Risky Bet

In 2002, Arizona voters rejected slot-machine gambling at dog and
horse tracks by a 4-to-1 margin. But racing-industry honchos—true
experts at gauging the odds—now see opportunity in repackaging
that old idea as a cash cow for strained state coffers.

Nor are they content this time to gamble on sentiments of the
citizenry, but instead are dispatching nearly a dozen high-end
lobbyists directly to the Legislature.

In particular, they’re hustling a bill sponsored by House Majority
Whip Andy Tobin which would allow slots at up to 10 tracks statewide.
Attempts to contact Tobin by press time were unsuccessful. But the
Yavapai County Republican told the Arizona Daily Star that he
had little choice. “We’re billions of dollars in the hole,” he said.
“There are very few options.”

Others consider this the worst of all options—one that not
only encourages more gambling in a desperate economy, but also props up
the abusive greyhound-racing business. Those critics include retired
federal prosecutor Susan Via, who heads Tucson Dog Protection. Last
year, her group spearheaded a successful ballot proposition in South
Tucson that mandated improved conditions for the dogs at Tucson
Greyhound Park.

According to Via, state law requires that tracks wishing to
simulcast races from elsewhere—a primary revenue source for the
Tucson track—must also conduct live racing. The law has a
corollary effect of perpetuating greyhound racing, regardless of
whether or not the tracks get expanded gambling.

“If they were going to put slot machines in other areas where dogs
were not required to suffer, I would probably not care much, one way or
the other,” she says. “But the slots would ensure the continuation of
the hideous conditions that the dogs live under. That’s particularly
true in the case of Tucson Greyhound Park, which we know is the bottom
of the barrel in the racing industry. And animal welfare is the first
to go if you’re terribly worried about your bottom line.”

Tucson Greyhound Park manager Tom Taylor didn’t return a phone call
seeking comment. But the bottom line at the old track has apparently
been sinking for some time. Over the past half-dozen years, annual
attendance has slid by more than 10,000, and cash bets have fallen by
millions.

Still, the park does get a sweetheart deal, courtesy of the citizens
of Arizona. Along with other tracks, it has received an almost-free tax
ride since 1994, as a hedge against competition from Indian gaming.
Under this law, tracks can make special deductions for capital
improvements and enjoy a “hardship tax credit,” which often allows them
to avoid paying any taxes at all.

But even with that advantage, tracks are still yearning for a cut of
the tribal casino market. However, some suggest that expanding
off-reservation gambling could actually cost the state money. They
point back to 2002, when voters approved a compact with the tribes to
allow Indian casino gaming.

Within that compact is a so-called “poison pill,” which stipulates
restrictions on the number of casinos or the variety of games tribes
can offer—but only if off-reservation gaming is restricted.
Turning the tracks into so-called “racinos” could violate the deal and
invoke this poison pill—meaning that tribes could pursue
full-blown, Las Vegas-style casinos. In addition, they could abandon a
revenue-sharing agreement that has contributed $436 million to the
state since 2003.

“If Arizona expands gaming outside of the reservations—outside
the scope of our agreement—then our revenue sharing goes down to
three-quarters of 1 percent,” says Sheila Morago, executive director of
the Arizona Indian Gaming Association. “Three-quarters of 1 percent is
not a whole lot of money.”

Under the current agreement, tribes share 1 percent of the first $25
million in net wins every year; 3 percent of the next $50 million; 6
percent of the next $25 million; and 8 percent of anything more than
$100 million.

Morago also says that voters sent a clear message back in 2002.
“Asked to make a choice of what kind of gaming they wanted in the
state, they chose to have it very limited. They limited it to the
Indian reservations, (and) limited the amount of machines that would be
allowed and the number of operations. They also included a very
rigorous regulatory structure.”

She says the tracks are now trying to overturn the voters’ will.
“But given that history, we think that this is something the citizens
of Arizona would not want to see.”

While proponents argue that racetrack slots could pump millions into
the state treasury—Tobin has suggested that the state could get
$113 million in the first year, at a tax rate of 45.5 percent of net
profits—Morago questions that claim. “The numbers they’ve been
throwing around have been different, depending upon what story you
read,” she says, “ranging everywhere from $250 million a year to $500
and $600 million. It’s all over the map.

“We don’t think they’re going to be able to make the money they say
they are, just based on the market—and we know what the market
is. It’s not like there are people sitting at home just waiting for a
racino to open.”

There’s certainly money in being a racetrack lobbyist. The Arizona
Secretary of State’s office lists no fewer than 11 lobbyists working
the Legislature on this measure. The tracks also have Phoenix PR
kingpin Jason Rose spinning the fight for them. Still, for all that
public-relations firepower, the Tucson Weekly was unable to
track anyone down for a comment.

Numerous calls to heavyweight racing lobbyist John Mangum were not
returned. Nor were a half-dozen calls to Arizona Racetrack Alliance
spokesman Jay Heiler.

This could be part of a strategy to keep the issue inside the
Legislature as much as possible—and as far away from the voting
citizenry as the law allows. Susan Via calls that an insult. “The
people spoke very recently on this issue, and they said no. Yet (the
tracks) are thumbing their noses at a majority of Arizonans and saying,
‘Well, we’re going to use our lobbying dollars and go to the
legislators themselves and bypass the will of the people.’

“I would hope that the legislators would not be so cavalier toward
their constituents,” she says. “And if they’re looking for revenue,
perhaps they should reconsider the tax breaks they give the racing
industry.”

This article appears in Sep 10-16, 2009.