MGM Resorts proposed the development of a casino in Atlanta, one of the largest cities in the country without easy access to Nevada-style gambling.
The city of Atlanta owns Underground Atlanta, but the biggest beneficiary of the casino would have been the Georgia Lottery and the company that has the longterm leasehold interest on the property. While the move had been anticipated for a while now, the Atlanta City Council confirmed what everyone had been thinking. They will be supporting a casino hotel complex that is being proposed for Underground Atlanta. Dan O'Leary is the man behind the proposal. He is planning a $500 million casino and hotel complex to help revive the struggling area.
“MGM Resorts is very interested in the business prospects of Atlanta,” MGM Resorts Executive Lorenzo Creighton wrote in a statement to USPoker. “Our Company holds high respect for the Georgia legislative process and we are closely monitoring developments.”
The concept is still in the preliminary stage. There are numerous barriers that may keep it that way.
The idea of a casino in Atlanta is well-received by Georgia gamblers. The closest live poker room to Atlanta is in Cherokee, N.C., a three hour drive from the proposed casino sites. Harrah’sCherokee also offers a full slate of table games, video poker and slots.
Many of the poker tables at Harrah’s Cherokee are digital. The closest live poker room is located in northern Florida, nearly five hours from Atlanta.
Georgia players are currently willing to travel
A study by MGM Resorts shows that an Atlanta casino could generate $250 million in taxes for the state’s HOPE Scholarship, the education trust funded by lottery proceeds. No tax rate has been published to demonstrate the math behind that number.
At 25 percent, an Atlanta casino would need to generate $1 billion a year in revenue to meet that number. That is double the gaming revenue Harrah’s Cherokee generates, where profit margins run upwards of 50 percent.
Metro Atlanta gamblers make up an estimated 50 percent of Harrah’s Cherokee customers. A second North Carolina casino under the Cherokee umbrella will open in Murphy later this summer to help cater to the Atlanta market.
Harrah’s New Orleans may be a better comparison than Cherokee. A $1 billion Atlanta casino would do about three times more in gaming revenue than Louisiana’s only land-based casino.
A 2011 study initiated by the Georgia Lottery Corp. estimated casino gambling in Georgia could be a $1 billion industry by 2014. That study was based on three casinos in the state. One would have been located in downtown Atlanta, another in the suburbs of Atlanta, and a third near the Atlantic Ocean.
Lottery cannibalization not a major concern
The Georgia Lottery sold nearly $4 billion worth of tickets in fiscal year 2014. That is about $400 for every Georgia resident. The HOPE Scholarship received about $945 million in funding from that revenue, which was 25.2 percent of sales.
While an Atlanta casino would draw players that currently travel to other states to gamble, as well as new players not inclined to travel for gaming purposes, some existing lottery revenue may be lost to the casino.
Maryland and Ohio lotteries reported single-digit losses after casinos opened in those states’ newly opened gaming markets. The casinos in these states launched gradually, potentially softening the blow to lottery revenue.
The amount of revenue an Atlanta casino is projected to generate would more than offset this amount, even if it was substantially higher than the losses experienced by the lotteries in Ohio and Maryland.
Road to legal casinos in Georgia
The path to legalizing casinos in Georgia is a long one. It would have to start in the General Assembly. It would take a constitutional amendment that requires a two-thirds majority in both the house and senate.
A qualified majority in both houses to legalize a controversial gambling amendment may not be an easy task. While the governor has no vote or veto power in the process, Georgia Governor Nathan Deal has repeatedly stated that casino gambling will not happen on his watch.
Gov. Deal has a loyal following in the state that could be used to his advantage to help keep casinos out of Georgia.
Should the constitutional amendment pass both chambers of the General Assembly, it would go on the next statewide ballot. This type of referendum can only be held in even numbered years. No special election may be used for a constitutional amendment.
The statewide referendum for a constitutional amendment would only require a simple majority to pass. The earliest this can happen is November 2016, assuming the General Assembly passed a casino bill in the next legislative session.
After that point, local jurisdictions would be required to approve casinos through a local referendum. This would occur during a future election cycle. The next scheduled election would be November 2018, barring a special local referendum.
Unique Georgia Constitution article
The current proposal by MGM Resorts looks to place a casino only in Atlanta. The Georgia Constitution states:
Only amendments which are of general and uniform applicability throughout the state shall be proposed, passed, or submitted to the people.
That article is a product of the rural versus Atlanta fight. A constitutional amendment would require that the option for legalized gambling apply to all municipalities.
While some rural voters may not care what Atlanta does, there could be a concern – real or perceived – that casinos could find their way into areas not currently proposed.
There are 159 counties in Georgia. Combined with cities, there are more than 500 potential casino jurisdictions in the state. Under the common definition of the constitutional article, each would be entitled to enact local casino regulations through a county or municipal referendum.
Transportation issues affect proposed sites
Atlanta consistently ranks among the worst cities in terms of traffic. In 2014, it ranked fourth in the country in average commute times.
This issue is exacerbated by the lack of any viable public transportation system, one that repeatedly ranks among the worst in the country. MARTA, the Atlanta’s main public transportation system, only operates in two of the metro area’s 15 counties.
One proposed site for a casino – the current Georgia Dome land – would be on the west line. This would require any visitor coming from the northern suburbs or the airport to change trains at Five Points.
Turner Field – soon to be the former home of the Atlanta Braves – is another site mentioned. Turner Field is located on the Downtown Connector near the I-20 interchange, one of the most congested areas in Atlanta.
Turner Field is not accessible by subway. It is a 25 minute walk from the closest MARTA station.
These downtown sites are at least a half-hour drive from the affluent suburbs that are home to the type of players a casino hopes to attract. And that is with no traffic.
Not the first time for Atlanta casino discussion
Fulton County Commissioner Robb Pitts – previously an Atlanta City Councilman for 20 years – has been pushing for casinos in Atlanta for most of his political career. The proposed location was often Underground Atlanta, a special downtown entertainment district that has struggled throughout most of its 40-year existence.
Pitts suggested the development of a casino on the Turner Field land when the Braves vacate it for Cobb County. Pitts’ official website’s “About Us” page declares that casino gambling in Fulton County is among his priorities.
These are not the only locations mentioned in the past for a Metro Atlanta casino. Land in suburban Gwinnett County was proposed as a potential development that would have included 7,500 video lottery machines.
None of these plans gained any momentum in the past.
History of legal gambling in Georgia
Georgia is a conservative state. The lottery is the only form of legalized gambling.
It was created through a 1992 constitutional amendment. The Georgia Lottery passed by a 52-48 margin. It was one of the most decisive issues to ever hit the ballot in Georgia. Anti-gambling groups continued to fight, calling for store boycotts where tickets were sold, even after losing at the polls.
Georgians showed that there was a demand for gambling. The state lottery broke national records for sales for its first week and year. The Georgia Lottery met its first year’s sales goal in just five months.
The state lottery met its first serious competitor in 2000. South Carolina banned video poker in June 2000. About half of the estimated 34,000 machines found their way into Georgia. There was a video poker machine for every 483 Georgia residents, based on the 2000 census.
The devices were legal through a loophole intended to permit arcade redemption machines. Cash could not be paid for winnings. Operators worked around that ban by issuing gift cards to winners, then immediately buying the cards back for cash, if a player desired. A 2001 special session of the General Assembly banned the machines.
The video poker ban rid the state of video games involving cards and numbers. It left another backdoor that permitted slots that involve any degree of skill. These games started to appear in bars and gas stations.
These games are still active today. Cash cannot be paid for winnings on these slots. Players receive gift cards or store merchandise when cashing out. Tobacco and alcohol may not be purchased with winnings.
The devices remained largely unregulated until 2013 when the lottery connected all games to a central database by order of the General Assembly. The Georgia Lottery received five percent of the hold the first year. That number goes up one percent per year until it reaches 10 percent.
In 2014, these devices generated $10.2 million in Georgia Lottery revenue, including initial licensing fees. The hold on these devices was approximately $138 million, based on the $6.9 million share reported by the Georgia Lottery.
One source told this author last decade that his redemption machines returned 80 percent to players. An open records request by Macon.com confirms this ballpark figure. That puts the annual handle on these devices in the neighborhood of $700 million.
Market is there, but is the legislative support?
Atlanta can clearly support at least one major casino resort.
The only question is whether lawmakers and voters are willing to allow MGM Resorts or another company the chance to legally operate one in Georgia.
Casino Underground Atlanta Map