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Voters may not see luck on their side with new casino

Bossier City voters may be forgiven if they feel as if they are staring down the barrel of a .44 magnum, held by their city government snarling, “You’ve got to ask yourself a question: do you feel lucky?” The answer either can lead to adding a little economic boost to the underperforming suburb, or end up being yet another economic development mistake in a city that has made a habit of unwise spending and frittering away genuine opportunity.

Because, in reality, it’s multiple questions needing answers as a result of the state deciding to allow transfer of a casino license to a projected operation in Bossier City, which would make it the fourth riverboat docked at least partially in the city. State law requires an affirmative local option vote in the parish of the berthing.

The antecedent question for voters addresses the moral aspect of the decision, whether increased gambling opportunities make, in the aggregate, the parish a better place in which to live.
Two potential benefits, extra wealth and entertainment choices brought to the community, must get weighed against the ramifications of externalities that could degrade the community: more addicts, encouragement of sloth and foolish spending choices for those who can’t afford it, increased criminal activity, and a condoning of behavior many see as contrary to that of God’s teachings.

But even if a voter balances these considerations and finds the positives outweigh the negatives, before casting an affirmative vote he has to draw another conclusion: whether granting permission will have a net beneficial economic effect for the parish. Statistics and history show a very mixed picture on this account.

The area has had five boats since the end of 2000, with the January, 2001 report showing handle of nearly $60.3 million. Handle has varied considerably since, being in January, 2004 a total of about $66.1 million. That year, Oklahoma passed a law allowing Indian tribes to commence casino operations. By January, 2008, area boats’ handle had declined to a bit under $56.5 million while the Oklahoma operations, 111 of them operated by 31 tribes, were up to $2.9 billion. The next year, they increased to $3.1 billion or up about 7 percent in a year tribal gaming revenues nationwide decreased, while by January, 2009 the Shreveport-Bossier handle went up to $63.1 million or an increase of almost 12 percent, bucking the national decline of about 8 percent. In January, 2011, handle had dropped to $51.3 million.

For comparison, in May, 2003 Louisiana Downs began offering slot machine action and in January, 2004, took in $4.8 million. The similar numbers for January in 2008, 2009, and 2011 were $7 million, $7.3 million, and $5.9 million. Together, the trend suggests increasing operations until 2004, a slow decline until a nice boost until the end of the decade, and then rapid erosion since.

Another way of viewing this is through attendance and average loss. For the track, using the data points of January reports for 2004, 2008, 2009, and 2011, attendance increased until this year, when it plunged to a level below that of 2004, at 118,012. This lagged average take, which increased to 2008, stayed about the same for 2009, and then dropped but remains about $9 higher than in 2004, at $48.16. For the boats, with the additional 2001 data point, attendance dropped significantly from 2001 to 2008, was up somewhat in 2009, then plunged by 2011 to a level almost half of what it was 10 years previous, at 741,111. Average take steadily increased, rising 50 percent up to 2009, but declined 10 cents from that mark by 2011, at $69.21.

Of course, extraneous factors impact these numbers, besides the market’s overall strength. One could argue the advent of Oklahoma legalized gambling sapped the market during an overall expanding national economy, then got a boost from Haynesville Shale activity, only to be knocked down by a contracting-to-no-growth national economy. While the national economy and one-off local boost like drilling activity make it more difficult to assess the inherent state of the market, that the market declined earlier in the decade even as the national economy expanded and that the drilling activity mainly puts local, not tourist, money into gaming company coffers, lends itself to a broad interpretation that this not an expanding market, if not one in contraction.

So the question for the suitor company, which bills the projected property as invoking a theme of relaxation in the tropics evoked by Jimmy Buffett’s classic hit tune “Margaritaville” (didn’t the previous incarnation of one of the area’s casinos, the Isle of Capri, try for the same effect?), is whether there’s anything special about its approach to expand the market. The license owners do say they’ll have, besides the obligatory hotel, an entertainment center, but it seems most of the gambling would occur on machines and not tables, which makes the operation hardly anything more than that on offer at Louisiana Downs.

So the question relevant to the voting public is whether it will take a chance on the operator successfully expanding the market, in light of uncertain trends. (And to make things even less certain, should presidential candidate Texas Gov. Rick Perry succeed in that quest, it would remove from Texas a significant constraint to expansion of gambling; legalizing even just slots in Texas would have a notably negative impact on the Shreveport-Bossier market.) It doesn’t make a lot of sense to allow it in if it just cannibalizes the existing business, a hard lesson learned by Bossier City government as its subsidization of the Louisiana Boardwalk was not offset by increased citywide tax revenues, helping to lead the city to its worst budget crisis in history for 2010. In part, this explains the city’s eagerness for the project, sited almost adjacent to the Boardwalk, in order to give it a boost as well as finally have something develop in the area after previous failed efforts.

Thus, voters must consider later this month, if enough think gambling is a legitimate legalized enterprise, whether giving the go-ahead to the city’s fourth riverboat rolls a seven and boosts the city’s economy, or whether it comes up craps and whatever costs the city sinks into the effort go for naught as this or another Bossier casino ends up abandoning the area for lack of demand – which would add another sorry chapter to the big game hunting ethos of economic development infecting Bossier policy-makers that has squandered the area’s otherwise promising potential.

1 comment:

Anonymous said...

Thanks Jeff for your attempts to expose the under the table politics we face in Bossier City. The city leaders have turned their backs on the casinos and racetrack that have proven to be significant financial contributors to our community for many years just to have a slight chance to save the Boardwalk. The principals of the proposed casino touted the city with promises of growing the market, more jobs for the community and increasing the tax base. What they are not telling anyone, other than their solicited lenders, is the only way they plan to obtain their projected numbers is by attmepting to close Louisiana Downs and two of our casinos. One would think even the politicians of town hall could calculate this equation.