Wednesday, April 19, 2006
Casino Madness
The Gaming Control Board is in town to listen to the proposals being laid out by the three applicants for the Pittsburgh license. All three, Harrah’s, Isle of Capri, and PITG Gaming, are each offering development packages in excess of $1 billion—all for the rights to buy a $50 million slots license.
These packages confirm our assertion that the Governor and the Legislature should have auctioned off the license to the highest bidder. Had they done so, the price could have easily topped $400 million. Imagine what the City could do with $400 million? Reduce debt, fund the pension plan, or cut taxes. All things that are desperately needed to help the City out of its distressed status.
However, the casino debate has been hijacked by the focus on a new arena for the Penguins. Obviously the concept of opportunity cost eludes those who are pushing the casino applicants to fund a new hockey facility. If the license winner is required to direct funds to a new arena, that money, estimated to be between $225 and $290 million, cannot be used to help the City. Pittsburgh is saddled with more than $900 million in debt and the money being sought for an arena could pay down a third of the City’s obligations.
What of the elaborate development packages being touted by the applicants? Currently they are only promises. No one knows how much revenue will be generated by the City’s casino, and estimates from the three applicants vary. If reality falls short of predictions, will these development projects be put on hold or will the casino look to government for a subsidy? As Mayor O’Connor stated in his testimony: “gaming could become another cost our city does not want at this time.”
These packages confirm our assertion that the Governor and the Legislature should have auctioned off the license to the highest bidder. Had they done so, the price could have easily topped $400 million. Imagine what the City could do with $400 million? Reduce debt, fund the pension plan, or cut taxes. All things that are desperately needed to help the City out of its distressed status.
However, the casino debate has been hijacked by the focus on a new arena for the Penguins. Obviously the concept of opportunity cost eludes those who are pushing the casino applicants to fund a new hockey facility. If the license winner is required to direct funds to a new arena, that money, estimated to be between $225 and $290 million, cannot be used to help the City. Pittsburgh is saddled with more than $900 million in debt and the money being sought for an arena could pay down a third of the City’s obligations.
What of the elaborate development packages being touted by the applicants? Currently they are only promises. No one knows how much revenue will be generated by the City’s casino, and estimates from the three applicants vary. If reality falls short of predictions, will these development projects be put on hold or will the casino look to government for a subsidy? As Mayor O’Connor stated in his testimony: “gaming could become another cost our city does not want at this time.”
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Rumor is that the "Board" was extremely impressed with the Majestic Star Proposal and that Barden's status as an African American owner might offset the political power behind Forrest City. Add that with the problem Harrah's has (being the Owner at Chester Downs it's questionable what their relationship can be in Pgh.) and this thing is not yet over.
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