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Gaming Guru

 

Casinos Operations are Often Misunderstood

28 May 2003

One of the biggest myths about the gaming industry is the image of the casino operator. There are many stereotypes, none of which will be described here for fear of proliferating them. However, my guess is that the image the reader is thinking of at this point probably isn't all that flattering. It is time for a reality check.

In the modern era, most casino operators are companies or corporations. Sure they are in business to profit, just as General Motors and Ford and the local Mom and Pop bakery are in business to profit. That is the bottom line for any business. Casino operators want to make a profit for their shareholders and to build value in the company so that the price of their stock increases. Thus, ultimately, the image that one thinks of when the terms "casino" or "casino operator" are used should be that of the shareholder who own stock in the business.

In most cases these days, the companies that own and operate casinos are publicly traded. Thus, their stock is readily available and can be purchased by anyone. If you think that casinos are making too much money, you should invest in their stock. If you think that they need to have more minority ownership, you should be seeking to have minorities buy stock. Casino gaming stock is widely held by numerous mutual funds that are invested in by retirement plans, and by individuals all over the world. Many of these people don't even realize that they own part of a casino. Thus, their stockholders are black, they are white, they are Native American, they are Asian, they are old, they are young, and they are Democrats, they are Republican. Undoubtedly, they live on your block, if not in your house.

Unlike most other businesses, casinos also have some special responsibilities. A license to operate a casino is a privilege. In order to enjoy this privilege, casinos have learned the importance of playing a special role in the communities they are located in. They hire the unemployed and unemployable, they provide training, they provide good paying jobs, they engage in countless acts of charity and community improvement.

Currently, in Michigan, casinos directly employ over 23,000 people. Indirectly, casinos probably double that number in terms of the jobs they create in the construction, restaurant, and supplier industries.

To attract any other industry that brings so many jobs to the table, communities frequently give tax breaks and other special incentives. In stark contrast, in order to enjoy the privilege of a license to operate a casino, casino operators often pay special additional gaming taxes on top of all the other taxes that businesses pay. In Detroit, this rate of this special gaming tax is a whopping 18 percent. When this high rate of taxation was chosen for the Detroit casino market, those crafting the legislation justified it based on the "oligopoly" that existed with only three casinos being located in the City.

Two decades ago, before I visited my first casino, the thought of going to one had little appeal to me. I was typically Midwestern in my attitudes. I went to Las Vegas for a vacation with my wife mainly because money was short and it was inexpensive, and we had the opportunity to go to a Diana Ross concert at Caesar's Palace. What I discovered in Las Vegas is that casino gambling is fun. I also discovered the true meaning of the word "hospitality" and the impact that it has on the enjoyment of a vacation.

There are those who deride casino patrons and suggest that they are blind to the fact that casinos are in business to make money. They miss the point. Casinos, just like golf courses, amusement parks, movie theatres, sports arenas and concert halls are in business to entertain for a price. Gamblers understand that the odds are against them. This is the price of the entertainment. Yet they also understand that they have fun and get treated like royalty when they visit a casino that is doing the job the right way. Occasionally, they walk away with a lot more money in their pockets than they had when they walked through the door.

Casinos do not seek bailouts. They do not ask the government to subsidize them. They are highly competitive and they work hard to do their jobs - pleasing and entertaining their customers to build loyalty. They deliver on their promises to their customers, to their communities, and to their shareholders. As a result, their customers, who number in the hundreds of thousands, return to have fun again.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com