Gambling expansion no solution to budget deficit, Leecy says

2 January 2011

On Saturday, January 1, the Duluth News Tribune featured a guest column by Bois Forte Chairman Kevin Leecy. Leecy, who also serves as Vice Chairman of the National Indian Gaming Association (NIGA), challenged the idea that gambling expansion promises a solution to the state’s budget deficit. Here’s the full text of Chairman Leecy’s column:

The Minnesota Legislature will convene Jan. 4, facing one of the largest budget shortfalls in the stateʼs history. Gov.-elect Mark Dayton and a handful of legislators have indicated they will propose expanded gambling as a solution to Minnesotaʼs budget woes.

Unfortunately, this so-called solution may do more harm than good. Expansion supporters have been promoting racinos at the stateʼs two racetracks for several years. Both Canterbury Park in Shakopee and Running Aces Harness Track in Anoka County would compete head-to-head with existing tribal casinos.

Despite perceptions to the contrary, the Shakopee Mdewakanton Sioux Communityʼs casinos, Mystic Lake and Little Six, are not immune to competition. A racino at Canterbury Park could cost Scott Countyʼs largest employer nearly 30 percent of its business, leading to employee layoffs, benefit reductions and cuts in philanthropic giving.

The Mille Lacs Band of Ojibwe is even more vulnerable to a racino at Running Aces Harness Track. Mille Lacs officials have projected losses of 40 percent to 50 percent at their casinos in Onamia and Hinckley. Again, losses of this magnitude could mean the elimination of as many as 800 jobs. This would be a huge blow to Mille Lacs and Pine counties, where the tribe is again the largest employer.

At best, the racinos will only transfer jobs from rural Minnesota to the metro area for no net job gain. Since these job shifts will be permanent, the result will be a net loss for rural communities.

Many people have asked me how the racinos would affect our casino, Fortune Bay, located way up north on Lake Vermilion. They donʼt realize how much of our business comes from the Twin Cities. Currently, people who want to gamble in the Twin Cities must drive to Mystic Lake. If they had another option in the north metro, many would stop there and never make it all the way to Fortune Bay.

Racino supporters also fail to recognize that reduced business at our northern casinos translates into economic hardship for the hospitality industry in our region. Why would legislators or our new governor consider anything potentially harmful to northern Minnesotaʼs resorts, restaurants and lodging facilities that rely on tourism for survival?

Even more concerning, the authorization of privately owned racinos would open the door to unlimited gambling expansion. Once states get a taste of gambling revenues, theyʼll want more. There is not a single state in the U.S. that hasnʼt continued to expand gambling beyond its first venture. Racinos lead to slots in the bars; slots in the bars lead to state-owned casinos; casinos start with slots and then add table games, roulette and craps. It never ends. Thereʼs never enough money for legislators to spend.

Despite this runaway expansion, virtually every state with gambling is facing huge budget shortfalls. In Pennsylvania, Maryland, Delaware, New York, New Jersey, Nevada and Missouri, states that relied on gambling to balance the books, lawmakers and government leaders are finding they bet on the wrong form of economic stimulus.

I canʼt help but wonder why some Minnesota legislators have decided that the solution to the stateʼs budget problem must come at the expense of tribal members and employees. Minnesota has more than 4 million residents. Shouldnʼt all of us be asked to share the pain?

Expanding gambling will not generate meaningful new money for Minnesota. Instead, the racinos will merely take $100 million out of rural Minnesota and divert it to two privately owned businesses and the black hole of state government. In this case, the shell game puts the burden squarely on the backs of Minnesotaʼs 55,000 tribal members and 12,000 tribal employees. Thatʼs an average contribution of nearly $1,500 from each of those 67,000 people.

Perhaps the state should just ask for donations from civic-minded citizens. If each Minnesotan contributed $25, the Legislature would have its $100 million—and tribes wouldnʼt face the loss of their economic resources yet again.