Saturday, September 6, 2003
There should be no debate -- Colorado needs to spend more marketing itself to potential visitors across the nation and world.
On that score, state Sen. Jack Taylor and other advocates of the Colorado Tourism Initiative deserve credit for trying to find a consistent source of revenue for tourism promotion. But while their intentions are on target, their solution misses the mark. The initiative, Amendment 33 on the November ballot, should be defeated.
The initiative would allow up to 500 video lottery terminals in each of the state's horseracing and dog tracks in Arapahoe County, Commerce City, Loveland, Colorado Springs and Pueblo. The state would collect 61 percent of the net proceeds from the terminals.
Proponents predict the initiative would raise $25 million for tourism promotion and would allow video lottery terminals in existing gaming establishments only, thus minimizing the expansion of gambling. And the program would be overseen by the Colorado Lottery Commission, generating millions for Great Outdoors Colorado each year.
But there are a number of concerns about the plan, including the risk of banking on gambling for revenues, the lack of funding to the communities affected and the structure of how the revenues are disbursed.
Not surprisingly, the state's three limited gaming casinos oppose the initiative. A dog or horse track with 500 video lottery terminals -- which operate much like slot machines -- becomes a more direct competitor to the casinos. The casinos are right to be nervous -- gambling dollars are not infinite, and no doubt some of the terminals' success will come at the expense of the casinos. Considering the casinos pay a 13.8 percent gaming tax, losses they suffer will diminish some of the state's gains from the video terminals.
Also, it should be noted that 35 percent of the gaming taxes goes to the casino communities -- Black Hawk, Central City and Cripple Creek -- to help with the impact of the casinos. The Colorado Tourism Initiative offers nothing to the affected communities -- not even a say in whether the terminals can be installed.
Finally, there is the distribution of proceeds. Proponents tout that 61 percent of the revenues will go to the state. But that is net revenue. The lottery pays 58 percent of its proceeds in winnings, another 7 percent to retailers, 8 percent for administration and 27 percent to the state. Horse- and dog-track owners will net 39 percent of profits from the video terminals. The state's 61 percent share comes only after payouts and other costs associated with the terminal's operation are deducted.
Taylor says the initiative will be a "shot in the arm" for the Colorado economy. What he should say is the initiative will be a shot in the arm for Wembley USA, owner of the horse track and three of the dog tracks. Wembley is its leading advocate. And why not? More than anything else, the initiative offers Wembley a way to reverse declining fortunes at its tracks.
Last spring, the General Assembly approved $10 million in spending on tourism promotion at the behest of Gov. Bill Owens. The 43 percent increase raised Colorado from a ranking of 34th nationally in tourism spending to 25th, according to Longwoods International.
Owens and the Legislature made the right investment, one that will lead to more tourists and more sales tax revenues. But in the long-run, Colorado needs a more stable funding source for tourism promotion, such as dedicating a portion of the state sales tax. Such a plan would not be easy to sell to voters, who shot down a similar measure 10 years ago. But it is a better way than the bettor way proposed in Amendment 33.