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Possible solution to big budget problem

As the mayor of Cave Creek, I empathize with what Gov. Jan Brewer and state legislators are facing with the state’s budget deficit. Taxes can be raised only so high and spending cut only so deep before Arizonans’ quality of life suffers.

Allowing the state’s horse- and dog-racing tracks to offer expanded gaming options such as slot machines — turning them into racinos — will help the state bridge budget gaps and create jobs.

Racinos are not an unproven option for state revenue. Many are working, responsibly, across the country.

Gross gaming revenues totaled $5.9 billion at racinos in 12 states where the facilities are legal and operating. Of that amount, taxes totaling $2.4 billion went back to states and local governments, according to the American Gaming Association’s (AGA) 2010 State of the States Survey of Casino Entertainment.

Racinos are able to potentially offer hundreds of millions of dollars annually to the state of Arizona because, compared with tribal casinos, they would give a significantly larger portion of their revenues to the state’s general fund in the form of gaming taxes.

According to the Arizona Department of Gaming, tribal casinos are required to share between 1 percent and 8 percent of their profits, which totaled approximately $90 million in fiscal year 2010. Twelve percent goes to cities and counties of the tribe’s choosing; the remaining amount goes to the Arizona Benefits Fund, which is earmarked for government services including public safety, help for problem gamblers and economic development.

Also, proposed legislation would limit racinos to places where gambling already exists in Arizona: horse- and greyhound-racing tracks.

Thousands of jobs would also be generated by the racinos. According to the AGA report, in 2009, Pennsylvania’s six racinos employed 5,799 people; West Virginia’s four racinos employed 4,688 people; Delaware’s three racinos employed 2,363 people. Estimates based on information from a 2008 study by New Orleans-based consulting firm The Innovation Group, combined with information from the AGA study, forecast the number of Arizona racino employees at between 4,000 and 5,000.

The 12 states where racinos are legal employed a total of 29,025 people in 2009.

Racinos would also rejuvenate the state’s horse-breeding industry and, coupled with an influx of horses attracted by better purses, would create demand for more production from the state’s agri-businesses.

There are 10 potential locations across the state for racinos. There are three currently operating horse tracks, Turf Paradise, Yavapai Downs and Rillito Park, plus a potential fourth location in Flagstaff. The other six locations include two greyhound tracks currently operating plus potential locations for four more.

Racinos are a legitimate potential revenue-generating solution for the state. Consider the math.

Racinos are willing to share a much larger percentage of their gross revenue with the state than is required of tribal casinos. The tribal monopoly has been partially effective for Arizona. But other facets of tribal gaming cannot be ignored. Money wagered in the state’s tribal casinos represents the largest wealth transfer in the history of Arizona. A Sept. 25, 2007, story in the business section of The Arizona Republic cited a report from the Department of Gaming estimating the gross take for the tribal casinos as nearly $2 billion for the 2007 fiscal year.

In other words, nearly $2 billion in annual revenue is passing, barely taxed, through the economy, denying revenue for the state and local governments. Legal racinos would introduce competition, which will mean increased revenue and resources for all Arizonans.

—Vince Francia is general manager of Turf Paradise and mayor of Cave Creek.

One comment

  1. This sounds like a low energy alternative to creative thinking. How about creating jobs where our fellow humans create useful things. No more dumbing down..enough!

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