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Friday, August 31, 2012
State takes close look at video gambling | www.ajc.com
Georgia Lottery officials in recent months have quietly explored how to roll out video gambling in the state if the idea ever gains political backing, documents obtained by The Atlanta Journal-Constitution show.
Their interest comes as projected revenue shortfalls force cutbacks in the lottery-funded HOPE college scholarship program — and as developers of gambling venues pitch their operations as sources of fresh funding. One recent proposal calls for a sprawling entertainment-video gambling complex in Gwinnett County.
The lottery last year commissioned a study showing that video lottery terminals at three venues could generate nearly $1 billion annually. An AJC open records request this month revealed that the lottery also hired a firm to report on details of introducing video gambling to Georgians.
The report by Spectrum Gaming Group includes a possible timetable for soliciting bids from operators and outlines how long it might take to develop a complex in metro Atlanta. It also detailed necessary steps like developing licensing and considering whether to set up services for problem gamblers.
Lottery Chairman Jimmy Braswell said the studies were intended only to educate lottery officials and Gov. Nathan Deal. Braswell said the lottery board has no intention of trying to approve video gambling itself, although it has the authority to do so according to a former state attorney general’s informal opinion.
Braswell said the board sees video gambling as a public policy issue to be decided by elected leaders.
“Without a broad base of support, including the support of the governor’s office, the lottery commission isn’t going to step up and do something unilaterally,” Braswell said.
The governor appoints the seven-member lottery board. A spokeswoman for Deal said the governor’s office has received the reports on video gambling, but added that the governor “is opposed to the expansion of gambling in Georgia.”
Social conservative organizations have long opposed gambling in Georgia. Jerry Luquire, president of the Georgia Christian Coalition, said he considers gambling a “tax on the poor” that takes money out of the economy.
“There’s no right way to do a wrong thing and in our opinion gambling is wrong,” Luquire said. “We’re standing firm with our governor. We believe he is who he says he is, and he will deflect and reject any expansion of gambling.”
The original public referendum allowing the state lottery in 1992 passed by a narrow 52-48 percent margin. But today Georgia is one of only a handful of states without other forms of gambling.
Expanding into video gambling has gained some prominent support of late. State Rep. Ron Stephens, R-Savannah, chairman of the House Economic Development & Tourism Committee, introduced H.R. 1640, a resolution encouraging the lottery board to allow video gambling to increase state lottery revenue.
The bill received bipartisan support, including from high-ranking Republican state Reps. Roger Williams, Chuck Martin and Butch Parrish. House Minority Leader Stacey Abrams, D-Atlanta, is among the co-sponsors.
Last month, Atlanta developer Dan O’Leary and a Delaware casino company outlined a $1 billion proposal for a hotel and gambling complex along I-85 near Norcross that the partners say could generate thousands of jobs and $350 million in annual revenue for struggling HOPE as well as pre-kindergarten programs also funded by lottery revenue.
The AJC’s records request also found that O’Leary’s team isn’t the only interested investor group.
American Sales & Promotions, a Cumming-based company, wants to develop a horse track and video gambling complex for metro Atlanta, with the potential for two others. Horse race wagering would require a voter-approved constitutional amendment. Measures introduced in the General Assembly calling for a referendum have stalled.
Angelo Panzarella, executive vice president with American Sales & Promotions, said his group has scouted locations in Cherokee and Forsyth counties and has inquired about the former General Motors plant property in Doraville.
Panzarella said his firm’s plans could generate $1 billion annually for HOPE through 3,000 video terminals, plus millions more through proceeds from on- and off-track betting.
Panzarella said Harrah’s, which recently expanded its Cherokee, N.C., casino, proves Georgia can be a viable gambling state.
“Have you gone to North Carolina? All the people there are from where? Georgia,” he said.
Braswell said he and the lottery have received numerous unsolicited proposals and studies over the past several years from would-be developers and gambling terminal makers about the revenue potential. The reports the lottery commissioned last year from Spectrum, he said, were intended to provide an independent assessment.
The studies recommended a process for competitive bidding, as well as investigating applicants and creating licensing and regulatory programs.
“We felt for anybody to be able to make an informed decision, someone would have to provide some type of independent review so that the leadership could tell fact [from] fiction,” Braswell said.
Braswell said the studies are not directly related to any proposals. The lottery has not formally responded to either O’Leary, who is teaming with Delaware casino operator Dover Downs in the Gwinnett proposal, or American Sales & Promotions.
The Georgia Lottery is one of the most successful in the country, but the HOPE scholarships it funds can no longer keep up with the demand of rising enrollment and tuition costs. More than 256,000 students received some form of the HOPE last year, while fewer than 200,000 received it a decade ago.
In 2008, the lottery commissioned a public relations study to sell video gambling to lawmakers, the business community and the public. But then-Gov. Sonny Perdue’s opposition stopped any consideration.
Lawmakers last year reduced standard HOPE payouts to students and made other changes to prevent the program from running out of money. More cuts are projected.
David Garrett, the founding chairman of the lottery board, heads a pro-video gambling group called Hope 20/20 Coalition. He said the lottery board was created under then-Gov. Zell Miller to be independent of politics and to find the most revenue to support education programs. It has become more tightly controlled by Perdue and now Deal, Garrett said.
Garrett’s group is backed in part by Georgia-based lottery game and video terminal maker Cadillac Jack. Garrett has floated an idea for thousands of terminals in truck stops, convenience stores and bars statewide. He said his group also supports resort gambling but is not affiliated with any proposal.
“What makes me very concerned, I don’t know what point it’ll happen but HOPE might become irrelevant,” Garrett said. That could lead Georgia students to go out of state to college and keep their talents out of the state’s workforce.
Donna Scullin, a Gwinnett County mother of two HOPE scholars who attend Georgia State University, said she doesn’t have qualms about gambling, but she fears that lawmakers could be tempted to direct the proceeds from a gambling complex to other programs.
“I love Las Vegas. I say, ‘Hey you want to build a gambling complex. Go for it,’ ” she said. “But will the money be used for what they say it’ll be used?”
Meanwhile, the lottery board is exploring other revenue opportunities, including online lottery ticket sales, Braswell said. Younger players, he said, are accustomed to smart phones and Internet commerce, and the lottery wants to reach as many potential players as possible. “We haven’t gotten very far down the pipeline on this,” he said.
Charles Bullock, a political science professor at the University of Georgia, said the issues of video gambling and horse racing won’t go away any time soon as long as funding for HOPE remains challenged.
The lottery itself was bandied about for years before voters approve it, he said.
“There once was major opposition to it,” Bullock said. “Now people see [HOPE] as a God-given right.”
WHAT IS VIDEO GAMBLING?
Currently, Georgia Lottery games consist of televised drawings, scratch tickets and KENO! virtual drawings in bars and convenience stores.
If video gambling was added it would enable the use of video lottery terminals, which look and play like video slot machines but are controlled and regulated by the lottery. Instead of awarding cash, the terminals would print a ticket used to redeem winnings.
The lottery could license such devices at convenience stores and other locations where tickets are sold now, or at a complex like the one proposed in Gwinnett.
AJC reporter J. Scott Trubey traveled to Delaware to check out a video gambling center similar to a complex proposed in Gwinnett County.
Staff writer Laura Diamond contributed to this article.