State financial analysis finds private casino measures are a bad deal

First, the Oregon Citizens' Initiative Review Commission voted 17-7 against measures 82 and 83, which would amend the state Constitution and allow a private casino in Wood Village.
And now a state economic analysis by the nonpartisan Legislative Revenue Office finds that a huge casino in east Multnomah County would probably cost state and local governments money and likely shrink the Oregon economy.
The analysis, written in July by Mazen Malik, a senior economist in the Legislative Revenue Office, evaluated three scenarios in which the proposed casino would operate 2,200 slot machines and three more scenarios in which it operated 3,500 slots, the number included in the measure's ballot language.
Only two of the six scenarios Malik analyzed showed a net gain for the state, ranging from $32 million to $53 million, if a smaller casino is built.
Under the larger casino scenarios, far more money is diverted from the Oregon Lottery than comes back to the state from the casino. Oregon government coffers would lose as much as $63 million a year, even after the casino's seemingly generous payment of $100 million is factored in.
The Oregon Lottery is the state's second-largest source of revenue after income taxes. Lottery officials believe gamers who might otherwise spend their money on video poker would gamble instead at the proposed casino.
Within a 20-mile radius of Wood Village are 800 restaurants and taverns that have video lottery terminals, representing 37 percent of the state total and about $350 million in annual sales.
The Oregon Lottery returns 65 percent of its revenues to Oregon while casino proponents are only offering to return 25 percent of its revenue to the state.
Steven Ungar, a former chairman of the state Lottery Commission, said Oregon's independent analysis is proof the state will be hurt by the casino.
"A private casino is ill-conceived and not in the public's best interests," said Ungar, a Portland lawyer. "I'm confident that the measure would result in a net financial loss to the people of Oregon."
The analysis found that money gambled at the casino would mostly come from within Oregon. Although it found that an estimated $83 million to $126 million would be added to the economy, that addition is outweighed by the cash flowing out of state to the casino's owners and lenders. The Oregon economy could shrink by as much as $74 million a year, resulting in overall job losses, the analysis found.
Gov. John Kitzhaber says a plan such as those in measures 82 and 83 would hurt the state budget, increase the number of addicted gamblers and unfairly punish Tribal casinos, which use gaming revenues to fund education, health care and other programs for their membership. With reduced revenue, members of Oregon's nine federally recognized Tribes may turn to state services to replace those that would have to be cut by Tribal governments.
Kitzhaber wrote in an Aug. 28 letter to the Portland City Club that a private casino would "primarily benefit a few wealthy executives and foreign investors while creating increased opportunities for corporate corruption and organized crime."
The two measures are backed by wealthy Lake Oswego businessmen Bruce Studer and Matt Rossman and financially supported by Canadian gaming giant Clairvest out of Toronto.
In 2010, Oregonians rejected the same proposal by a 68-32 percent margin.
So far, casino proponents have spent more than $1 million on a deluge of TV ads backing the project, which they have dubbed "The Grange."
"What the proponents of measures 82 and 83 are proposing is not just fuzzy math, it's Vegas math," said Justin Martin, the Tribe's lobbyist.

Includes information from Willamette Week.