Missouri’s casino industry is feeling abused.
And those of us who want to do something great in Jefferson City are the apparent chief abusers.
Takes one to know one.
We’ve now had committee hearings in both the House and the Senate on the Steamboat Legacy Fund bill that suggests Missouri’s casino industry be the main funding source for the creation of a National Steamboat Museum in Jefferson City, the construction of a Missouri State Museum that has been needed for ninety years, and the conversion of the present state museum space into a Capitol Museum/Visitor Center that focuses on the history of the capitol and the function of state government. Our goal is to do all of this without state funds and without any general tax increase.
In each hearing, the casino industry has complained that it’s being picked on because we (a small group of Jefferson City residents who have been working on these goals for more than a year) think the industry has capitalized on—–no, the proper phrase is “taken advantage of”—Missouri’s steamboat heritage for more than a quarter-century.
The casino industry thinks we’re picking on it by telling the truth about it. We think the casino industry has earned the right to provide the financial base to accomplish these goals.
We’ll start showing you why today.
The attempt to portray yourself as the victim when you are caught with your hand in the cookie jar is as old as cookies and jars.
The casinos aren’t victims. But there are victims—Missouri’s veterans and the home communities of the casinos in particular. We’re going to show you how it happens by using numbers from three sources: Missouri Gaming Commission annual reports for the last 25 years, the United States Bureau of Labor Statistics, and the Federal Reserve Bank of Minneapolis. And one other source: the casino industry itself.
Let’s begin this explanation with the parable of the 1994 pickup truck. That was the year the first two casinos opened in Missouri. It was near the end of fiscal 1993-1994. During that year, legislation went into effect establishing the two-dollar admission fee for casinos.
It’s important to understand that casino patrons do not pay that fee. The casinos do, based on the number of people who gamble.
We won’t go into detail about how that number was established except to note that it goes back to the time when the industry convinced Missourians to allow casino gambling here by selling the image of steamboats cruising our great rivers on two-hour cruises while people could gamble (but lose no more than $500 per cruise). Each time someone went on a cruise, they would pay two dollars. One of those dollars was for the Missouri Gaming Commission and it’s “worthy causes” (more about those in a minute). The other dollar went to the city and county that had a casino to offset the extra costs of public services because of the presence of a casino. Leftover funds were used for capital improvements in those towns. When the image of steamboats on our great rivers turned rather quickly into so-called boats in so-called moats the casinos decided not to charge patrons to enter the gambling floor. Instead the casinos counted noses and wrote checks to the state, probably making up that expense in charges for food and beverage, hotel rooms and the like, which is how the industry says it would make up for the dollar we are seeking for the museums project.
There is no doubt the host cities have made good use of that money. But in the process they have become victims of their casino.
If the city street department in one of the first two casino towns bought a Ford F-150 four-wheel drive extended cab long-bed pickup truck in 1994, it might have paid the MSRP of $18,607. By 2018 the truck badly needed to be replaced. But the price of a new Ford F-150 four-wheel drive, extended cab, long-bed truck, was $40,010.
The price of pickup trucks has doubled, and more. But the city is still getting a dollar. And it’s not a 2018 dollar. It’s still 1993 dollar. And it’s not worth a dollar any more
The legislature in 1993 didn’t think to include an inflation adjustment clause when it set that two-dollar fee and the casino industry has successfully insisted the legislature not correct that shortcoming.
The inflation calculators at the BLS and the Minneapolis Fed tell us that the equivalent of $2 in 1993 was $3.41 in 2018. The host city in 2018 got a dollar per admission at its casino. Had there been an inflation clause built into that 1993 law they would have gotten a dollar-seventy. Plus another half cent.
And the situation is worse for the city because those webpage inflation calculators show the dollar they DID get in FY18 had the purchasing power of only 58 ½ cents.
Does the casino industry give a hoot? Suggesting this avaricious industry should care about making sure its thirteen host communities receive a dollar that is worth a dollar will bring forth claims that such suggestions make the industry a victim somehow.
The other half of the two-dollar admission fee goes to the Missouri Gaming Commission which takes its annual operating costs out and then distributes the rest to a list of “worthy causes.” Those causes have varied through the years but the biggest beneficiary in 2018 was the Missouri Veterans Commission Capital Improvement Trust Fund, which funds veterans’ homes and cemeteries. Last year it got about $22 million. In 1993 dollars. While the casinos were hauling in 2018 dollars from people who thought they could go to a casino and win, the veterans homes and cemeteries were getting dollars worth 58 ½ cents in purchasing power..
In fiscal year 2018, the difference between a 1993 two-dollar admission fee and its 2018 equivalent value ($3.41) was more than $56 million dollars.
Where did that money go? Not to veterans’ programs. Not to the home dock cities. That $56 million dollars in windfall profits left Missouri and went to casino corporate headquarters in Nevada and in Pennsylvania.
And each year, because there’s no inflation adjustment in that two dollar admission fee, the windfall gets bigger and bigger. In the twenty-five years that Missouri has had casinos, the industry has had windfall profits of more than $830,000,000. That’s as of last June 30.
That’s $830-million that has not gone to programs for veterans, early childhood education, college tuition assistance programs, programs for problem gamblers—and to the host cities.
And when representatives of Jefferson City suggest that about two-thirds of the windfall going forward remain in Missouri to keep a treasure trove of American history from being purchased by a museum in Pennsylvania and moved there, and to satisfy a 90-year need for a state museum that can REALLY tell the story of Missouri and its people and its resources, the casinos whine that we are abusing them.
The casinos will attack any proposal to make two-dollar admission fees worth two dollars. And anybody who suggests it, or who suggests (as we have) that using part of the huge annual windfall profit casinos realize for something benefitting Missourians is making the casinos victims somehow, and we should be ashamed to suggest it. .
Reviewing every annual report of the Missouri Gaming Commission makes this clear: The casinos get richer ever year by paying the state in 1993 money. The state gets poorer because the programs and services that admission fee goes for cost 2018 dollars to operate.
We know that casinos are not built because their patrons have an even chance of winning. The tables are always tilted in the casinos’ favor. The tables tilt even more with each passing year that they pay the state two dollars in admission fees.
An industry spokesman has accused those of us supporting this measure of suggesting the casinos make too much money. As is often the case with statements from the industry, it’s less than truthful and is intended to deflect attention away from the issues. It’s not the amount of money the casinos make, it’s how much they KEEP, how they keep it, and how they are adamantly opposed to any idea that the two-dollar admission fee should be changed so that veterans and home dock communities get dollars that are worth dollars.
Now, having beaten up on these “victims,” let’s acknowledge some important things.
The casinos have broken no laws. They are paying what the law requires them to pay. Whether they are keeping faith with Missourians who voted to have majestic steamboats cruising our rivers or keeping faith with those who thought two dollars was going to be worth two dollars is another issue. But they have not broken any laws.
They have said in the committee hearings that they have met every obligation the state has put on them. And they have. And they sure don’t want the state to update any laws that make one of their obligations be that dollars be worth dollars.
They say they provide thousands of Missourians with jobs. And they do. Not nearly as many as they used to—which they don’t talk about publicly—but they do provide thousands of jobs that pay millions and millions of dollars in wages and benefits.
They pay a lot of property taxes and in some places they pay for leases of city or county land for their boats in moats. Not much to sympathize about there. Those are costs of doing business.
Here’s another indication that the casinos don’t much care about anything but how many dollars they can take out of Missouri:
Last year, Missouri’s casinos had almost one-and-three quarters BILLION dollars in adjusted gross receipts (income minus payouts for the minority of customers who won anything). And by the time they deducted the expenses the gaming commission forces them to report, the industry still had about $820-million left, including the $56-million in windfall profits from the admission fees.
Here’s another example of how our casinos don’t really care for much more than taking as many dollars out of Missouri pockets as they can:
The gaming commission requires the casinos to report their charitable giving each year. Last year the thirteen casinos donated about $940,000 to charities. If asked, they’d probably point to that number with a lot of emphasis and pride. They like to do that kind of thing.
But it’s not what they say. It’s what they DON’T say that is important in understanding their avarice.
The charitable contributions last year were just .00054% of their adjusted gross receipts. Remember than .01 percent represents one penny per dollar.
One casino with more than $70-million in adjusted gross receipts in FY2018 reported charitable giving of $915.
Your observer seems to be the chief casino abuser, I guess, because I came back from a meeting at the Steamboat Arabia museum in Kansas City a year ago with the idea that Jefferson City would be a great place for the museum’s new home when the museum’s lease runs out on its city-owned building in Kansas City in 2026. And our working group thinks an industry that has taken advantage of our steamboat heritage to make billions and billions of dollars should help preserve the heritage of the steamboats.
If the plan that our working group has developed in the last year constitutes casino abuse, all of us willingly plead guilty.
So the casinos accuse of abusing them, of making them some kind of victims. Read the numbers again. And think about who is—and wants to remain—an abuser.
The question then becomes: Who really is abusing the system: a citizens group that wants to use casino money to create something good—great—for our state or the group that wants to truck as much money as it can out of the state for its own enrichment?
The problem can be corrected. All it takes is 82 courageous members of the Missouri House and eighteen courageous members of the Missouri Senate who will vote for boats that are not in moats but whose cargoes are instead in museums or are waiting under farm fields for their stories to be brought to the surface.
The casinos have made billions of dollars from the heritage of those boats. Giving back a relative few million to honor the importance of steamboats to America—and to casino development in Missouri—isn’t going to make any casino executives jump off the top floor of Wynn’s in Las Vegas.
More later.
