Friday, May 07, 1999
State might own casinos
Patton says profits would stay with Ky.
BY AL CROSS
The Courier-Journal
FRANKFORT, Ky. — If Kentucky gets casinos as Gov. Paul Patton envisions, the state would pick sites and hire companies to furnish and operate the casinos for five to 10 years but the state would keep the profits.
The casinos would be smaller than those in resort hotels in Las Vegas or Atlantic City, designed more to boost convention business than act as draws for family vacations.
Those were some of the many points Mr. Patton made about casino gambling Thursday in a 90-minute interview with the Courier-Journal, his longest discourse on the subject that he put on the state's public agenda last week without endorsing it outright. He also said:
• Though he has suggested 12 to 14 casinos scattered around the state, he does not think the state should develop that many right away. He said the number should be a permanent limit, included in a constitutional amendment to permit casinos that would have to be approved by the legislature and then be put before voters in fall 2000.
• Casinos would draw customers from horse racing but not many from the state lottery, because the lottery is a solitary, casual form of gam bling. But his plan to recycle some casino revenue back into racing would more than make up for the tracks' lost business, and the lottery would still finance a college-scholarship program created by legislators last year.
• He has not discussed the issue with casino interests, but he has with people in racing and with Vice President Al Gore, who is campaigning against urban sprawl. Mr. Patton would attack sprawl by using casino revenues to preserve farmland and environmentally sensitive areas and redevelop cities within their current boundaries. The former coal operator said his interest in preservation was spurred by the recent public outcry against strip-mining Black Mountain, the state's highest peak.
• He raised the casino issue because it was already going to be debated in the legislative session that starts in January, and it needs more discussion and study than any other topic facing lawmakers, he said.
Mr. Patton said he has no detailed plan for casinos, and acknowledged there are several unknowns. He said studies will have to determine:
• The amount of money that Kentuckians are leaving at floating casinos in other states along the Ohio River, mainly in southern Indiana.
• The revenue that Kentucky could expect from casinos and the amount of land that could be preserved with it.
• “The magnitude of the social ills that we're already experiencing (from gambling) and how they might be exacerbated” by casinos. “In my opinion, we're getting just about all of the ills we could possibly get from gaming.”
• Possible relationships among the state, casino operators and developers.
Other states license and regulate casinos, taking a prescribed share of their income, much as Kentucky does with racetracks. But in Mr. Patton's sketchy plan, the state would be the direct beneficiary of gambling, much as it is with the lottery.
He said a state board, perhaps the lottery board or a new agency that would oversee all gambling in the state, would pick a site for a casino, seek percentage or fixed-fee bids from gaming operators and award a contract for five to 10 years, much as the lottery does with its contractor for online games.
“The state's role would be to administer the contract,” Mr. Patton said. “I can't imagine the state having anything to do with the management of a facility, because we would also be regulating it.”
“I want to keep all of the real value in the state's hands, so that people then would run these things just based on return on risk, not as a result of having a monopoly the state granted them,” he said. “I want the state to get all the leverage, all the money, that the monopoly is worth.”
Mr. Patton acknowledged that his casino-revenue estimate of $200 million to $300 million a year is “a very loose number ... but I don't think I'm going to be that far off.”
Mr. Patton said he does not envision Kentucky's casinos being major vacation destinations like those in Nevada or Atlantic City, but as enticements for conventions.
“It's something extra for people to do at conventions,” he said. He declined to say whether he has specific locations in mind.
Mr. Patton has said his main impetus for raising the issue is the money that Kentuckians are leaving on the Ohio River casino boats and the threat that the boats pose to the state's horse racing and breeding industry. He wants to dedicate one-fourth of casino revenue to racing, divided equally between the tracks and their purses for horse owners.
The tracks are wary of Mr. Patton's plan. For years they have sought video lottery terminals, a form of electronic slot machine, to give horse players some casino-type action. Mr. Patton said he is willing to consider that idea, but it faces some obstacles.
He said that if the tracks get video lottery, other businesses will want it, too, and the legislature would eventually give in unless a constitutional amendment limited video lottery to the tracks. But many legislators think such a measure would be unlikely to pass the legislature or the voters. Mr. Patton said video lottery could be started without changing the constitution, but should probably be decided by voters.
The tracks' plan and his idea “deserve equal consideration,” Mr. Patton said, but he voiced concern that if tracks get video lottery, racegoers would “get so enamored by it they end up forgetting about the races.”
Mr. Patton said he expects “other variations” of his plan and the tracks' to evolve “by the time we get this debate fully developed.”
While Mr. Patton said he raised the issue mainly because of riverboats' threat to the horse industry, he said he is also motivated by a desire to discourage urban sprawl and preserve “ecologically sensitive areas.” He wants to devote three-fourths of casino revenue to buying land and development rights and to urban renewal.
Mr. Patton said his discussions with Mr. Gore, whom he is supporting for president, “might have been a contributing factor” to his plan, but the Black Mountain controversy “has as much to do with my bringing this subject up as anything else, because I see the need for that.”
He said citizens' calls to protect the Harlan County peak “have been an element of this overall evolution toward a realization we really need to make a strong commitment.”
Mr. Patton has said the constitutional amendment also should make casinos subject to approval by voters in “each city affected,” but he said there might be reasons to expand that to include larger areas, perhaps the entire county in some cases. He also said he was willing to consider giving local governments a share of casino revenue.
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