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A new philosophy?

When approaching a new and potentially profitable casino jurisdiction, it's time to scrap the "let them come to us" philosophy.

A new philosophy?

When I interviewed Harrah’s Gary Loveman last spring, I was surprised at how outspoken he was about the industry’s lack of success in legalizing gaming in multiple jurisdictions recently. Just in the past year, gaming has seen opportunities in Massachusetts, Ohio, New Hampshire and Maryland go by the wayside.

“Since 1992, we’ve had three states make it into gaming,” he told me. “That’s an extraordinary result when you think about what we’re talking about here. You need a perfect alignment of legislative leadership, gubernatorial leadership and statewide and local business leadership to make this work. Those things are very tough to find.”

Indeed, the industry has not achieved much success in this effort, and most disappointing of all, the success we have seen has come at the cost of a high tax rates and nonsensical regulations, making it difficult to make a reasonable profit in Florida, Pennsylvania or New York.

It all began in 1994 when the industry set its sights on Florida. Fresh from successes in Iowa, Illinois, Indiana and, the most unlikely of all, Mississippi, the Sunshine State seemed a natural domino to follow.

With Bally Manufacturing’s Arthur Goldberg leading the charge, the industry poured millions into the effort, envisioning massive casino resort complexes on the beaches of Miami, Jacksonville, Palm Beach and elsewhere.

But while the industry thought it was a natural, the conservative people of central and northern Florida had other ideas. The proposal, which would have permitted 20 casinos and riverboats across the state, was too broad and overreaching. The organizers of the effort poured millions of dollars into the campaign, yet paid little attention to the sentiment from those non-resort areas of the state. The referendum went down to an overwhelming defeat, joining at least four other efforts to legalize gaming in Florida.

After that loss, the industry has taken a hands-off approach to legalization, preferring to let local businessmen and legislators take the lead before it got involved.

This is what has led to the legislative and electoral defeats since then, as well as the high taxes and strange regulations imposed in Florida, Pennsylvania and New York.

Harrah’s has actually changed its philosophy since Loveman’s arrival. The company has been active in Massachusetts, where politics derailed an effort to OK three mega-casinos earlier this year. Harrah’s spent millions on a Rhode Island referendum last year in an effort to legalize an Indian casino it would have operated with the Narragansett tribe, but failed to come close again, undoubtedly because the stars described by Loveman failed to line up correctly.

Internationally, the game is completely different and even more complicated. Often gaming occurs in a quasi-legal atmosphere—like in Russia and Chile—and then is either completely legalized or booted.

China has put a vice on Macau’s gaming growth by making it more difficult to obtain visas to visit the jurisdiction (Why are visas even necessary to visit what is essentially just a different part of the same country?) and insisting on a freeze of casino expansion.

It’s the responsibility of a reputable gaming industry to communicate with legislators, businesses and public officials to establish a real rapport and understanding. The U.S. is well served at the federal level with the American Gaming Association, and most state associations are proactive in this regard.

Internationally, the industry is too often playing catch-up. After an initial period of great growth and expansion, the industry sometimes forgets that it must always communicate with the powers-that-be to make sure they understand the challenges and opportunities of gaming.

So when approaching a new and potentially profitable casino jurisdiction, it’s time to scrap the “let them come to us” philosophy. Gaming needs to identify the potential for the jurisdiction, outline a plan that will demonstrate the benefits to the community and highlight the industry’s socially responsible stand when it comes to problem gambling and other possible negative impacts on the community.

We need to demonstrate more clearly our corporate responsibility and commitment to making that particular jurisdiction a better place.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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