How Not To Run Casino Licensing

See if you can figure out what’s wrong with this story…

State gambling regulators will choose next week between three companies seeking the state’s last available riverboat casino license.

The Louisiana Gaming Control Board will take up the issue at its Feb. 17 meeting, after hearing four hours today from the companies and the state officials who reviewed their applications to make sure they meet the requirements to hold a casino license with the state.

The projects proposed would be in either Jefferson Parish or Lake Charles.

Gabriel Downs LLC is seeking to build a Hard Rock Hotel & Casino in Lake Charles, with a $167 million first phase. Creative Casinos LLC also is targeting the Lake Charles market with a proposed $400 million project called Mojito Pointe.

Penn National Gaming Inc. is proposing a second casino in the New Orleans suburb of Harvey, called Hollywood Casino, with a first phase costing $145 million.

Assuming all three of these operators check out and are on the level, a question: why is it that Louisiana is choosing just one of these projects? Assumedly, since voters in Harvey and Lake Charles have opted to have casino gambling within their jurisdictions there wouldn’t be a local objection to one or two more casinos.

The current licensing scheme is essentially the same one set up by Edwin Edwards – and he just got out of jail for crimes he committed in setting up that scheme. Offering a set number of casino licenses statewide rather than opening specific geographic areas as casino districts is a stupid way to do casino gambling; it incentivizes the kind of corruption Edwards practiced and it opens the door for politically-connected sleazeballs to get licenses based on who they know rather than what they can do. Anyone who has been to either of the two casinos in Baton Rouge and witnessed the siphoning of Social Security, disability and welfare checks via slots and low-dollar table games knows we’re not accomplishing the intended goals of having casinos – namely, promoting tourism so that it’s somebody else’s citizens losing their money at the tables rather than our own poor people. Nobody comes from out-of-state to gamble at a crappy little boat when they could go to Vegas, or Atlantic City or the Beau Rivage.

Penn National Gaming, by the way, is the company operating Hollywood Casino in Baton Rouge. People come from as far away as Grosse Tete to throw dice there.

Even if you’re committed to a set number of licenses, why not set up a clear-cut system of qualification of prospective operators and then put up the licenses for auction to qualifiers? Seems like that would make for an open and transparent process. How transparent is the current system? It depends on the votes of the commission, no?

Regardless of which one of the three operators wins this license, Lake Charles and/or Harvey will miss out on anywhere from $314 million to $567 million in private-sector investment even if the casinos would ultimately go broke.

This is the worst possible way to do casino gambling, and it’s virtually assured that we’re going to end up with less benefit than we should as a result. Shouldn’t someone attempt to address this in the legislature in the upcoming regular session?

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