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15 Gaming L. Rev. & Econ. 1 (2011)

handle is hein.journals/gmglwr15 and id is 1 raw text is: DOI: 10.1089/glre.2011.15121 Gambits News in brief about the gaming world Last Harrah for Foxwoods Philadelphia For the first time, the state of Pennsylvania has revoked a gaming license-the license for the stillborn Foxwood's casino in Philadelphia. The latest attempt to salvage the troubled pro- ject, this time with a partnership with Harrah's Entertainment, was not enough to save a casi- no that has been four years in the making with little to show for it, other than large legal and consulting fees. A number of factors appear to have doomed the project, including: The Mashhantucket Pequot tribe-the pro- prietors of Foxwoods in Connecticut-have been economically stressed since the begin- ning of the recession, making it difficult to develop the new casino; Local opposition to the casino was unusual- ly fierce; The scope of the project has changed several times, as the developers tried to adapt to changing circumstances and finances, lead- ing to a much-smaller proposed casino out of sync with what had been approved; and The charitable benefits proposed to flow from the casino have also been scaled back dramatically, reducing the public benefit. The revocation leads the fate of the license in question, since if Foxwoods appeals the deci- sion, the license could be tied up in litigation for years. That would leave the SugarHouse Casino in Fishtown as Philadelphia's only casi- no. The inability of the project developers to bring the project to fruition also highlights the challenges facing casino development and expansion amid a persistently soft economy and difficult credit market. Showboat Casino Fined by New Jersey Casino Control Commission The Showboat Casino Hotel in Atlantic City was fined $20,000 for underage gam- bling. The gambling involved four people, be- tween the ages of 16 and 20, who were able to gamble for brief periods of time. In addition, the Showboat forfeited $2,315 that had been seized from people who were able to enter the casino and gamble despite having volun- tarily placed themselves on a self-exclusion list designed to help compulsive gamblers help themselves. The Showboat did not con- test either the fine or the forfeiture, neither of which had been cast or characterized as representing systematic or widespread failure. New Jersey Looking to Redefine Atlantic City in Significant Ways Bills working their way through the New Jersey state legislature as of this writing (Dec. 17, 2010) would reshape Atlantic City and the Atlantic City gambling experience in significant ways. While the final impact won't be known until (and unless) the gam- bling bills are signed into law, proposals include: Creating an Atlantic City tourism district: this would be an area encompassing the boardwalk and marina districts, and the goal would be to create non-gambling, family-centered tourism. To accomplish the goal of promoting Atlan- tic City tourism, the Casino Reinvestment Development Authority would be given broad authority over roadwork, traffic, mar- keting, development, and public safety in and for the district. In addition, Atlantic City casinos would be allowed to offer Internet gambling, available to New Jersey residents only; the offering would be limited and under tight control, in an attempt to pass muster under federal anti-igaming laws. Casinos would generally have some of their regulation relaxed, in exchange for making investments in promoting Atlantic City. Some of the money thrown off by the new initiatives, such as the limited online gam- ing, would be diverted to the New Jersey Racing Commission to support horse racing. The proposed bills represent an acknowl- edgment that both Atlantic City, which once was the only gambling location on the East Coast, and New Jersey horseracing have been struggling. Atlantic City, for example, has ex- perienced the 27th consecutive month of revenue declines. Whether the new initia- tives, if passed, can reverse that remains to be seen; however, state government is to be commended for recognizing that business as usual is not working and that some changes have to be made. U.S. Senate To Not Take Up Allowing Internet Gambling Internet gambling in the United States has been barred by the Unlawful Internet Gam- bling Enforcement Act (UIGEA). An attempt to modestly liberalize the nation's stance to- wards online gambling, by allowing online poker only, is supported by Senate Majority Leader Harry Reid. However, despite the Majority Leader's support, the effort has been put on hold, at least for the moment. The mea- sure to allow online gambling was to be at- tached to an omnibus spending bill: the bill has been pulled from consideration, owing to Republic opposition to it. While it was not the provision allowing online poker which led to the bill being pulled, the fact that the bill seems to have no chance of passing on its own, but only as amendment to a larger, more critical bill suggests that the United States has not yet reached the point where allowing Internet gambling is being seriously considered as an option by Congress. German States Want to Keep Their Monopoly on Lotteries Despite an ECJ ruling that found problems with Germany's state monopoly on lotteries, it appears that the nation's federal states wish to retain their monopolistic regulation. That was the report of Wolfgang Boehmer, state premier of Saxony-Anhalt, about the re- sult of a meeting with his colleagues from other states. At the meeting, the states agreed to keep the lottery on monopolies. However, positions vis-a-vis other forms of gambling, such as sports betting and egaming, are far less monolithic than the position on monopo- lies, with states split on whether to open up the market for these other forms of gambling or not. The split appears to be political, with states headed by Christian Democrats wanting to open up the market, to better monetize it and bring in revenue, while states headed by Social Democrats oppose letting private opera- tors offer sports betting and egaming. The ECJ challenge to Germany's state mo- nopoly on lotteries had been based on the seeming disconnect or discrepancy between the stated aim of the monopolistic scheme- better protection of consumers and fighting problem gambling-and the reality of aggres- sive promotion of lotteries. The reason that states, despite their allegedly consumer protec- tion goals, actively promote lotteries can be readily divined from the fact that Germany's lotteries provided $2.8 billion Euros for social, cultural, and sports projects last year. Danish Differential Taxation of Online and Terrestrial Casinos To Be Investigated The European Commission is looking into a new Danish law that taxes Danish online gam- ing less-substantially less-than land-based casinos. Brick-and-mortar casinos in Denmark are taxed at rates up to 75%(!), while Internet gaming would be taxed at only 20%. The con- cern is that this differential taxation gives an enormous competitive advantage to online casi- nos, as compared with their land-based breth- ren, and it is the seemingly anti-competitive nature of the tax scheme that has drawn Europe- an Commission attention. The economic advan- tage accruing to online casinos would seemingly be further magnified or leveraged by the rela- tively low overhead of online gaming opera- tions, which means that internet gaming sites licensed by Denmark could have large amounts of cash available for marketing, expansion, product development, and/or to take out as profit. Taxing online gaming less than the coun- tries own captive land-based casinos flies in the face of how most European states are approaching the matter; however, it may repre- sent a bid to capture a larger share of the online gaming market. The new gaming law's imple- mentation has been pushed back, from its origi- nal date of January 1, 2011 to an undisclosed date, due in part to Commission concerns. Gambits identifies recent news on gaming. Please send announcements or news items to Steven Zweig, Managing Editor, Gaming Law Review and Economics at stevenjzweiglaw@gmail.com or (fax) 888-484-6933. 1 News

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