Clark County mega-casino takes major step forward; all pain, no gain for Oregon

Kari Chisholm FacebookTwitterWebsite

"The Portland area will be getting a casino in the next few years and we believe it is better on our side of the river, paying taxes, creating jobs and providing revenue for our public schools." - Measure 75 proponents

Last week, the Bureau of Indian Affairs announced that it had approved the construction of a 134,150 sq. ft. casino in Clark County by the Cowlitz tribe.

During the fight over Oregon's Measure 75, proponents had argued that Oregon voters should approve the construction of a tax-paying, state-regulated, privately-owned casino in Multnomah County - in part because of the looming threat of a casino just 15 miles north of Portland, right off I-5. Proponents argued that a casino in the Portland metro area was inevitable; and the only question was whether that casino would pay taxes to support Oregon schools and local governments.

Today, that prediction seems prescient. A mega-casino, funded in part by the powerful and wealthy Mohegan Tribe of Connecticut (the owners of America's second-largest casino, the Mohegan Sun), is on its way to the Portland area. And this casino won't pay a dime in taxes to Oregon - while generating all the same social ills and economic impacts that a tax-paying casino in Wood Village would produce. Heck, it won't even pay taxes to La Center, Washington, the local community most impacted.

La Center Councilwoman Linda Tracy said she was “terribly disappointed” but not surprised by the BIA’s decision. ... “And everything we offer in the state will be cheaper there and you’ll be able to get more of it there, and there won’t be any tax benefit because it won’t pay taxes,” she said. The tribe offered a $3 million a year agreement with the city to cover the impact of the new casino, but Tracy said it was rejected as “ridiculous” and not realistic. The city has no agreement with the tribe as of now, she said.

According to the Columbian, there are at least a few possible legal challenges that loom. There may be a challenge to the BIA decision to give the Cowlitz approval to build on non-reservation land - since the tribe is only ten years old, and federal law seems to only authorize "land in trust" arrangements for pre-1934 tribes. There may also be a challenge under the Indian Gaming Regulatory Act - since the median income of tribal members is already 18th of 495 tribes nationwide, and just shy of the state median income. (IGRA says that a major purpose of tribal casinos is economic opportunity for impoverished communities.)

I'm no lawyer, but those challenges seem far-fetched. With luck, the legal process will delay things just long enough for the proponents of the Wood Village casino to regroup, redesign their proposal, and resubmit it to Oregon voters in 2012. From their post-election statement:

The Portland area will be getting a casino in the next few years and we believe it is better on our side of the river, paying taxes, creating jobs and providing revenue for our public schools. We will make the necessary changes in our measures as we prepare for 2012 and we believe Oregonians will rally around the need for job creation and revenue for schools.

As Oregonians are more informed about plans for a mega-casino just across the river in Washington that will take jobs and revenue out of the state, Oregonians will want the opportunity to vote on a tax-paying casino here in Oregon in 2012.

Thoughts? There were plenty of Measure 75 critics here at BlueOregon this fall. With the news of the Clark County mega-casino, are you reconsidering your position?

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    Full disclosure: I was part of the Yes on 75 campaign team. I speak only for myself.

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    Except for any tax revenue, and maybe some support and contracted jobs that may have been created by an Oregon casino, a casino just across the river will be just as detrimental to Oregon as one built here. Just as the one here in Oregon, the Washington casino will be funded by out-of-state interests which will extract wealth from our region and send it out of state. It is not in Oregon's interests to have an out-of-state funded casino near the Portland-Vancouver metro area.

    Our rural casinos are good for Oregon because they move money from the metro area to under-funded and depressed rural areas. This movement of money facilitates the circulation of money inside the state, builds jobs in areas where there otherwise would be none, and increases tax revenues - all results we should encourage. Neither the Wood Village nor the Washington casinos achieve the goal of attracting money to the region and having that money circulate in region before it leave. The net economic impact on the region is to make us poorer.

    Because of the detremental impact on Oregon, we should take the lead on, or at least strongly support legal challenges to the Washington casino.

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      Interesting point.

      But that's not really the question. It is now a near certainty that there will be a casino in the Portland area.

      So, the question is, how should Oregonians react? Accept the flow of jobs and money north? Or reconsider the Wood Village project and capture the jobs and tax revenues for ourselves?

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        The answer is that it should be in Oregon, of course. The task in Oregon will be to craft an agreement that maximizes the amount of money that remains in the state which can be done by finding in-state investors to replace the out-of-state investors, and finding an agreement structure that replaces lost revenue to rural counties and achieves buy-in from other tribal casinos. Given the threat from a Washington casino, building this agreement structure shouldn't be too difficult.

        We should also employ legal action to delay the Washington casino long enough for the Oregon casino deal to be in-place.

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          In-state investors. Sounds good to me. Who do you know? Just a quarter billion required, for starters.

          "Lost revenue to rural counties." Not sure what you mean here. Tribal casinos employ people, but otherwise don't pay taxes to rural counties. Measure 75 would have made direct payments to all 36 counties and schools in every school district in the state.

          "Buy-in from other tribal casinos." Not sure that's realistic. After all, this is a competitive scenario. The tribal casinos already compete with each other, so getting them to agree to allow a non-tribal casino seems farfetched.

          "We should also employ legal action..." Who is the "we" you refer to?

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            I know you have greater rigor of thought and a more expansive view than these comments suggest.

            A Washington casino is clearly a threat to our economy and a threat to tribal casino revenues. Seems to me that this threat should be able to bring Oregonians to the bargaining table and is a great enough threat that our new Governor should want to take action. Looks to me like a phone call to Dudley asking him to lead a non-government, bipartisan group to forge an agreement among interested constituencies, identify in-state funding sources, formulate and implement a legal strategy to block the Washington casino, and prepare and implement a plan to deal with constitutional and legal hurdles to the deal. Heck, I'm willing to serve.

            "Lost revenue to rural counties." - The counties that through which transportation corridors link the metro area to tribal casinos have a direct economic interest in a metro area casino - they should have a place at the table.

            "Buy-in from other tribal casinos." - Faced with a loss of revenue, tribes should be willing to come to the table and participate - it would be in their self interest.

            "We should also employ legal action..." Who is the "we" you refer to? - Seems our Attorney General has been willing to stretch the authority - this is a good starting point. I'm sure a little bit of diligent thought would yield a few other ideas.

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    NIMBYISM didn't quite work then did it?

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    With luck, the legal process will delay things just long enough for the proponents of the Wood Village casino to regroup, redesign their proposal, and resubmit it to Oregon voters in 2012.

    By 2012, the backers of the casino may be in jail.

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      Hmmm. I hadn't seen that story.

      Score one for the initiative process, where the people decide instead of self-motivated politicians.

      Also, score one for Oregon. Good thing this ain't New York.

      Based on my read of that story, it looks like it's the NY state senators that are in trouble - more so than the casino backers.

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        While I haven't read the 308-page report and it does sound like the NY state officials are the main target, I would not excuse the casino backers' participation in graft. From the article: The 308-page report identifies principals of Clairvest and Navegante who were involved in questionable efforts to influence key senators.

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    Kari - The Casino deal is far from guaranteed in Washington State.

    With luck, the proponents of the Wood Village Casino will see the 68-32 defeat for what it is: An outright rejection of a self-serving plan to carve out a special niche in the Oregon Constitution for a couple of private investors who want to turn Wood Village into their own private ATM machine.

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      We'll see how the Clark County casino plays out, but in my experience, and I've been studying the IGRA closely since 1996, it looks like it's a done deal - at least, legally speaking.

      There do appear to be some questions about their financing, but if you've got approval to build a casino, financing questions are usually easily resolved.

      Look, I support tribal casinos - especially when used to support impoverished and remote communities without other economic opportunities.

      But that's not what's happening in Clark County. Oregon's going to get all the negative impacts without any of the positive impacts.

      As for Wood Village: Sure, you can call it a "private ATM machine", but that's the goal of any business - to produce revenue for its owners. As for "carving out a niche in the Oregon Constitution", they're not the ones who put a casino ban in the Constitution. That's already there. It's up to the voters to decide. If the voters vote no - and they have done so once now, in the absence of the full facts - then that's that.

      I happen to think that a taxpaying casino can represent good value for Oregon, especially in light of a nontaxpaying casino in the same region.

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        Oregon voters didn't have the "full facts" when they defeated the Casino Measure?

        That's an interesting argument.

        My assumption is that the proponents of this casino proposal hired the best talent they could (Mark Wiener, Lisa Grove, Kari, et al) and made their best possible case to Oregon voters.

        The full facts as I understand them are these:

        1) There are many steps and obstacles to siting the Clark County Casino.

        2) Your clients have a clear interest in having people overstate the likelihood of a new casino being sited. They have demonstrated a clear pattern of similar misrepresentations. For example, after their measure failed, they promoted the (bogus) idea that no constitutional amendment was needed to site an off-reservation casino.

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          The YES side had plenty of great talent. But for the record, Lisa Grove was on the NO side. I don't believe Mark Wiener worked for either side.

          "Best possible case." No, the proponents pulled the plug long before it was over. The multi-million dollar TV and mail campaign never materialized.

          1. Yes. But the biggest one has now been hurdled successfully.

          2. OK, fine. (Not my clients anymore, the race is over.) As for the constitutional argument, I think that reasonable people could argue either way. It is certainly true that without the constitutional amendment, the Multnomah County casino would have been tied up in court for years. (See "never materialized" above.)

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            I think their constitutional argument was a non-starter. The Oregon constitution unambiguously provides that "The Legislative Assembly has no power to authorize, and shall prohibit, casinos from operation in the State of Oregon." (Art. XV, Sec. 4(12), my emphasis). The legislature is constitutionally required to "prohibit" casinos in this state, even if the voters "authorize" one. I don't think you get around that without actually amending the constitution.

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    This sounds like the "everyone else is doing it" argument. Find a casino-centered economy that is thriving.

    "As for Wood Village: Sure, you can call it a "private ATM machine", but that's the goal of any business - to produce revenue for its owners." Haha. But when a business is set up to sell nothing for something in order to do so, it's a different enterprise compared to one that's set up to produce something to sell.

    There may be reasons to have a casino around, but claiming that it will be an "economic driver" ranks with trickle-down economics as a surprisingly persistent argument, given the lack of evidence to support it.

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      So are you opposed to the Blazers, movie theaters, concert halls, music venues, etc as well? They sell nothing for something, don't they?

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      "sell nothing for something"

      As Michael notes, they're selling entertainment. It may not be entertainment that you enjoy, but it's entertainment. (I can't stand baseball or ballet, so I'd score those as "nothing for something", but I'm not going to oppose your right to enjoy that entertainment.)

      Are there people who can't handle this particular form of entertainment - that get addicted to it? Sure. Same as beer.

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        Do you really mean to equate sports and the arts with gambling?

        Yes, they are all forms of entertainment, but their long-term effects are much different.

        Both sports and the arts bring enjoyment in the moment, but they also bring enjoyment for years to come, and inspire people to change their lives.

        Tell me, how many success stories have you heard from people inspired by a famous gambler?

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          I agree, of course, that there is more redeeming long-term social value in sports and arts. No brainer.

          But that's hardly the point.

          Gambling is a form of entertainment that many people choose to enjoy.

          Are all forms of gambling equal? No. Compared to video poker - found in taverns across Oregon - destination resort casinos provide more value to our economy. Given a choice (which the video poker people insist it is) I'd choose a taxpaying casino every time.

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            "Gambling is a form of entertainment that many people choose to enjoy."

            So is getting falling-down drunk. Does that mean that we should allow no-limit bars where people can get as drunk as they want to?

            I do agree with you that video poker is problematic. But tell me, how would a casino reduce video poker activity?

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              MH -- I don't believe that a casino would reduce video poker activity, except perhaps in a 1 or 2 mile radius.

              The video poker guys think otherwise, though, claiming that video poker receipts would be hurt as far away as Keizer, Oregon. I think that's silly, but if it does, I'm OK with it.

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            Ah yes, it's not gambling, it's "gaming." Just entertainment.

            A private casino such as what was proposed is simply a wealth extraction device. The claims of job creation are similar to what happens when colonists hire locals to extract natural resources, then ship the profits out.

            I hope we're not chumps enough to buy the claims that this enterprise would be for schools or for jobs. It would be designed for the most efficient wealth extraction possible.

            Again, there are casinos of this nature elsewhere. Show us a place where a local economy has improved because of them. What is different about this one as compared to the ones along the Mississippi River, where they form the basis of an economy of desperation during the best of times?

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              "A private casino such as what was proposed is simply a wealth extraction device. The claims of job creation are similar to what happens when colonists hire locals to extract natural resources, then ship the profits out."

              How is that different from an amusement park, or any tourist trap?

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              FWIW, I refuse to go along with the silly "gaming" trope. It's gambling.

              "Gaming" is something one does with a Nintendo, or perhaps even a Monopoly board.

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              It appears nobody is able to answer Sue's question and show where a local economy has improved because of gambling.

              I've been to Las Vegas, and I know I don't want Portland to turn in to Las Vegas. It has a very high population turnover, and more gated developments (I refuse to call them "communities") than anywhere I've seen.

              But then, when the economy is based on picking people's pockets, it's understandable that those that have are afraid of those who don't.

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    What is the status of the casino in Cascade Locks that would be beneficial to an impoverished Native American community as well as a high unemployment area and be just as close as La Center? Oh and it would pay Oregon taxes.

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    My position hasn't changed. If we're going to have a casino in the Portland area, make it state-owned and operated, with 100% of gambling proceeds going to a public purpose, on top of any taxes drawn from the business in which the casino is sited. Personally, I'd prefer 90% of the casino revenue were put into a permanent endowment for state universities, with maybe 10% set aside to deal with casino-related problems like gambling addiction.

    And put the casino someplace useful. Maybe in a hotel next to the Oregon Convention Center. Let the state run the casino and a private investor build the long-sought convention center headquarters hotel above it. After all, the only hotel in the city with a casino in it should be able to command a premium price for rooms.

    But no, we don't carve out a special exception in the state constitution to give just ONE private operator a gambling monopoly. That doesn't change, no matter what happens in Clark County.

    As for the owners of the old greyhound track, they can still built a destination resort with a hotel, nightclub, restaurants, 3D movie theater, concert hall, convention facilities, bowling center, water park, all of it ... but without a casino. Just like every other privately-owned entertainment destination in this state has done for decades.

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      I don't think the question is "what should be done", but rather "is there a compelling reason to stop someone from doing this."

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      I think the idea of a state-owned casino is very interesting.

      That said, I'm not sure the voters if this state have the appetite for a quarter billion (or more) of construction debt, no matter how strong the financial projections look.

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        What I was thinking (if we ever get around to seriously talking about state-run casinos) is that a private owner would build the actual hotel, restaurant, shops, ballrooms and so forth, with space for a casino inside. The state (probably the state lottery) would lease the casino space at a fairly low rate. The state would provide the slot machines, blackjack tables, and so forth, as well as the staff to run the games. The hotel and related businesses would benefit from people coming to gamble, but 100% of gambling revenues would go to the state rather than a private operator. Plus, the state, county, and city would benefit from taxes on the hotel and other businesses therein.

        So I don't think there would be a huge amount of public debt involved in getting it off the ground. It might be a million-dollar setup rather than a quarter-billion when it came to public investment.

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    Washington will make it happen and Oregonians will drive there to work and play. The dollars will go to Olympia instead of Salem. But many folks will congratulate themselves for stopping a bad, bad gambling hall. Shades of professor Harold Hill.

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      Sadly, other than personal income taxes for the employees, the dollars won't even go to Olympia.

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        Kari, Washington does not have a personal income tax. However the sales tax will go to Olympia as will the B&O taxes. The construction activity alone will send millions to Olympia.

        Oregon will get nothing by increased bills for road mantenance.

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          The tribal casino won't pay sales taxes or B&O tax.

          So, without personal income tax (duh, thanks!) that casino offers no revenue to Washington at all...

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    The legal challenge is much stronger than you would think.

    Carcieri indicates that to take land into trust, the tribe in question had to be "recognized" in 1934. Recognition in 2000 doesn't quite cut it.

    The nonsensical verbal gymnastics Interior used to justify this was pure claptrap. It was done this way to set up the test case.

    There are going to be several legal challenges on the Carcieri front, the moronic and baseless restored lands decision by the BIA, and the environmental impact study that was an out and out joke.

    And, as far as that goes, here in Washington, we don't have a state income tax. So, left up to the governor, the tribe won't have to pay one dime to the state in taxes, except what they collect from non-tribal members after they open their big box stores in addition to the casino.

    Sub-minimum wage pay (Washington's minimum wage is $8.67; the tribe will only have to pay federal minimum wage at $7.25 or $7.50) no labor and industries, no unemployment, no business and occupation tax, no property tax, massive taxpayer-paid infrastructure development, complete violation of Washington's Growth Management Act, to name just a few of the problems confronting us... not to mention the sucking sound of tens of millions vacuumed out of the local economy, destroying La Center's tax base and the myriad of other small businesses who depend on disposable income that they will now see disappear to the Mohegan in Connecticut and the Paskenta in California.

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    This is one of the most fascinating threads I've read on BlueOregon in a long time.

    It is basically nonideological. Instead, it's an example of the kind of debates we too often have today, where one side (in this case Kari) tries to argue the practical realities and lots of other people (you know who you are) want to argue for alternatives that either don't exist or are unlikely in the extreme.

    Which is not intended to diminish some of the legitimate legal and political considerations being raised, but I still find the overall debate typical of other issues where the practical is measured against the theoretical and, being found wanting, loses.

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      I've been asking for examples of where establishments of this nature have done what this proposal promised. So far, unless I've missed it, no such thing has been provided. The proponents are on the side of the theoretical here, arguing what amounts to trickle down economics in its purest, and most imaginary, form.

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        Sue -- I think there are lots of casinos around out there that are providing tax revenues directly to state and local governments.

        Are you claiming that no one will visit the casino - and thus the estimates are illusory? Or that the casino operators will evade the tax that they're creating?

        I'm confused. What are suggesting is going to happen to the tax revenues that's contrary to what they're saying?

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          Sue asked "Again, there are casinos of this nature elsewhere. Show us a place where a local economy has improved because of them."

          So far, nobody has done so.

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            While you may not like Las Vega, or Atlantic City for that matter, and no, even if a casino in the heart of downtown Portland would not make POrtland into Vegas... Vegas exists as a major metropolitan area (and one that votes Democratic I might add) because of gambling.

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            Well, I think there are two separate elements here:

            1. Does it improve the economy, create jobs, etc.

            2. Does it provide necessary tax revenue for critical state services and schools?

            I think #2 is a no-brainer. Of course it will. Assuming that it has any revenues at all (not profits, remember - M75 would tax revenues) then it would have provided massive sums to local schools and county governments.

            As for #1, that's tougher to measure. Clearly, the casino will create jobs -- after all, someone has to deal the cards, sweep the floors, make the dinners, pour the drinks, run the cashier, etc.

            Will there be negative economic effects? Sure. There will also be lots of positive economic effects.

            Whether it's a net positive or a net negative depends on whose studies you read and believe.

            I'm not qualified to do economic analysis, but I trust the analyses that I've read. And even if the economic effect is a wash (and I think it'll be positive), I'd support it for the tax revenues.

            This state - and our schools - are in a critical situation with regard to revenues. We have do something to break the "death spiral". I think a private, taxpaying casino can be part (but only part) of the solution.

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              "I'm not qualified to do economic analysis, but I trust the analyses that I've read."


              And what were the estimated tax revenues from the casino? What percentage of the state budget would that be?

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    This all reminds me of the "what would your mommy say" concept. "If the neighbor's kid is gonna jump off the roof, should you do it too?"

    How about we legalize prostitution and put a bordello in Troutdale. There would undoubtedly be customers and a good revenue stream for the state. (As long as it's privately owned of course and doesn't generate the addition of a single vehicle to traffic in the Gorge).

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    Here's the thing: I'll bet most Clark County residents will approve of this. Maybe not those in the La Center/north county area, but most down in the Vancouver/Camas suburbs will. Over the years, they have been made the butt of everything in the metro area. The news only goes north to report on crime there, they are the butt of many jokes in the Portland area and many Portlanders think that most of the residents there are tax dodgers when they waste fuel to cross state lines and buy things tax free. I have a friend who lives in the Orchards area and drives to Portland all the time to buy things. He rarely seems to shop the many business around his own house.

    For the first time in a long while, Clark County seems to have the upper hand over the rest of the metro area and most of them could care less on how they piss off Oregonians. The way I think of it is that I almost feel we had this coming.

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