December 2018 Magazine

Rolling The Dice

rolling

By Chris Price

Casino gaming could add billions to state coffers, but will it be a win for Arkansas?

On Election Day, voters approved an amendment to the state Constitution to allow four casinos in the state, and a week after the measure passed, Arkansans got a glimpse of what’s to come at one of the licensed facilities.

In mid-November, Oaklawn Jockey Club announced an expansion project in excess of $100 million that will include approximately 28,000 square feet of gaming space; a seven-story, 200-room hotel; 14,000 square-foot multi-purpose events center and expanded parking.

“This historic announcement represents a new chapter in the rich 114-year history of Oaklawn,” says Louis Cella, president of Oaklawn Jockey Club. “As we enhance the entertainment experience for our customers, we will also further elevate thoroughbred racing and help make Arkansas and Hot Springs even stronger regional tourism destinations.

“The hotel will offer a unique vantage point for our patrons in that it will overlook the track. Imagine the spectacular view as the horses are heading down the stretch,” he adds. “Our goal is to achieve 4-star status.”

Steve Arrison, CEO of the Hot Springs Advertising and Promotion Commission, praised the addition of the events center and hotel during an address to the public.

“Oaklawn’s project will allow Hot Springs to attract more and larger meetings and conventions,” he says. “This creates exciting opportunities for Hot Springs tourism.”
Although he was against Issue 4 before the election, Arkansas Gov. Asa Hutchinson said the Oaklawn expansion will be monumental.

“The state of Arkansas is grateful to Louis and his family for their commitment to growing their business right here at home,” Hutchinson said. “This project, which will be financed exclusively with private funds, not only represents one of, if not the largest, tourism related expansion projects in our history, it will also rank among the state’s largest economic development projects in 2019.”

Oaklawn’s 2019 live racing season begins January 25. The expansion will begin in May immediately following its completion. The gaming expansion is expected to open in January 2020 with the hotel and event center to come online in late 2020.

HBG Design of Memphis is the architectural firm for this new expansion. Flintco Construction, with an Arkansas headquarters located in Springdale, is the contractor on the project. The company estimates that as many as 2,300 jobs will be created during the construction phase.

Rolling

Renderings of the $100 million expansion at Oaklawn Racing and Gaming includes a 200-room, seven-story hotel overlooking the race track , along with a multipurpose event center.

Although it has been reported that Southland is considering a $200 million investment at its West Memphis location, the track has not revealed any official plans for their facilities.

“Southland Gaming & Racing is pleased to have the opportunity to enhance our entertainment and gaming offerings in West Memphis. We thank the voters for their trust in us,” Glen White, director of corporate communications for Buffalo, N.Y.-based Delaware North, Southland’s parent company, says. “We will increase our investment, provide more jobs and continue to offer a great experience for our guests.”

The Arkansas Racing Commission will issue the two remaining licenses to applicants who pay an application fee of up to $250,000, demonstrate experience in conducting casino gaming and submit letters of support from the county judge or quorum court and the mayor if within the city limits. The amendment requires the commission to accept applications no later than June 1, 2019.

The Downstream Development Authority of the Quapaw Tribe in Quapaw, Okla., contributed $3.65 million to gambling proponent Driving Arkansas Forward and has expressed interest in applying for the casino license in Jefferson County. The Cherokee Nation Businesses in Catoosa, Okla., gave $2.28 million and is expected to apply for the license in Pope County. Both tribes run gaming facilities in Oklahoma.

While a 2005 law previously allowed for slot machines and electronic games, like video poker, the approved initiative allows table games, including poker, blackjack, roulette and craps, as well as sports betting.

While proponents say the state will benefit from increased jobs and tax revenue, opponents argue gambling is a vice that will hurt citizens, especially the poor and undereducated.

Issue 4 received 468,599 (54.09 percent) votes in favor compared to 397,658 (45.91 percent) opposed. The measure calls for the Arkansas Racing Commission to issue casino gaming licenses to Oaklawn Jockey Club for a casino at or adjacent to the company’s horse track and gaming facility near Hot Springs in Garland County, Southland Racing Corporation for a facility at the organization’s greyhound track and gaming facility near West Memphis in Crittenden County, one to an applicant in Pope County for a facility within two miles of Russellville, and one to an applicant in Jefferson County for a casino within two miles of Pine Bluff.

The amendment stipulates the casinos will pay a net gaming receipts tax on money earned after gambling winnings have been paid. Each will pay 13 percent on revenue up to $150 million and 20 percent on earnings of more than $150 million.

Fifty-five percent of the taxes collected would go to the state general revenue fund, where the governor and legislature would decide how it is spent. The host city or town in which the casino is located would receive 19.5 percent. The Arkansas Racing Commission would get 17.5 percent to increase total purse money for races at Oaklawn and Southland. The host county would receive 8 percent of the tax revenue; however, if the casino is located outside of city limits, the county would receive the share allotted to the host city, for a total of 27.5 percent.

Additionally, Oaklawn and Southland are required to contribute 14 percent of casino winnings to their racing purses to improve racing entries and 1 percent to the Arkansas Racing Commission Purse and Awards Fund to promote and encourage breeding activities in Arkansas.
Under the law, the racing commission must provide a minimum of $200,000 annually for compulsive gambling disorder treatment and compulsive gambling disorder education programs.

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Voting yes on Issue 4 means Arkansas can keep its money, its jobs and its tax revenue in Arkansas rather than sending money to surrounding states.

A report commissioned by Driving Arkansas Forward found Arkansas’s economy could add as many as 6,000 new jobs and $5.8 billion over the next 10 years, including $120 million in annual tax revenue, with expanded casino gaming and entertainment, according to independent findings by the Arkansas Economic Development Institute at the University of Arkansas at Little Rock.

The AEDI report says that 30 percent of Arkansans regularly travel to neighboring states to visit casinos, including 1.149 million visits by Arkansans to Mississippi casinos over the past 12 months.

“Voting ‘yes’ on Issue 4 means Arkansas can keep its money, its jobs and its tax revenue in Arkansas rather than sending money to surrounding states; and it means Arkansas’ economy will reap benefits even more far-reaching than many of the industrial super-projects we recruit to the state with public money,” says Nate Steel, counsel for Driving Arkansas Forward. “These privately financed casino resorts will employ Arkansas residents, pay Arkansas taxes and generate billions of dollars of economic growth for Arkansas.”

“What this study represents is a thorough investigation of the likely impact of Issue 4 on the state’s economy,” says Dr. Michael Pakko, AEDI chief economist. “Not surprisingly, when you have an economic activity that is prohibited within the state but is available in nearby states, bringing that activity home has the effect of raising total income, spending and employment within Arkansas.”

Even though the addition of casinos is expected to bring an economic windfall, Issue 4’s passage was not guaranteed. Proponents had to collect signatures from 84,859 Arkansas voters, equal to 10 percent of the people who voted for governor in the last election, to get the measure on the ballot. It then had to survive two lawsuits to remove it from the ballot, which were rejected by the state supreme court.

Jerry Cox, president of the Family Council Action Committee, which opposed Issue 4, called casinos a “false hope.”

Because most of the jobs created will be in the service industry, thus low paying compared to tech or manufacturing jobs, Cox is doubtful of the economic impact they will provide. He is also concerned that local economies will suffer if people spend money gambling instead of at local businesses and eateries. Additionally, he says out-of-state money spent on political campaigns could have an ongoing corrupting influence on state and local governments.

“The house is set up to win,” Cox says. “Anyone who thinks differently is not dealing in reality.”

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