos, but you wouldn’t have a deal otherwise. Because those tracks are huge money-makers for the local communities — the very poor and economically depressed local communities — and have been for decades. So, the lawmakers representing those areas protect the jobs of their constituents, as they should.
Historically, that has meant that no gaming or lottery bill gets through unless the tracks are included. Alternatively, until this deal, the tracks getting a piece of the pie has always been a non-starter for the Poarch Creeks, who didn’t want to see their potential revenue diluted.
But over the last year-plus, the right people from those two groups got together and hammered out a compromise that didn’t make any of them completely happy, but will ultimately make them and the state of Alabama a lot of money. Assuming this deal passes and voters approve it.
Where does the money go?
There are a few problems here. Overall, I think the bill strikes the correct tone, in terms of where the money goes, but the pathways to those locations aren’t clearly defined. And a couple of locations need to be changed, or at the very least the amount of money going to those locations changed.
What constitutes “rural health services” or “mental health services” isn’t defined at all, and it needs to be. Or you could remove the rural services and simply expand Medicaid — a move that would help every area of the state and would also generate billions of dollars and thousands of jobs.
Also, I’d like to see the distribution of revenue altered to allow a repeal of the grocery tax and make it clear that career tech and certification programs can be covered by the lottery revenue, in addition to the college scholarships.
There’s enough money to do those things and still also improve our IT infrastructure and expand broadband throughout the state. Depending on the compact deal worked out between the tribe and Gov. Kay Ivey, there might also be enough to offer free pre-K to all Alabama children.
If we get anywhere close to this level of change, you have just fundamentally altered for the better the future of millions of Alabamians for generations to come.
How’s the tax rate?
Marsh’s bill taxes casinos at a 20 percent rate. That’s pretty close to average. Most other states have a variety of tax rates — for example, taxing gaming machine revenue at a much higher rate than table game revenue — making it difficult to assign an overall tax rate, but of those with flat rates, the rates vary from mid-teens to 30 percent.
That rate can be adjusted in the future, if needed. Although, the Poarch Creeks are currently (and rightfully) making the case that the rates shouldn’t be changed during a licensing term.
So, that’s it. That’s why I think it’s a good bill now, and one that could be life-altering for this state with just a few changes in revenue disbursement.
But there’s also one other thing that I need people to understand: We already have gambling in this state.
Whenever this debate pops up, the go-to argument for gaming supporters is that there’s gambling in states all around us. But you don’t have to go that far. The Poarch Creeks already operate three casinos in Alabama. VictoryLand, GreeneTrack, the Birmingham Race Course and various smaller locations around the state also are already offering some form of gaming. So, there’s already gambling occurring at seven of the eight proposed casino locations.
And that means all of the negative aspects of gaming that you complain about, we already have them here. What we don’t have is revenue that would allow the state to implement changes that could positively affect all Alabamians, particularly poor Alabamians, and offset some of that harm.
That only comes by passing good, comprehensive gaming legislation that legalizes gambling at certain locations, regulates it and taxes it.
Marsh’s bill does that.
