Thursday, June 26, 2014

Place your bets: Gambling battle at legislature ratchets up UPDATE

Posted By on Thu, Jun 26, 2014 at 10:00 AM

THE ISSUE: A vote against the lottery is a vote to help this casino at Oaklawn.
  • THE ISSUE: A vote against the lottery is a vote to help this casino at Oaklawn.

Someday the rest of the media world will discover that the bitter battle, led by Sen. Jonathan Dismang, to get a lottery-limiting bill on the special session call is not solely about moral objections to state-sponsored gambling expansion.

It's about — at least as far as a big part of the lobbying activity is concerned — the casino at Oaklawn Park. The religious groups that oppose gambling are allies with their past foe Oaklawn on this one.

The lottery wants to offer video games, akin to keno, at stores, bars and other outlets around the state to shore up declining revenue for college scholarships.

A bill to prohibit this is gaining steam, with the Oaklawn Jockey Club's lobbyist, led by former legislator Ted Mullenix, whipping out his credit card nightly to hotbox legislators onto the sponsorship list.

Oaklawn doesn't want competition for its casino. Southland, the casino and dog track at West Memphis, is staying out of this fight, by the way. It's content with working its Memphis market. And it's always been looked down on by the patrician ownership of Oaklawn, home to the "sport of kings," though horse racing has been eclipsed by casino dollars.

Wrinkle today: Rep. Mark Perry of Jacksonville, who's supporting the lottery efforts, has drawn up a bill to take back from Oaklawn the "Oaklawn anywhere" legislation of 2013 that opened the door to Internet gambling at the racetrack.

If you think you sniff hypocrisy, you have a good nose.Many of the same legislators that had no objection to letting Oaklawn take gambling dollars anywhere a computer terminal can be found professing horror at a few more outlets for wagers on scholarship-supporting lottery dollars. And this is on top of years of hypocrisy that gave Oaklawn 1) one of two monopoly licenses to gamble in Arkansas; 2) slot machine gambling by the meaningless artifice of "electronic games of skill."

The moralists who are fighting the lottery in Oaklawn's behalf are also gulping down Oaklawn-financed steaks and martinis supplied by the Mullenix firm, one of the biggest users of the slop-the-legislator lobbying option. Mullenix was the chief opponent to the proposed constitutional amendment to end hog slopping of legisaltors.

Oaklawn wants lottery customers. Here's some must reading on the subject in the New York Times just a few days ago. The market is getting saturated with casinos. Increasingly, casinos are going after low-income players, rather than big-dollar "whales." Low-income gamblers are the lottery's meat and potatoes. Oaklawn doesn't want to give up market share to a new competitor.

Think about Oaklawn. Does it have name-chef restaurants, big-name entertainment, swimming pools, golf courses or any of the other amenities that made visitor meccas of places like Las Vegas. No. It has slot machines. I don't know if it's yet followed Tunica with its handy "we'll cash your paycheck for no fee" amenity. But it might as well. The result is the same. From the NY Times:

In America’s increasingly two-tier economy, casino industry leaders realized that they didn’t have to cater exclusively to well-heeled consumers in order to rake in profits. Payday lending, rent-to-own stores, subprime credit cards, auto title loans and tax refund anticipation loans all evolved to extract high profits from low-income groups. And the newly established state-licensed casinos have their methods, too.

A research team from the University at Buffalo and SUNY Buffalo State has conducted studies that offer new evidence of the exploitative effects of casino gambling on lower-income Americans. For example, the researchers found that the rates of casino gambling participation and frequency of visits have increased among lower-income groups. Easy access to casinos is a key factor. Living within 10 miles of one or more casinos more than doubles the rate of problems from excessive gambling. Another factor is easy access to slot-machine gambling. Women and the elderly have become more likely to gamble in recent years, partly because of a preference for nonskill slot-machine gambling.

If Perry completes his bill and files it (he hasn't returned my call as yet), it would seem to be germane if Gov. Mike Beebe puts the lottery on the call. The pressing need to battle gambling expansion should take all gambing into account, should it not?

The Oaklawn-anywhere bill passed without a single "nay" in the House, though 14 didn't vote and two voted present.

PS — I've talked with Dismang since posting this. He makes points worth noting that I have mentioned at other junctures. 1) legislators believed the original lottery legislation prevented use of video terminal gambling. It does. They see little distinction with video monitor gambling, where gamblers don't interact with the machine. (It's been known for years that keno-style games were allowed.) 2) Legislators would prefer this debate at a regular session and some are unhappy at the effort to get it up and running, knowing that it is devilishly hard to stop something once it's started. 3) lottery vendors have a lot of money at stake here and are fighting hard on the other side of this issue.

Fair enough. My main objection is that media has failed to identify this roiling lobby battle that undergirds the  debate and I think it ought to come out of the shadows. This publication opposed creation of the state lottery. We saw it as a tool to benefit middle class students disproportionately with money coming disproportionately from the poor. We predicted it would likely see a decline in interest and then would come inevitable efforts to invent different forms of gambling to juice it up. We cited no moral objection to gambling. We do object to certain businesses getting a monopoly on the enterprise through legislative trickery.

UPDATE: Lottery commissioner Bruce Engstrom has written to House Speaker Davy Carter to correct an impression left by a news article that he said there should be negotiations over the lottery's plans. That has been taken as saying he wanted the legislature to negotiate. He said he was referring to Oaklawn gambling interests. His letter follows:

Mr. Speaker:

I hope this finds you well.

I’m writing to hopefully clear up a matter related to the lottery and our plan to pursue monitor games. It has come to my attention that a comment I made at yesterday’s Lottery Commission meeting has been misrepresented to members of the General Assembly.

The quote from as story by the Arkansas New Bureau was “If they want to negotiate, I think they ought to come over here and stand right up here and negotiate.” I want to clarify that the “they” I was referring to was the Oaklawn Racing and Gaming special interests, not the General Assembly as a whole. It’s my understanding that Oaklawn advocates have misrepresented my quote to be a slight on the Legislature or a sign of disrespect. That was certainly not my intention. I appreciate the very positive relationship the General Assembly has had with the Lottery Commission and look forward to that continuing.

The Lottery Commission has had monitor games under consideration for over a year, with the encouragement of Lottery Oversight Committee Co-Chair Mark Perry. Rep. Perry secured an Attorney General’s opinion in the fall of 2013 confirming our authority to offer monitor games. Director Woosley and representatives of Intralot, our vendor, presented the monitor game concept to the Lottery Oversight Committee in December 2013. The Lottery Commission’s Vendor Subcommittee voted in March 2014 to authorize Director Woosley to implement monitor games. This has been a very careful and thoughtful process. I remain frustrated at the recent opposition to our efforts by Oaklawn and only meant to express that feeling with my comments yesterday.

Thank you for your leadership and for the opportunity to clarify my remarks.

Bruce R. Engstrom

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