William Eadington, an economics professor at the University of Nevada and director of the university's Institute for the Study of Gambling and Commercial Gaming, questions the accepted wisdom in racing circles that video slots are a magic bullet for racing.
"The official argument is that this is a way to save racing and increase purses, which will attract better horses," Eadington said. "The only thing wrong with that is that it hasn't really held up.
"Racing continues to be in decline. If you look at handle and on-track attendance and net revenue after payment of purses -- any of the standard measures -- it has been stagnant for 20 years."
While track operators stand to benefit financially from state licenses for video slots, granting such licenses during an economic downturn and limiting the field to racetrack owners cuts into potential state tax benefits by eliminating the large casino operators as competing bidders, Eadington said.
"Most of the major companies, with a couple of exceptions, are in no position to be bidding on casino licenses. They have no money for capital commitments," Eadington said. "In that sense, this is not a great time to be putting things out for bid. You foreclose the option of doing something better if and when the economy gets going again."
Difficult times for the resort casino industry, of course, make this a perfect time for racetracks to seek state legislation that would grandfather them in as video slot operators.
"It's all political," the economist said. "What (the tracks) would like is an environment that preserves the possibility of long-term excess profits. If they can have exclusivity in slots in urban areas, they are potentially very profitable."
Meanwhile, John Nova Lomax has a cover story in the Press about the history of casino gambling in Galveston and the debate today about bringing it back as a means to revitalize the place post-Ike. I think this is the key bit:
You can see arguments for and against casinos before your eyes. Both major Lake Charles casinos sport huge parking lots -- which begs the question of where they could fit in Galveston.
Those lots are also jam-packed with cars with Texas license plates. When you couple that with all the signs touting the many shuttles offering dirt cheap transport from nine pickup points in Houston to the casinos, you realize the magnitude of the cash drain over the Sabine.
Both the Isle of Capri and L'Auberge du Lac are vast complexes that rise mirage-like out of acres of concrete in the middle of nowhere. Each offers in-house restaurants, shops, clubs and lodging, and that underscores one of [gambling opponent Harris] Kempner's main anti-casino contentions -- that [Allen] Flores and the Strand merchants are fooling themselves if they think casinos will bring them customers. Even in the old days, he says, the Balinese Room knew well how to lock down the junket trade. "When the casinos wanted to attract banquets, they undercut," he says. "They could afford to do that because they can make food, drink, shelter and entertainment a loss leader, and they will do it again."