Monthly Archives: May 2018

Gambling Legalized!

sports_betting.0

May 29, 2018

A couple of weeks ago the US Supreme Court ruled that a 1992 law called the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional. The regulations under PASPA had effectively outlawed sports betting nationwide, with the exception of four states (Nevada, Oregon, Delaware, and Montana). The Supreme Court’s 6-3 decision gave back to each state the power to decide whether to allow sports gambling.

In the Court’s majority opinion Justice Alito wrote “Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.” He went on to note the “non-legal” pros and cons “Supporters argue that legalization will produce revenue for the states and critically weaken illegal sports betting operations, which are often run by organized crime. Opponents contend that legalizing sports gambling will hook the young on gambling, encourage people of modest means to squander their savings and earnings, and corrupt professional and college sports.”

While it is still too early to see the impact of the ruling, the Center for Gaming Research at the University of Nevada (where else?) has forecast that 14 states will have sports betting up and running within two years. An additional 18 others are predicted to have regulated sports books active within five years.

Prior to the Supreme Court’s decision, the American Gaming Association commissioned a study by Oxford Economics , to analyze the potential economic impacts of legalized sports betting in the US. The study, published in May 2017 provided some figures on just how much our economy could benefit from this legalization. The scope of illegal sports betting activity in the US is inherently difficult to measure. It occurs in a variety of formats, including, betting with bookies, online betting with offshore operators, and through casual forms, like office fantasy football pools. Unlike regulated gaming, which is tracked in detail at the state level, statistics for illegal gaming are not gathered.

Despite the difficulties, Oxford Economics produced an estimate for three adoption scenarios. The “best case” assumed all 50 states legalized sports betting, and that gambling was conveniently available through a variety of media including casinos, retail outlets, and online. The estimated impact of this scenario suggest the generation  around $20 billion to the US GDP, and the addition of as much as $8 billion in additional annual tax revenue. Moreover, around 200,000 American jobs could be added, of which about 80,000 would be directly employed in the sports betting industry. Many of these jobs will come from casinos, which require intensive labor including security guards, technical support staff, and gaming staff, among other jobs. Some of these casino taxes (depending on winning proceeds) are as high as 25% to the IRS!

States will likely be cautious in adopting new gambling laws, so it may be awhile before we see the new ruling making a difference. However, there seems to be real potential for this heavily taxed hobby to have a significant effect on our economy.

Dan Hall

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Pride in Our New Sports Homes

Merc

May 21, 2018

The two new major league stadiums in Atlanta have now been in use for more than a year. These stadiums have benefited from significant tax payer funding, an investment justified by the projected benefits. So what has been the impact of the Mercedes-Benz Stadium and SunTrust Park?

Both stadiums were planned to be state of the art sports complexes, and they had similar budgets.  Construction proved to be a long and tedious road for both. Mercedes-Benz emerged with the dubious “honor” of facing the greater difficulties, with construction delays leading to soccer games scheduled for mid-2017 being played elsewhere in Atlanta.

SunTrust Park sought to create a stadium anchored mixed use complex, complete with hotels, office buildings, apartment complexes, and street level retail.  The main goal was to develop an underused section of the Cumberland/Galleria area of Atlanta.  The project was funded by a joint public/private partnership between Liberty Media, the owners of the Braves, and the Cobb-Marietta Coliseum & Exhibit Hall Authority.  The public side of this partnership, funded by Cobb County, contributed $421 million of the estimated $1.1 billion needed to complete the project.  The stadium itself cost $672 million, a relative bargain in stadium terms. The rest of the costs was for “The Battery”, a vibrant and walkable district of stores and bars.  The added tax revenue from these businesses, and year-round foot traffic, may well pay off for the district in the long run.

Further south in the City of Atlanta, the Mercedes-Benz stadium began taking shape in early 2014.  While this was a stadium-only project, its proponents did not skimp on city-changing optimism.  The total cost of the project was estimated to be $1.6 billion, with a modest $200 million contribution by the City of Atlanta in the form of stadium bonds.  The remaining expenses were covered by a private partnership of investment banks, and Arthur Blank personally.  The Mercedes-Benz Stadium is focused simply on the enjoyment of fans on game day.

As part of the philosophy behind the project, Arthur Blank recommitted to helping the English Avenue district, which lies west of the stadium.  Included in this initiative are a new job training center, affordable housing for police officers, and new youth leadership programs.  Another goal is to bring outside partners and team sponsors to support the development of the area.  The stadium has brought renewed attention to the development of an area known as “the Gulch,” an underutilized section of downtown adjacent to the stadium.  Should development occur here, Blank’s vision of the neighborhood may take one step closer to fruition.

Atlanta now has two contrasting approaches to the stadium/neighborhood relationship issue, and has not skimped on the cost of either.  While it is still too early to tell if either will be successful, the early signs are very positive – just ask any Atlanta based Millennial.

Carey Blakley

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