I don’t typically post reports from the House Journal because I am not flush with the time necessary to read them on any sort of regular basis. But the committee vote on SB152, the most recent effort to plop a Casino somewhere on the New Hampshire landscape, was close–and just happened to go my way. What better incentive than that to report the results of that report…?
…to see what the bipartisan committee saw that inspired them to suggest, not so much that any Casino would be bad for New Hampshire–which is my position–but that SB152 was just a lousy effort at getting one even if you were in favor of it.
So here is the where and why of how the bill fails and should, by Rep Mary Jane Wallner.
Rep. Mary Jane Wallner for the Majority of the Joint Committee of Finance and Ways and Means: SB 152 proposes to license one “high end, highly regulated” casino for a one-time $80 million licensing fee and future tax rate of 30% on up to 5,000 slot machines and a 14% tax rate on up to 150 table games.
In exchange for being able to award a license and receive the fee in the next budget cycle, the bill short circuits the regulatory process that would ensure a casino would indeed be “highly regulated” and able to serve the best interests of the people of New Hampshire.
In addition, despite the claims of supporters that we need gambling revenues to fund essential safety net services, SB 152 does exactly the opposite, creating restricted revenue streams rather than putting the money in the general fund where it can be spent on the important state programs our constituents care most about. Finally, this bill asks us to balance new jobs with an increase in social problems and costs in ways that are not well-quantified.
The majority believes the bill does not create a meaningful regulatory structure or process necessary for effective checks and balances. The regulatory provision contains numerous significant weaknesses and deficiencies that could not be fully understood or addressed during a month-long subcommittee process.
The bill vests the Lottery Commission, a three-person, part time board, with the primary responsibility to provide oversight and adopt regulations and enforce regulations. At the same time, it does not give the Attorney General enough regulatory oversight to ensure the public interest is adequately protected. In order to get the $80 million fee in the next biennium, it creates an arbitrary and unreasonable timeline, commencing the licensing process before the Lottery Commission has enough time to write rules and adopt them through the JLCAR process. The timing is not long enough to allow for a reasonable expectation of accepting multiple applications to operate a casino, again short-circuiting the robust and competitive process that would increase the probability we would get the best casino deal.
Finally, the bill ignores the recommendations of the Gambling Commission issued in 2010, which stated emphatically that a strong regulatory infrastructure must be in place before the licensing process can begin. SB 152 puts the cart before the horse, thus failing to protect our interests in the way we should expect.
The majority is also concerned about the bill’s revenue provisions. If the purpose of casino gambling is to create a robust, sustainable revenue stream into the future, SB 152 probably does not achieve that goal since it appears to sacrifice long term revenue for a one-time payment. Specifically, a lower licensing fee combined with higher tax rates would likely maximize revenue for the state. Other states have used a bidding process to find the highest rate and employed consultants to help create a financial structure. SB 152 does neither.
In addition, the minimum required investment is not high enough to generate the highest revenues we could reasonably expect. SB 152 grants a “forever” license for a low renewal fee due every 10 years. A more prudent approach would be to increase the length of the license and then require a higher fee through a competitive re-licensing process. The bill also misses an opportunity to share some of the profits if the casino’s ownership changes hands, allowing all potential profit to be tax-free.
The majority is also disturbed by the bill’s failure to make future revenues available in the operating budget, instead creating only restricted revenues. The funds are dedicated to support highway debt (a proposal that the State Treasurer says is not feasible), an ill-conceived North Country Economic Development Fund with absolutely no oversight or accountability, the university system, millions to the local communities and, finally, a dedicated funding stream to treat gambling addiction that is either too high or too low but certainly not based on any facts.
Part of the argument for a casino is that it would be just one. We should remember the potato chip example; no state has stayed with just one casino. Proliferation is not just certain; it is actually contemplated in the bill through the creation of a study commission with members without specific qualification but with a charge to evaluate whether “additional licenses should be issued for gaming locations.”
The lure of jobs is a key selling point for supporters, but there is no guarantee that these jobs would go to NH residents, especially with a location on the southern border, and a neighboring state with a more densely concentrated population and a higher unemployment rate.
The majority is concerned about the cannibalization of existing local businesses. The total amount of entertainment spending is finite, and, unlike with local businesses, the majority of business profits of this new venture will be sent out of state and out of our economy. Finally, the number of NH residents with gambling addiction will rise, and with it the cost to government and families.
For all these reasons, the majority of the committee believes that, while no bill is perfect, SB 152 is not good enough. There are still too many unknowns. The state made a short-sighted decision when it did not spend money appropriated in the last budget to hire experienced consulting assistance that could have answered many of the questions. This bill does not have the regulatory infrastructure to ensure protection of the public interest, it does not maximize revenues or put them in the right place, and it affects New Hampshire’s brand and quality of life in ways that are impossible to measure and, therefore, impossible to adequately protect. Vote 23-22.
