SB 152 – 2013

Senate Bill 152 would legalize casino gambling at one location in New Hampshire.

    • Passed the Senate, 16-8
    • Is backed by Gov. Maggie Hassan
    • Was reviewed by three sub-committees, (Regulations, Revenue, Community Impact), of  a joint House Finance and Ways and Means Committee appointed by Speaker Norelli.
    • The full committee voted to recommend “Inexpedient to Legislate”.  Since the first motion by a committee member was to kill the bill, amendments were not voted on by the committee.
    • The full House voted to accept the committee report of Inexpedient to Legislate, thereby killing the bill.  The debate, from the afternoon session, can be seen or heard at http://www.gencourt.state.nh.us/house/media/default.htm.

SB 152 Analysis:

    • Allows video lottery machines and table games at one gaming location in the state pursuant to a competitive application process.
    • Distributes proceeds of video lottery machines and table games to the municipalities where the facility is located and abutting communities, to support programs to treat problem gambling, and to the education trust fund. Proceeds will also be distributed for highway and bridge projects, higher education, and north country economic development.
    • Establishes a gaming enforcement unit in the division of state police.
    • Requires the lottery commission to regulate, license, and enforce the provisions for video lottery and table games operated at a gaming location.
    • Creates a commission to study the operation of the licensed gaming location and its effects on the community, and to make recommendations that may include whether to issue additional licenses.

The stated purpose of the bill:

    • Regulation of all forms of gaming is vitally important to the economy of the state and the general welfare of New Hampshire citizens.
    • By virtue of New Hampshire’s unique location, natural resources, and development, tourism is a critically important and valuable asset in the continued viability of the state and strength of its communities.
    • New Hampshire has an interest in promoting economic recovery, small business  development, tax relief, and job creation, as soon as possible, through the development of regulated gaming in order to preserve the quality of life for New Hampshire residents.
    • New Hampshire has an interest in ensuring the financial stability and integrity of 1 gaming operations in the state.
    • New Hampshire must limit the proliferation of gaming by controlling the number of gaming sites in New Hampshire and choosing gaming sites based on potential for job growth and revenue generation, access to appropriate transportation, suitability for tourism, local resources, and development opportunities.
    • Any license issued or permission granted pursuant to the provisions of RSA 284-B is a revocable privilege and no holder acquires any vested right in such license or permission.

Committee Report:

    • SB 152 proposes to license one “high end, highly regulated” casino for a one-time $80 million licensing fee and future tax rate of 30% on up to 5,000 slot machines and a 14% tax rate on up to 150 table games.
    • In exchange for being able to award a license and receive the fee in the next budget cycle, the bill short circuits the regulatory process that would ensure a casino would indeed be “highly regulated” and able to serve the best interests of the people of New Hampshire.
    • In addition, despite the claims of supporters that we need gambling revenues to fund essential safety net services, SB 152 does exactly the opposite, creating restricted revenue streams rather than putting the money in the general fund where it can be spent on the important state programs our constituents care most about.
    • Finally, this bill asks us to balance new jobs with an increase in social problems and costs in ways that are not well-quantified.
    • The majority believes the bill does not create a meaningful regulatory structure or process necessary for effective checks and balances.
    • The regulatory provision contains numerous significant weaknesses and deficiencies that could not be fully understood or addressed during a month-long subcommittee process.
    • The bill vests the Lottery Commission, a three-person, part time board, with the primary responsibility to provide oversight and adopt regulations and enforce regulations. At the same time, it does not give the Attorney General enough regulatory oversight to ensure the public interest is adequately protected.
    • In order to get the $80 million fee in the next biennium, it creates an arbitrary and unreasonable timeline, commencing the licensing process before the Lottery Commission has enough time to write rules and adopt them through the JLCAR process.
    • The timing is not long enough to allow for a reasonable expectation of accepting multiple applications to operate a casino, again short-circuiting the robust and competitive process that would increase the probability we would get the best casino deal.
    • Finally, the bill ignores the recommendations of the Gambling Commission issued in 2010, which stated emphatically that a strong regulatory infrastructure must be in place before the licensing process can begin. SB 152 puts the cart before the horse, thus failing to protect our interests in the way we should expect.
    • The majority is also concerned about the bill’s revenue provisions. If the purpose of casino gambling is to create a robust, sustainable revenue stream into the future, SB 152 probably does not achieve that goal since it appears to sacrifice long term revenue for a one-time payment. Specifically, a lower licensing fee combined with higher tax rates would likely maximize revenue for the state. Other states have used a bidding process to find the highest rate and employed consultants to help create a financial structure. SB 152 does neither.
    • In addition, the minimum required investment is not high enough to generate the highest revenues we could reasonably expect. SB 152 grants a “forever” license for a low renewal fee due every 10 years. A more prudent approach would be to increase the length of the license and then require a higher fee through a competitive re-licensing process.
    • The bill also misses an opportunity to share some of the profits if the casino’s ownership changes hands, allowing all potential profit to be tax-free. The majority is also disturbed by the bill’s failure to make future revenues available in the operating budget, instead creating only restricted revenues.
    • The funds are dedicated to support highway debt (a proposal that the State Treasurer says is not feasible), an ill-conceived North Country Economic Development Fund with absolutely no oversight or accountability, the university system, millions to the local communities and, finally, a dedicated funding stream to treat gambling addiction that is either too high or too low but certainly not based on any facts.
    • Part of the argument for a casino is that it would be just one. We should remember the potato chip example; no state has stayed with just one casino. Proliferation is not just certain; it is actually contemplated in the bill through the creation of a study commission with members without specific qualification but with a charge to evaluate whether “additional licenses should be issued for gaming locations.”
    • The lure of jobs is a key selling point for supporters, but there is no guarantee that these jobs would go to NH residents, especially with a location on the southern border, and a neighboring state with a more densely concentrated population and a higher unemployment rate.
    • The majority is concerned about the cannibalization of existing local businesses.
    • The total amount of entertainment spending is finite, and, unlike with local businesses, the majority of business profits of this new venture will be sent out of state and out of our economy.
    • Finally, the number of NH residents with gambling addiction will rise, and with it the cost to government and families.
    • For all these reasons, the majority of the committee believes that, while no bill is perfect, SB 152 is not good enough. There are still too many unknowns. The state made a short-sighted decision when it did not spend money appropriated in the last budget to hire experienced consulting assistance that could have answered many of the questions. This bill does not have the regulatory infrastructure to ensure protection of the public interest, it does not maximize revenues or put them in the right place, and it affects New Hampshire’s brand and quality of life in ways that are impossible to measure and, therefore, impossible to adequately protect.

Amendment 2013-1770h, (itemized here) proposed:

    • Increase the state’s share of casino profits and change how those monies are allocated:
        • Lower the licensing fee from $80 million to $50 million but increase the state tax on profits from video lottery machines (from 30 percent to 33.3 percent) and table games (from 14 percent to 16 percent).
    • Require a greater investment by the casino developer and an extension of the license duration from 10 to 20 years. When it was time to renew the license, lawmakers could decide whether casino gambling should continue in New Hampshire.
    • Changing regulatory oversight;
        • Limit political contributions by those associated with the casino.
        • The regulatory subcommittee also
            • Questioned whether the Lottery Commission should be the lead regulator or a separate agency should be established;
            • Wants the attorney general and the Department of Safety to play bigger roles; and
            • Wants all rules in place before the license is issued.
    • Protecting charity gambling and existing entertainment centers such as the Capitol Center for the Arts in Concord and the Music Hall in Portsmouth.

Notes:

    • Two thirds of gamblers come from within 30 minutes of a casino.  
    • The casino planned by Milenium was not a “destination” casino.
    • No other tax causes increased welfare, bankruptcy and suicide.
    • No amendment would prevent proliferation of casinos.
    • There was not time available to establish a workable regulatory structure.
    • Revenue from the casino license fee would not be available in FY 2015 and there is no real way to know how much revenue might come from a casino once fully operational in 2019.
    • In 2012 a similar bill gave NH 49%; in 2008 it was 50%; in 2004 it was 55%; Pennsylvania gets 55%.
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