Economic issues inform casino vote
Kansas City Business Journal - by Michael Becker Contributing Writer
More than 5,000 local jobs and $30 million in local tax revenues are riding on the outcome of the November 3 vote on Amendment 9, which would retroactively legalize riverboat casinos in artificial lagoons, or "boats in moats."
"They (Harrah's) took what was the old city landfill and basically built a golden cow down there," said North Kansas City Mayor Gene Bruns. "Because of the casino, we're able to do some pretty neat things for the city."
Casino officials hope such ringing endorsements will result in a favorable vote. As proof of the casinos' economic importance, they cite the $577 million the three local boats in moats invested in their properties, their combined $99 million annual payroll and the $33.4 million they paid last year in local taxes.
The economic ripples caused by the forced closure of the casinos, they say, would be widely felt -- and some business leaders even fear a no vote would sour the local investment climate.
Opponents of the amendment counter that the economic costs of gaming outweigh its benefits and that the issue is, in any event, too specialized to have any overall impact on future investments in the state.
The proposed amendment would nullify the Missouri Supreme Court's ruling last year that riverboat casinos can only operate games of chance on the main channels of the Missouri and Mississippi rivers, and not in man-made basins or lagoons.
"When the Missouri Supreme Court struck down that law," the Gaming Commission said in its 1998 annual report, "the commission had an obligation to enforce the new law announced by the court."
The decision whether or not to keep the boats floating will have significant economic implications for Kansas City; three of the six affected casino operations -- Harrah's North Kansas City Casino, Station Casino and the Flamingo Hilton -- are located here.
Nationwide, between 1987 and 1997 casino revenues rose from $6.5 billion to $25.5 billion, according to industry figures. Locally, adjusted gross receipts for the three boats in moats stood at $334.97 million in fiscal 1997-98, which ended July 31.
Total revenues for all four Kansas City casinos (including the Argosy Casino in Riverside) came to $416.7 million at year-end 1997 -- up $99 million from the year before, according to the Gaming Commission. Harrah's receipts were $155.26 million, Station's were $129.55 million and the Flamingo's were $50.16 million.
Adjusted gross receipts represent the casino's total revenues minus payouts to winners, but don't include operating expenses such as salaries, loan repayments and other costs.
The boats' capital investments were significant as well: Station cost $300 million, Harrah's $167 million and the Flamingo $110 million.
Compared with other businesses, the three casinos rank among the area's largest service-sector firms, according to the Mid-America Regional Council (MARC).
Of 15,040 service-sector companies in the five-county metropolitan area, only 20 employ between 500 and 999 workers. Just 27 have 1,000 or more employees.
In Jackson and Clay counties, the casinos account for 3.51 percent of the total number of people employed in the service sector and 2.66 percent of the service-sector payroll. In the five-county area, they account for 2.14 percent of service-sector employment and 1.65 percent of the service-sector payroll.
The combined payroll of the three casinos -- they employ 5,293 workers -- is $99 million annually. That doesn't include more than $30 million in direct benefits.
Payroll and taxes
By contrast, Sprint Corp. employs 10,000 workers in the Kansas City area, H&R Block Inc. employs 357 and Hallmark Cards Inc. employs 5,900.
Some economic officials caution that the figures used by the casinos can easily be misconstrued.
"We need to be careful with these figures, and ask where the money is coming from that they are paying their employees and vendors with," said Frank Lenk, MARC's director of research services.
"Their money is coming mostly from local folks, unlike these other big firms, whose revenues come from national and international sales. As a result, the net impact of boats is probably not large."
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