tiggerpolice

Airport slots plan seen as gamble
Revenue projections are anyone's guess
Sunday, June 12, 2005
By Laura Maggi

Capital bureau

BATON ROUGE -- A legislative proposal that would allow the installation of slot machines at Louis Armstrong International Airport emerged unexpectedly from the House last week with a trail of questions in its wake.

But the most baffling calculation, which could crucial to the measure's fate when it is debated in the Senate this week, is how much money the state can realistically expect to collect from bored travelers pumping money into the devices while waiting to board a flight.

Supporters of House Bill 799 by Rep. Cedric Richmond, D-New Orleans, have said the machine winnings annually could generate millions of tax dollars that would be earmarked to help pay off the state's annual obligation to the New Orleans Saints. But others have said they don't know whether the tax revenue could reach the figures predicted. Richmond, for example, puts his estimate in the $7.5-million-to-$18-million range.

For Richmond, the airport slots solution is ideal, providing a revenue stream to help pay the Saints, with most of the cash coming from out-of-towners.

"It does exactly what the residents of this state wanted gaming to do: capitalize on tourists who voluntarily wanted to play as opposed to locals who may take a risk of getting addicted to it," he said. A recent study conducted for the airport concluded that about 85 percent of the roughly 10 million passengers coming through the terminal each year are visitors.

The legislation, scheduled to be heard Tuesday in the Senate Judiciary B Committee, would allow 15,000 square feet of airport concourses behind security checkpoints to be used for slot machines.


Roll of the dice


Legislative analysts seem to have thrown up their hands at trying to get a fix on how much revenue such a plan could generate for the state, saying in the latest fiscal analysis that "the amount of gaming tax revenue that might be generated from such facilities is speculative." The plan calls for levying a 21.5 percent tax on the net slot proceeds.

The analysis concludes that airport gambling in the secure areas restricted to passengers would bring in "significantly" lower earnings than slot machines at race tracks around the state, which provide tax dollars ranging from $11 million to $20 million annually. Those figures are based on the track slot machines earning between $72 million and $130 million per year in gross gaming revenue.

The only airports in the United States that have slot machines are in Nevada. At the Reno-Tahoe International Airport, which gets about half the passenger traffic as Armstrong, 150 slot machines are scattered throughout the airport, including in areas accessible to the nonflying public. Those machines brought in a net income last year of $5.1 million, said Heidi Berthold, spokeswoman for the airport.

The take at the McCarran International Airport in Las Vegas was much higher, with about 1,300 slot machines earning a net of $54 million in 2004, said Jim Palmer, the audit supervisor. But the Las Vegas airport gets about four times the number of passengers that comes through the New Orleans airport and, like Reno, offers the slots in the main lobby, where locals can play while waiting for airline passengers to arrive.

Those numbers lead Roy Williams, Armstrong's director of aviation, to conclude that the money that could be earned, both for the airport and for the state, would be much lower than the double-digit millions that Richmond originally predicted.

Williams noted that earnings from slots at the New Orleans airport would never reach the Las Vegas levels, even adjusted for the lower number of passengers going through Armstrong, because people who travel to that city go there primarily to gamble. "That is just not true in New Orleans," he said.

But Richmond is more optimistic, saying the widespread availability of gambling in Las Vegas might deter people from using the slots while they are waiting to pick up their baggage before heading off to a casino. Visitors to New Orleans, on the other hand, might dawdle at the slots for a bit because there is more limited availability in the city, he said.


Few strong objections


None of the vested interests at the airport or in the state's gambling industry has objected to the proposal so far. Williams said he has not heard any complaints from vendors at the airport, and a riverboat casino lobbyist said slot machines restricted to secure areas in the terminals would not be considered a competitive threat.

This could make coming up with some kind of estimate on how much tax revenue could be generated a key factor as the Senate considers the proposal.

The New Orleans Aviation Board has not taken a position on the concept, although Williams said he expects the topic to be discussed at the board's meeting this week. The legislation appears to leave the authority for installing slot machines in the hands of the aviation board, although voters in Jefferson Parish would have to agree.

How much traction the idea will get in the Senate is unclear. Richmond said he has gotten some indications of support from senators who are normally anti-gambling.

Sen. Art Lentini, R-Kenner, however, said he does not like the proposal, seeing it as an unnecessary expansion of gambling. Lentini said that if the proposal makes it to the Senate floor, he will offer an amendment to require the referendum that would have to be called to require a majority not only in Jefferson Parish as a whole, but also in Kenner, where the airport is located.

Gov. Kathleen Blanco, who campaigned for office as being against any expansion of gambling, was noncommittal after the proposal cleared the House, saying she would have to "think very hard on it" before taking a position.

Blanco has said she wants the money to pay for the Saints deal to come from taxes in the New Orleans area, and she has proposed hiking the taxes on hotel rooms and rental cars in the metropolitan area. But the delegation from Orleans and Jefferson parishes has balked, saying some other source of money should be found.


Will it fly?


The National Football League team is due $15 million in July, but Superdome officials have said existing revenues that are supposed to pay that obligation are short by as much as $10 million. The Superdome Commission is planning to make this year's payment by taking out "revenue anticipation notes," which would have to be paid back with interest. The Saints payment from the state next year is slated to go up to $20 million.

Using gambling taxes to cover the state's contractual obligations would be allowed within NFL policies, said Brian McCarthy, a spokesman for the league. Although the league does not allow gambling companies to sponsor a franchise or advertise with a team, the state can pay a subsidy by taxing gambling, he said.

But Williams said the federal laws governing airports, which require that revenues generated at an airport must be spent on the airport, will have be considered as the state continues looking at the proposal. "All of our revenues have to be devoted to aviation," he said.

Williams said he doesn't know whether a tax on slots would be considered airport revenue.

The state can collect sales taxes on anything sold at the airport and use the money for any purposes, Williams said. It would have to be determined whether a tax on slots revenue generated at the airport is like a sales tax or "an attempt to just tax an airport activity," he said.

. . . . . . .


Laura Maggi can be reached at lmaggi@timespicayune.com or (225) 342-5590.


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Euphoria

What a mess this idea turns out to be.

stockman311

I have a better idea. Why don't we just have state officials start panhandling outside the airport. We could give them all monkeys and a music box. Except for the poop flinging and cleanup, this seems like a can't miss moneymaker. Anything to keep the Saints in New Orleans by lining Tom Benson's pockets.

Euphoria

State officials in Baton Rouge would rather annex the city before having to go there... but late at night you might catch one on burbon st.

mayoj

Obviously the problem doesn't lie in a need for more gambling taxing opportunities to raise money when the state hasn't been giving NO the money it is guaranteed from Harah's taxes. It just doesn't make sense. When gambling came to NO all that was talked about was how much money could be earned for local schools, etc and that promise has in no way been realized. So, why now should we go down the same road as before? They are also trying to raise cigarette taxes and hotel taxes. Where is all of this money going to go bc it sure as hell never makes it to the intended recipient. Our schools, streets and politicians blow.

On top of all of that, I don't really see slot machines bringing in any big business in our airports. People don't have gambling fever when they come here. They crave food, music, tits and booz-the heart and sole of NO.

This whole situation is so frustrating to read about everyday. The problem lies in the current system and in its inefficiency. No matter how many layers of frosting you put on a piece of sh**, when you bite into it, it still tastes like poop.

Euphoria

Yeah I have to agree with you. The problem isn't that there is no money for the payment but the leaders who are in office running the money. They can raise taxes on everything they want to and as much as they want to and come next year there will be no money to make the payment. This is a tactic by the governer to raise taxes and blame Benson for it and give a screw to New Orleans area. New Orleans wants the Saints let them pay for it... but send us the all the other taxes from what the Saints generate.

E U P H O R I A