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Gaming Guru

 

Looking at the Coming Year

5 January 2005

As an industry, Michigan's twenty casinos, seven racetracks and thousands of Lottery outlets provide huge numbers of direct jobs to those who have chosen this exciting field. The casinos alone employ close to 19,000 people and the racetracks provide over 14,000 direct jobs in this state. Not counted in these figures are the indirect jobs, which have been estimated by various economic consultants to total an additional 60,000-80,000 indirect jobs, created by the existence of gaming. Also not counted, because these are difficult to estimate, are the jobs created by the Lottery. Thus, gaming in this state is a huge industry and a very significant employer and contributor to our economy.

The purpose of this column has always been to speak to the members of this industry and to provide useful information to all aspects of the industry.

Looking forward, the coming year promises to bring with it a host of very significant developments for the various facets of the gaming industry.

Detroit Casinos

By the end of 2005, one of the Detroit casinos is likely to be sold. On a national level, MGM and Mandalay Bay are merging. Under the Michigan Gaming Control and Revenue Act, MGM will be required to sell either the MGM Grand Detroit or Mandalay's majority interest in the MotorCity Casino because ownership of two Detroit casinos is not permitted.

Complicating the picture is the pending lawsuit filed by the Lac Vieux Desert Tribe which has resulted in an injunction over the start of construction of Detroit's permanent casinos. Both MotorCity Casino and Greektown Casino reached settlements with the tribe last year, but the injunction has remained in place while the parties await court approval and the courts try to sort out the potential impact of a settlement with two of the three Detroit casinos on the third (MGM Grand Detroit).

Tribal Casinos

The Gun Lake Band of Match-E-Be-Nash-She-Wish Pottawatomi Indians will continue its efforts to gain a compact with the Granholm administration to permit the construction of a casino in Wayland Township. Late last year, the Michigan Senate adopted a resolution rescinding a previous resolution calling upon the Governor to enter into a compact. The tribe has started a campaign to win approval in the coming year.

Also, two tribes that entered Class III Compacts with the state in 1998, Pokagon Band and Huron Band, are in the process of satisfying federal requirements concerning locating their tribal casinos in New Buffalo and Battle Creek, Michigan. Therefore, it is very likely that the initial development of these two casino projects will begin to materialize during 2005.

Under a land claim settlement entered into with former Michigan Governor John Engler, two other tribes may win the right to construct casinos in Port Huron (for the Bay Mills Indian Tribe) and in Monroe, Romulus or Flint (for the Sault Ste. Marie Tribe). Both land claim settlements require federal approval by Congress, which has been pending for quite some time.

Horse Racing

In the coming year, Governor Granholm will appoint a new Racing Commissioner to replace Robert Geake. The new Racing Commissioner will face some very significant challenges in seeking to help this struggling industry survive. With the passage of Proposal 1 last fall, requiring a statewide and local vote for the expansion of the forms of gaming offered at the tracks, the racing industry is working on regrouping and developing a new strategy for survival. The racing industry may seek a statewide referendum on the issues of Video Lottery Terminals at tracks, or may seek alternative ways to address its declining revenue problem.

Also on the horizon is a new track in Windsor Township, just west of Lansing, Michigan. Late last year, a new track license was approved, and the developer has been moving forward with its plans in the meantime.

Another very significant issue for the new Racing Commissioner is determining what Detroit-area developer should get the one remaining available Metro Detroit license. There have been numerous applications for the license, including one for a thoroughbred track in Romulus which has been made by MAGNA, plus proposals by Don Barden and many others.

Lottery

With the passage of Proposal 1, the Bureau of State Lottery is concerned that it may have a difficult time introducing new technology. Lottery Commissioner Gary Peters has suggested that he may seek a declaratory ruling from the courts to determine how far he can go without voter approval.

Still looking for new ways to generate revenue, late last year Peters announced that he was seeking to hire a firm to sell advertising on Lottery tickets. Peters believes this move will result in $8 million in additional revenue to the state. Tobacco and alcohol ads will be banned from this new strategy.

Despite the passage of Proposal 1, the Lottery saw growth in 2004 with the introduction of its Club Games (Keno and Pull Tabs). This coming year the Lottery will see additional growth in its Club Games as more Michigan residents become accustomed to seeing Keno and Pull Tabs in their local restaurants and bar establishments.

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