05 March 2012

22 New Michigan Casinos Planned

First appeared in Detroit Free Press
Private investors and Indian tribes are proposing 22 new casinos across lower Michigan, and metro Detroit is clearly among the targets of the gambling gold rush.

Hopefuls are wagering -- against long odds -- on plans that could make them millions of dollars while also nearly doubling the number of casinos in the state. Six organizations want in on the game -- two investor groups separately seeking state constitutional amendments and four tribes trying to expand off-reservation gambling.

The proposals overlap, calling for four casinos in Romulus and two more in Detroit, home to the state's only non-tribal casinos. The groups also want casinos in Macomb and Oakland counties and two in Port Huron.

"It's like fantasy land," said Michigan State University law professor Matthew Fletcher, who specializes in tribal law. "I really don't expect people are willing to have that many more casinos in lower Michigan."

Confidential documents reviewed by the Free Press reveal details.

Leading one effort is Michigan First, which would amend the state constitution and usher in the largest gambling expansion since Detroit's casinos were approved in the 1990s.

In secret pitches to potential investors and government officials, Michigan First organizers propose a new casino in Detroit, one each in Wayne, Oakland and Macomb counties, and four more outstate, documents show. In Macomb County, the group would build a $300-million casino projected to rake in $85 million a year in profit for its owners once initial building costs are paid off.

A competing proposal by a separate group called Michigan Is Yours is also on the table, as are pitches from four tribes hoping to expand gambling through off-reservation casinos such as one proposed a few blocks from the state Capitol in Lansing.

Gov. Rick Snyder, Detroit's casinos and Mayor Dave Bing oppose casino expansion. So do major outstate Indian tribes.

Despite those challenges, investors and other tribes want to cash in, lured by the record $1.4 billion in revenues Detroit's casinos posted in 2011 and what supporters view as untapped markets in cities across the Lower Peninsula.

The fight may be costly. Michigan First tells potential investors that before one brick can be laid it will have to raise nearly $50 million to collect enough signatures for its campaign and then woo voter support for a November constitutional amendment to allow non-tribal casinos in Michigan First's designated cities: four in the Detroit area and one each in Grand Rapids, Lansing, Cadillac and the Flint-Bay City-Saginaw area.

Michigan First says in the documents that it has lined up support from former Michigan House Speaker Rick Johnson, a Republican from the Cadillac area, and Mitch Irwin, a Democrat who was the state's management and budget director under former Gov. Jennifer Granholm.

Irwin confirmed his involvement but declined to discuss details in the documents or specifics about the group's proposal, saying more would be revealed in mid-March.

"We're not ready to announce anything publicly right now," Irwin told the Free Press.

Irwin said the effort is attracting enormous interest among community leaders and private investors.

Others associated with the Michigan First effort, including Johnson, did not return phone calls seeking comment.

Opposition's viewpoint
James Nye, a spokesman for a coalition of tribes and Detroit casinos preparing to fight the Michigan First effort, said his group is ready to raise $50 million to stop the new casinos. The group, Protect MI Vote, says casino expansion would circumvent state voters' approval in 2004 of a constitutional amendment requiring both statewide approval of non-tribal casino expansion and approval of local voters where a casino would locate.

Nye's group represents the MGM Grand Detroit and Greektown casinos and two tribes: the Saginaw Chippewa, which own Soaring Eagle in Mt. Pleasant, and the Nottawaseppi Huron Band, which owns FireKeepers Casino near Battle Creek. Nye said Michigan First wants to write its eight casinos into the state constitution, exempting them from the strict Michigan regulatory oversight required for the existing Detroit casinos.

"They are really unbelievably brazen with their plan to sell off pieces of our constitution to their investors," Nye said. "Worst of all, there is no transparency," he said, adding that it remains possible for any amendment that goes before voters to not include the names of the casino owners.

Other casino efforts
Separately, a high-profile effort to build a glitzy $245-million Kewadin Lansing Casino, just blocks from the state Capitol, kicked off in January. It would be built by the Sault Ste. Marie Tribe of Chippewa Indians in partnership with the city, and would be the state's 26th casino.

Other efforts range from the small Upper Peninsula Hannahville Indian Community's interest in building a casino in Romulus to larger efforts by the two investor groups. One of the investor groups, Michigan Is Yours, has tapped former Detroit Lions great Billy Sims as a backer and aims to build privately owned casinos in Detroit, Romulus, Port Huron, Grand Rapids, Lansing, Saginaw and Benton Harbor.

"Detroit was meant to be the first city, not the only city," Sims told the Free Press.

How much is too much?

Lansing Mayor Virg Bernero said he's not sure, but it's time that cities outside Detroit get a crack at the jobs and economic development potential of casinos, instead of seeing the money flow to other parts of the state.

"That's our money they're luring away," Bernero said. "I want that money reinvested here. Lansing will get a casino. The only question is when and where. I want it downtown as soon as possible."

But Michigan First and Michigan Is Yours also each want a casino in Lansing -- that would make three -- and the overlap among the competing plans highlights serious questions: Can Michigan's casino market handle a slew of new casinos, and if so, how many?

In southeast Michigan, gamblers already can easily drive to casinos in Detroit and Windsor. There will be one more option when the Hollywood Casino Toledo opens in Ohio in late May.

Adding casinos in Detroit and its immediate suburbs and Port Huron would saturate the market, said Frank Fantini, editor and publisher of Fantini's Gaming & Lodging Reports. He said putting so many casinos in metro Detroit would be "extreme, because you're not dealing with a destination market."

Michigan now has 22 tribal casinos in addition to Detroit's three, and analyst Jake Miklojcik said it's not likely that government officials would permit the number to double -- or that banks would finance so many new casinos.

He said, however, the Michigan market has room for more casinos, perhaps a 20% expansion.

The American Gaming Association ranks Detroit the nation's fifth biggest casino market. And it's a lucrative industry statewide, employing about 19,800 people last year in Detroit and tribal casinos, by the state's estimate.

Detroit's casinos in 2010 paid nearly $100 million to the state's school aid fund and nearly $164 million in Detroit wagering taxes, according to the Michigan Gaming Control Board. Tribal casinos paid more than $61 million in taxes to the state and local governments in 2010.

"For any one community, it could be a nice shot in the arm" to open a casino, Miklojcik said. "Could Flint have a successful casino? Yes. Would it rely on pulling from other casinos? Probably."

Nye said that risk is too great.

"In Michigan, we are in a mature casino gaming market," Nye said. "The pie is not going to grow any larger, so instead, everyone will get a smaller piece of the pie, and in that scenario, you would have a dramatic shift of jobs and revenue from certain areas of the state to another, but without any net economic gain for the state."

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