Frank Fahrenkopf, Member of the First Republic Bank Board of Advisors. USAGE: As per 2009 contract between Jamey Stillings Photography, Inc. and First Republic Bank. Photo ©2009 Jamey Stillings, All Rights Reserved.
From my days growing up in Reno to seeing the specter that is Macau today, I can safely say I have had a front row seat to the growth and maturity of the casino gaming business. I’ve worked with most of the giants of the industry and continue to call most of them friends.
So, it has been especially gratifying that for the last 18 years I have had the privilege to help safeguard and advocate for commercial casinos in Washington and across the country, and it has been an honor to represent the interests of the men and women of this industry.
As you may know, at the end of June I am handing the reins of the American Gaming Association to a new and able leader. As this will be my last column for Global Gaming Business as president and CEO of the AGA, I would like to reflect on where we started, remind all of us of how far we’ve come and take a brief look at the future.
Eighteen years ago, gaming had just experienced a dramatic period of expansion that raised the industry’s profile and made it a target for governments always hungry for a new tax source. In Washington, there were calls to create an aggressive federal tax on gaming. Thus was born the AGA, and today there is still no federal gaming tax.
To be sure, the industry still pays more than its fair share in state and local taxes. In 2010, the most recent data available, the industry paid nearly $16 billion in total taxes, an effective tax rate of 32 percent, significantly higher than the economy-wide total tax burden of 27 percent for other industries.
As the ’90s continued, industry leaders recognized expansion had dawned an era that would spawn new and continued challenges at both the federal and state levels, and now casino gaming had the attention of the national media and a few moralists in Congress.
Upon opening the doors of the AGA, we began addressing these new challenges by adopting a two-part strategy: first, to introduce the industry to Congress, the administration and the public, and second, to let no negative claim about the industry go unanswered. We took our message to Capitol Hill, and meeting by meeting and issue by issue we put the myths to rest and introduced these decision-makers to the industry.
If our strategy were to work, we needed to provide balance to the negative messages being delivered by the opposition. We leveraged studies, white papers and expert testimony to bring fact-based information to the media, elected officials and regulators. We welcomed the scrutiny of the National Gambling Impact Study Commission, we created and gave autonomy to the National Center for Responsible Gaming, and we used the truth to dispute the dozens of faulty statistics, half-truths and outright lies promulgated by our opponents. These actions were important to the acceptance of the industry, but the deal-closer was the industry itself.
Through the years, we’ve expanded on our original mission to develop new programs that continue to add value for our members. We created the Global Gaming Expo family of events that brings together the industry every year in Las Vegas (G2E) and Macau (G2E Asia) and showcases the innovation and vibrancy of casino gaming. We launched our annual “All In” campaign to demonstrate the industry’s commitment to philanthropy, diversity, responsible gaming and the environment. And our Global Gaming Women initiative promotes the advancement of women in our industry.
As a result of the AGA’s efforts, the gaming industry has realized significant public acceptance gains, without which it is doubtful the industry would be the success it is today. In the last two decades, the industry has grown from operating casinos only in Nevada, Atlantic City and riverboat casinos in a handful of states to operating 513 casinos in 23 states.
During that period, large portions of the industry have also undergone a dramatic shift from offering almost strictly gaming to an increased emphasis on a wide range of entertainment and recreational options beyond the casino floor. That shift has meant that one-third of industry revenue is now generated via the food and beverage, hotel and other lines of business within commercial casino properties.
The industry continues to adapt to a changing world, and each year at G2E, we see the marvels of the next generation of games and hospitality and management tools. There is no doubt the industry is prepared to compete with other types of entertainment, but I should give a word of caution: The industry can never forget that operating a casino is a privilege, not a right; and our existence, more than perhaps any other industry, is in the hands of elected officials and regulators.
It is for that reason we embrace strong regulation and enforcement. Our voluntary adoption of an industry Code of Conduct, the creation of the NCRG and millions of dollars contributed in support of responsible gaming are tangible proof of our commitment to being a good, responsible corporate citizen. Because of these actions and many others, we have earned the privilege to operate, but the new wave of technology, most obviously internet gaming, will make maintaining that status a far larger challenge than any we’ve faced since the early part of the last century.
In closing, I want to thank the leaders who have built this great industry and supported the efforts of the AGA. I want to also publicly thank my colleagues here at the AGA. No one could ask to work with better, more talented and committed men and women. As I take on my next challenge, I will be fortunate, indeed, to have such support.
