You may be asking yourself why I am going back to research a Congressional Hearing that is more then 20 years old.
1. We got a lot of what was done wrong because we failed to heed the voice of experience. This hearing shows that we were in the presence of helpful information and a special effort was made by hearing participants to give Tunica advice. We all have to understand what went wrong and come together to put Tunica back together again. We can't make the same mistakes again and we can't keep repeating the same information over and over and expecting different results.
2. The Jul 2015 issue of the Delta Business Journal is out and it appears to me that there is a lack of understanding about how we went wrong. We've got to stop putting out stories that don't give the correct information.
These are the cast of character at the 1994 Hearing, listed in the order of their testimony.
Goodman, Robert: Director of the US Gambling Study, Lemelson Professor of Environmental Design, Hampshire College, and Professor of Regional Planning, University of Massachusetts
Grinols, Earl: Professor of Economics at the University of Illinois
Bloomberg, Jeffery: State's Attorney, Lawrence County, South Dakota
Webster Franklin: Executive Director of the Chamber of Commerce, Tunica County, MS
As stated above, the purpose of this hearing was to discuss the "national impact". However, many examples and much of the testimony centered around gambling and what happens to small businesses when gambling moves into an area. Also, a part of the Hearing was devoted to giving helpful advice to Tunica County, MS.
Here we go:
Goodman, Robert
I was "...surprised by the intensity of some of the attacks against the study by political leaders and people in the gambling industry."
"The intent of the study was to look at the economic consequences of gambling."
There are "limited opportunities for economic development in many parts of this country, and the introduction of gambling is really a symptom of that problem rather than a long-term solution to it."
"...any new enterprise which promises large numbers of jobs and revenue can give the appearance of salvation and economic revival."
"...using gambling as government policy to create jobs is a dangerous form of economic development."
What happened in Tunica "is different than what happened,,,in the 1930's in Nevada and...the late 1970's in Atlantic City." In Nevada and Atlantic City...people came...they gambled...and they left a great deal of money" when they returned home.
What we have in Tunica is known as convenience gambling. Convenience gambling is when a consumer spends descretionary dollars that might have been used on other forms of entertainment, restaurants or retail sales to gamble. This is not economic development. This is shifting dollars. This is taking dollars from other businesses.
What we have learned from Mr. Goodman's testimony is that those who visit Nevada and Atlantic City are considered destination gamblers and those who visit Tunica are convenience gamblers.
So here's my take: In the Delta Business Journal, Jul 2015 issue there is an article by Becky Gillette. The title is: Tunica Gaming...Tunica may have turned the corner on declining gaming revenues.
In this article, Webster Franklin, Executive Director of the Tunica Convention and Visitor's Bureau (CVB), is quoted as saying: "Tunica grew under the model of destination gaming, which was all the industry knew at the time. Today, convenience gaming has become much more prevalent over destination gaming."
Blogger: I disagree. Although I have heard it said many times that Tunica was the third destination site for gamblers after Las Vegas and Atlantic City, this 1994 Congressional Hearing testimony makes it clear that is not the case. Tunica always has been convenience gambling and convenience gambling is not economic development.
Will stop for now and will pick-up later with the testimony of Earl Grinols, Professor of Economics, University of Illinois.
Update: 19 Jul 2015
Next is the testimony of Earl Grinols, Professor of Economics, University of Illinois.
Grinols: "A factory, when it locates in an area, sells to the rest of the country. Its payroll, materials purchases, and profits spent locally are new money to the area that represents tangible goods produced.
On the other hand, adding a new restaurant that caters to local population in an area simply takes business from local (food establishments). The question for a particular region therefore is: Is a casino more like a factory or a restaurant?
In Las Vegas, casinos are more like factories because they sell gambling services to the rest of the Nation. In most other parts of the country, gambling is like a restaurant,... drawing money away from other businesses, creating no economic development, but leaving social costs in its wake."
"A study I did of Illinois casinos...examines 10 counties where casinos were opened from September, 1990 to June, 1993. ...When the job gains that would have occurred anyway in those counties were accounted for, the net effect of gambling was that roughly one job was lost for each gambling job created, an increase in the gambling industry, but not economic development."
"In the case of gambling,...Government restrictions prevent other small businesses from competing. Casinos can offer food, liquor and entertainment, but existing small businesses cannot offer gambling."
..."food purchases within 10 miles of the casino are ...negatively impacted. A sudy conducted for the State of South Dakota shows similar declines for clothing stores, recreation services, business services, auto dealers and service stations."
"In Minnesota, restaurant business within a 30-mile radius of casinos with food service was reported to have fallen by 20 to 50 percent, and this has been verified in press accounts by restaurant owners near Illinois casinos. It is well-known that in Atlantic City the number of restaurants declined from 243 in 1977, the year after casinos were legalized, to 146 (ten) years later, and that retail business and employment in Atlantic City has continued to decline, despite the presence of gambling."
Blogger: The next person to testify is Valerie Lorenz, Director, Compulsive Gambling Center, Baltimore, Maryland. This post is focusing on the economic impact of gambling. The social issues, which are tremendous, are presented at this Hearing and may be read by clicking on the link provided elsewhere on this blog for the entire document.
Next up is Jeffrey Bloomberg, State's Attorney, Lawrence County, South Dakota.
In 1988, "the citizens of South Dakota, voted to approve limited casino gambling within the boundaries of Deadwood, South Dakota, a very small community of 1,800. Almost immediately, dramatic changes began within our community, and since that time I have had the opportunity to talk to journalists and government officials and private citizens throughout the United States regarding some of the very issues that we have come across in our community and some of the same issues that they are now running into in their community as they either adopt gambling or consider it.
In every community or State that I have gone to or people who I have talked to, the same sales pitch is used in regard to gambling. That is, economic development, new jobs and lower taxes. Every State, the pitch is the same."
"The infrastructure of our community was totally inadequate for the number of visitors that came and the number of new employees. The water lines, sewer lines, parking and other governmental infrastructure was inadequate and had to be replaced. But the city government had no funds with which to make those kinds of changes.
So, they made...a critical decision and one which in hindsight it is easy ...to criticize, but they decided to bond, sell revenue bonds to develop that infrastructure and pledged the proceeds from gaming taxes, future gaming taxes to pay off those bonds.
...if the citizens of Deadwood today wanted to get rid of casino gambling they could not do so without going into total bankruptcy."
Blogger: It is my understanding that the Diamond Lakes Bond is the sole responsibility of Harrah's. In thewording of the TCUD Bond, Tunica County is responsible for this bond debt if TCUD cannot make the payments. Since TCUD has never made their bond payment, why is is just now that they have applied for and received a rate increase? Additionally, from meetings I have attended and reports I have read, TCUD in past due on many of their operating bills.
As you will read later from this hearing, Tunica County was advised not to borrow money for infrastructure and we did it anyway. Somehow we are going to have to figure out a way to dig ourselves out of this financial mess.
Back to Bloomberg's testimony:
"As to the claim that tax relief will be brought about by gambling, that has simply proven to be not true in Deadwood. Taxes, in fact, in terms of real estate taxes have gone up each and every year since gambling came to our community.
I think that is because of two reasons, First of all, the profits that have come in terms of gaming taxes have been eaten up by the additional costs that have come to our community.
Second, real estate assessments jumped dramatically when the property values jumped. So the individual that had a business that was non-gaming before and didn't want to get into gaming was certainly looking at a much larger tax bill because the assessment of his property had jumped."
"In Deadwood,...virtually every decision on a local level is dictated by what is best for the gaming industry. ... We haven't been willing to say we are going to cut service. We haven't been willing to say we will raise taxes. So we, as government officials, have taken the easy way out, which is to say let's go with this painless form of revenue, which is gambling."
Will stop for now. Next up will be Webster Franklin, Executive Director, Chamber of Commerce, Tunica County, Mississippi.
Update: 24 Jul 2015:
Franklin: "...it is an honor for me to appear before you on behalf of Tunica County t express my views on the effects of the gaming industry on our local community.
Historically, Tunica County has been known as 'the poorest county in the Nation.'"
Unemployment as recently as January of 1992 was as high as 26.2 percent, one of the highest in the State Of Mississippi. Per capita income was 11,865, one of the lowest in the State. Fifty-three percent of all Tunica County residents received food stamps. We were known for our substandard housing, poor health care delivery and sanitation problems caused by inadequate or antiquated sewage systems.
Over the years Tunica County received national attention due to several studies, one of them being the Harvard Medical School Committee on Poverty, your own Committee on Hunger, and the congressionally mandated study of the lower Mississippi Delta Development Commission.
These studies all recommended basically the same thing: Government assistance. Due to this national attention, we received much needed government money and assistance. But that did not solve our problem - which was jobs for our citizens. It was not until the gaming industry came into our county that those jobs surfaced.
The Mississippi legislature in 1990 passed what is known as our 'dockside gaming law,' that authorized dockside gaming on a local county option basis for those counties on the Mississippi Gulf Coast and along the Mississippi River. Tunica County followed in passing its local referendum in 1991, which le to the economic explosion that we are now seeing.
Our first casino, Splash Casino, opened its doors at Mhoon Landing in October of 1992. For 11 months it enjoyed a monopoly on the gaming area and quickly became the envy of the national gaming industry n that its revenues were (un)precedented.
The gaming industry realized that Tunica County had the potential, because of its location, to become the Nation's third regional gaming destination resort. Investors flocked into our county nd bought control or rights to all available casino sites from Mhoon Landing north to our neighboring count of DeSoto County. Land prices that in 1990 were valued at $250 an acre, now sell for some $25,000 an acre.
Since the arrival of gaming, oour once defunct planning commission...has issued over $1 billion worth of building permits.
In 1993, we had 12 major casino(s) in the construction phase. This allowed our citizens to go to work in the construction industry at salaries of $10 and upwards an hour. Every able-bodied person in the county was afforded...the opportunity to acquire as many overtime hours as they could withstand. Therefore, they had a skill that they could take to other jobs once these facilities had been constructed.
Also, each casino set up employment schools for their casinos to teach the local people the necessary skills to provide blackjack dealers, craps dealers, slot machine technicians, and security guards. The service industry employment in Tunica County for our residents has gone up 435 percent since 1990.
Blogger's Note: If Tunicans were trained for these jobs, how did many of these jobs wind-up in the hands of people who do not live in Tunica? Did our employees not perform as expected or did more highly educated individuals fill vacancies?
Nine casinos currently operate in our county, employing approximately 9,000 people. There have been more jobs in our county in 20 months than there were people, according to the 1990 census. Our unemployment rate...was 26.2 percent in January 1992. It has gone as low as 4.9 percent in October of 1993. Child support collections in the county have increased from $38,000 per month to $65,000 a month in 1994. The number of welfare recipients has decreased 42 percent. Food stamp recipients have decreased 13percent from 1992 to 1993, and that trend continues in 1994.
Business in Tunica County is...booming. We are in the secondary development stage. We have new housing, RV parks, restaurants and motels. However, there are many service sector jobs that are needed. For instance, I am the first paid director of the Tunica County Chamber of Commerce. We now have a push for a new Department of Tourism that is being currently organized.
To illustrate to you the totality that this money and influx of people have brought into our area, the tax collector responsible for giving out the car tags in our county ra out last year and had to reorder In fiscal year 1994, our county recorded the highest percent increase of retail sales of all of Mississippi's 82 counties, a 299 percent increase representing sales of $256.5 million compared to $64.2 (million) in fiscal year 1993.
The Mississippi law provides that part of the gaming revenue that is established in the State of Mississippi be returned to its counties. In fiscal year 1995 it is anticipated that $2.5 million will b put into the county budget with additional impact fees of $12 million. This new revenue source has allowed the county to continue the much needed infrastructure improvements.
Blogger's Note: Need to know if this new revenue was used to improve infrastructure throughout the county or to put in infrastructure for the casinos.
For example, just yesterday our county has embarked on a five-lane major highway that will link five of our casinos together and link them to U.S. Highway 61, our State artery that leads into Tunica County. Another local highway connecting all of our casinos throughout the county has been approved and is now in the planning stages.
We have had two new utility districts created. Funding has been gained for long-range land use development planning, and our county school system is being completely overhauled.
Blogger's Note: I believe these two utility districts would be Tunica County Utility District (TCUD) and Diamond Lakes. There is an outstanding TCUD bond that the County is obligated to pay. The Diamond Lakes bond is the sole responsibility of Harrah's. I'm not sure what the last sentence of the above paragraph means.
Revenue from gaming has allowed our county to provide an additional $1.4 million of funding for this school year. This funding will go to new classes, much-needed equipment and increase in teacher salaries. Everyone in Tunica County is committed to updating our public school system.
Our Board of Supervisors also recently voted to reduce its tax on property in the county by 32 percent.
Blogger's Note: In 1994, the BOS Members were: Dunn, Henderson, Battle, Tucker and Bailey.
...gaming has had an extremely positive impact on our local economy. However, we are experiencing several growing pains which ought to be expected. All of us in Tunica County are committed to developing our area into major destination resort. We envision a major airport, a first-class, family oriented theme park and championship golf courses."
Next up: Advise from Deadwood, SD to Tunica County, MS.
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