Expanded Gambling In NH: Casinos Win. The Public Loses.

This posting is reposted from Representative Bob Perry's website (www.Perry4NH.org).

Expanded Gambling Bill:  Casinos Win.  Public Loses. 

SB 152, the senate's expanded gambling bill, will arrive on the house floor on May 22, for debate on a very narrow (one vote)  committee recommendation of inexpedient to legislate (ITL).  It is sure to be a long debate, with many amendments presented, as proponents of expanded gambling try to appease skeptical legislators.  There are many opponents, the latest of which is the Portsmouth Chamber of Commerce, which recently voted unanimously to oppose expanded gambling.

Additional reasons for opposing SB152:
  • Unaddressed, unidentified flaws. The House SB152 super-committee has uncovered so many weaknesses, flaws, and unaddressed concerns that they cannot be meaningfully or knowledgeably corrected. Furthermore, we don't know enough to address many of these concerns, or if we've even identified all of them.
  • Time and expertise lacking. The legislature should kill (ITL) SB152 and take the time and retain the expertise necessary to do the job unanimously recommended by Governor Lynch's Gaming Study Commission before deciding whether to expand gambling.
  • No revenues for the coming budget. Projected casino license and tax revenues are both later and lower than the bill claims, and Massachusetts casinos would cut revenue by nearly half.
  • Casinos cannibalize local business, using monopoly slot machine profits to undersell rooms, meals, entertainment, and conference services.
  • No state has one casino. The decision to legalize one casino is a certain decision to proliferate slots parlors statewide and forever changing the face of our state.
  • SB 152 is a no-bid sweetheart deal that siphons 70% of the profits out of our local economy and into a Las Vegas casino company.
  • Casino states have worse budget stresses than New Hampshire. Connecticut, New Jersey, Delaware, and Illinois and other casino states have suffered intensifying cross border casino competition, years of declining casino tax revenues, and budget stresses worse than New Hampshire’s.
  • Casino jobs wouldn't necessarily go to NH workers. Within 30 miles of Salem, 2/3 of the workforce lives in Massachusetts, which has a higher unemployment rate than ours.
  • Casino social costs are real. A casino would bring a new, highly addictive form of gambling to our state. Video slot addiction causes harms that money can't fix.
  • The closer the casino, the greater the net economic cost. While Massachusetts casinos will cause net economic harm, imitating Massachusetts by bringing casinos here only compounds the costs. The closer to slots, the higher the costs of broken families, bankruptcy, crime, and suicide.

Last week on Ch. 9's Sunday morning program Close Up, the spokesman for Millennium, the corporation likely to be developer of a casino, said that SB 152 prohibits Millennium from influencing New Hampshire's elections.  I disagree.  Those of us working on a disclosure bill, including Gordon Allen, volunteer with Coalition for Open Democracy (COD), Concord, are well aware of the flaws in SB 152, and well aware of the flaws in current statute related to campaign expenditures by special-interest organizations, as explained below.  These flaws, together with the Supreme Court ruling in Citizens United, grant license to special-interest organizations, including the gambling lobby, whether Millennium or any other, to spend millions to support or defeat candidates to pursue the corporate interests.  It will not stop at one high-end casino; rather, gambling will proliferate throughout the state and end only when there is no longer any profit to be made.  Profit is the core function of a corporation.

The current definition of "political committee" under New Hampshire law is meaningless, and has not been enforced. As evidence of the need for passage of a meaningful disclosure law, the National Institute on Money in State Politics recently ranked New Hampshire with a failing grade - "F" - because of its weak disclosure laws.  I suggest there would be every incentive for the gambling industry to work the halls of the state house and flex their media muscle to keep this "F" rating, and defeat the two disclosure bills currently in study, and any that may follow.  Why would the industry not oppose a law that would reveal the extent of its political influence?  The revealing testimony of Mr. Allen in committee appears below.  Used by permission.

Loopholes in SB 152 that Allow Casino Licensees to Spend without Limit to Influence Elections

SB 152 Testimony – Gordon Allen, Coalition for Open Democracy, Antrim, NH – wgordonallen@gmail.com
  • #1  Loophole in the SB 152 provision to prevent casino operators from bankrolling NH elections with unlimited amounts of money because of the loophole in the definition of “political committee” making the prohibition of “contributions” to political committees meaningless.
The first loophole in the SB 152 provision intended to prevent a casino operator from spending millions to bankroll elections for state offices stems from the loophole in the definition of "political committee" in current NH law.  This loophole greatly limits what independent groups now spending millions on NH electioneering are defined as “political committees” – and only those independent groups funded by the licensee that are “political committees” in SB 152  284-B:17, XII are restricted.  This is the same loophole that the Coalition for Open Democracy, together with other groups who believe in transparent elections, have been working hard to close to get full disclosure from independent special interest groups now spending millions in NH to elect candidates – and who can now hide themselves and their spending from public view.

These independent groups, which businesses like casino operators typically use to conduct their electioneering (including so-called Super PACs), are not now required to be “political committees” under State law.  This means they do not have to register with the State and disclose details about who they are and their spending, as candidates’ campaigns do.  It also means they have no limits to the electioneering spending they can make or the size and amount of the contributions they can receive.  In the 2012 NH gubernatorial election, for example, these independent groups dominated the election by spending at least $19m compared to $4m spent by the candidates themselves.  SB 120 in the Senate and HB 392 in the House – both now in study – would close this loophole by mandating that these special interest groups (including those electioneering for casinos) register as political committees.  If these bills passed, they would close one of the major loopholes in SB 152 - a loophole that now allows the casino licensee to spend without limit to bankroll NH elections because the groups doing the spending are not required to be “political committees” under current law.

Specifically, Section 284-B:17, XII. in SB 152 below  is the provision intended to prevent NH elections for state offices from being bankrolled and greatly influenced by casino operators whose existence and profits are totally dependent upon the monopoly license granted to them by the State.
XII.   No licensee or any person owning an interest in a licensee or affiliated personnel shall be permitted to make a political contribution as defined by RSA 664:2, VIII. 
The key to this first loophole in 284-B:17, XII. is the definition of contribution in RSA 664:2, VIII. in current law and specifically a contribution to a political committee.

RSA 664:2, VIII. "Contribution'' shall mean a payment, gift, subscription, assessment, contract, payment for services, dues advance, forbearance or loan to a candidate or political committee made for the purpose of influencing the nomination or election of any candidate. "Contributions'' shall include the use of any thing of value but shall not include the services of volunteers who receive no pay therefor or the use of personal resources by a candidate on behalf of his candidacy.

If a casino operator itself – or any number of affiliated, subsidiary, or front groups casino owners or the corporations typically use to conduct their independent electioneering – were considered to be “political committees” under state law, then 284-B:17, XII might prevent casino licensees from making political contributions as intended.  However, because of the flawed definition of "political committee" in current NH law, nonprofits such as 501(c)(4)s and 501(c)(6)s making independent expenditures on behalf of casinos would not be required to register as “political committees” even if they were to spend millions to influence our state elections.  This means the casino licensee under 284-B:17, XII. would not be prevented from contributing unlimited amounts to the 501(c)(4)s or 501(c)(6) trade associations (such as a gaming association) that would run independent electioneering campaigns on their behalf because these groups would not be considered "political committees" and contributions to them not considered “contributions” under state law in 284-B:17, XII.  So while Section 284-B:17, XII. would prevent casinos and their owners from contributing directly to a candidate’s campaign (although not prevent other affiliated entities rather than person from doing so), it would not prevent them from making unlimited contributions to these independent groups because they are not political committees and contributions to them not “contributions” under state law.
  • #2  Loophole in 284-B:17, XII. from no restrictions on making political “expenditures” as defined in RSA 662:2, IX., “independent expenditures” in RSA 664:2, XI., and “electioneering communication expenditures” not defined and covered in current State law.
In order to prevent the casino licensee, their owners, employees, and any connected, funded, or other entities and groups from spending millions to elect or defeat candidates (none of which are required to register as political committees), there must be an ironclad prohibition against electioneering expenditures as well as contributions.  This includes explicitly prohibiting “electioneering communication expenditures” now used so extensively that do not expressly call for a vote for or against a candidate but are those negative attack ads against candidates they want to defeat that fill the airwaves and our mailboxes at election time.  Electioneering expenditures as well as contributions have to be prohibited to protect our elections from the danger of being dominated by casino money as 284-B17 XII. intends.  This includes careful monitoring and enforcement of the extensive advertising the casinos will be doing to make sure there is no electioneering advertising embedded in it.  The reality is that there will be tremendous pressure on the casino licensee to influence the NH political process simply because their entire existence in NH depends on the political process.  It is not wise or prudent business practice for a casino licensee to leave their future to chance decisions of elections and the political process, so any available and unenforced loopholes will likely be used.
  • #3  Loophole in 284-B:17 XII. from not explicitly prohibiting contributions and expenditures from entities in addition to persons with any connections, however obscure and complicated, with the licensee and its owners.
Section 284-B:17 XII. does not prohibit contributions and expenditures to other entities electioneering on behalf of the casino licensee, especially as “affiliated” as defined in 284-B:1, I. only refers to a person, which in this context appears to be a “natural person.”  Indeed, it would help tighten up 284-B from the point of view of protecting and promoting the possible public benefits of granting a monopoly casino gambling license if the definition of “affiliated” in 284-B:1, I. was expanded and strengthened to include more connected groups and entities as well as persons.
  • #4  Loophole because there are no definite and significant penalties to the casino licensee for not complying with 284-B:17 XII if it were expanded and tightened to eliminate Loopholes #1-3
  • #5  Generic loophole in 284-B because it contains no provisions limiting lobbying 
Casino interests have already spent millions to influence NH legislators, but this will pale compared to the millions the casino licensee will be prepared to spend to protect and expand their monopoly license.  As good businessmen and as in other states, they will likely work for law changes to protect their profits by reducing the state’s share, their payments to municipalities and to treat addicted gamblers, their capital investment and payments for infrastructure improvements, and other restrictions they will claim limit their ability to compete as the Massachusetts casinos come on line.

Loophole Fixes

All these loopholes can be fixed by adding more detailed provisions to SB 152 to eliminate each one.  This is because there are strong legal grounds that conditions limiting the licensee's electioneering spending and contributions are permissible in protecting the public interest in issuing a license.

* * * * *

Lastly, below is the response of Rep. Margie Smith, (D-Durham), in response to a legislator who expressed support for SB 152.  Used by permission:
Marjorie Smith
You might know that I sat on Finance for 12 years, four of which as chairman.  I know the budget process.  The argument that money from this bill will be directed to USNH or programs for those who depend upon the state for assistance or roads and bridges is not fact based.  1)  this legislature cannot control what future legislatures will do,, 2)  even the ardent supporters of SB 152  acknowledge that there is little or no chance that any money would come in during the 2014-15 biennium, 3)  If at any time the hoped for money can be put in the  budget it is more than likely that the senate will use it to take the place of other money -- example the tobacco tax increase and other funding sources.  The budget that passed the house provided more funding than the governor's budget for some of the areas that matter most to you and to me, and in other areas the cuts were minimal.

The best way that I can explain the finances in this bill would be to say that Millenium is offering a pay day loan to the state.  $80 million, which is significantly less in upfront money than went to other states, has to be paid back by the state taking a lower rate in future taxation than in any other casino/gambling bill that has ever come before the legislature.  I don't think we should permit our citizens to be gouged by pay day loans they take out personally.  I certainly don't think the state should take out a pay day loan on behalf of its citizens.

And, by the way, the bill clearly calls for a commission charged with arranging for subsequent casinos.  This is not a one casino bill.  And the first and strongest conclusion that the governor's commission a few years ago issued is that we should do nothing until we had in place a well structured regulatory system.  In the budget that came out of a committee of conference that I chaired we put $250,000 to pay for the work necessary to develop that system.  The money is still sitting there because the advocates for casino gambling did not want to have such a system in place.

Forty five of our colleagues struggled to try to make a silk purse out of a sow's ear.  They generated hundreds of pages of amendments in order to try to fix a bad bill.  If we were to decide as a public policy that we want casino gambling in the state, then let's write a bill that sets up the regulatory framework and then put forward a plan that does not   grant one-out-of-state company a license to take NH money out of our state.

I hope that your thinking will evolve on this matter.  This is not real money.  It will do nothing to fund the programs we care for.

Margie Smith
* * * * *
Among the many important points made by Rep. Smith:

1)  The bill passed by the Democratically controlled New Hampshire House of Representatives better funds programs important to Democrats and the middle class than the governor's budget, and did so without considering any revenue from gambling.  (Recently, the Republican-controlled senate announced its version is going to be "leaner" than the House version, putting all on notice that its version will contain its own set of priorities, and less overall funding).

2)  The lower budget proposed by the Senate should indicate that future proliferation of casinos already exists in SB 152.

Bob Perry
NH State Representative
Strafford County District #3
Strafford and New Durham

Additional Resources

Portsmouth chamber takes stand against casino in N.H. in the Portsmouth Herald http://www.seacoastonline.com/articles/20130516-NEWS-130519772 

Granite State Coalition Against Expanded Gambling

Restaurant lobby issues call against casinos in NH in the Nashua Telegraph

Expanded Gambling in New Hampshire- an Update on Options  from the NH Cengter for Public Policy

NH House Kills Casino Bill HB 665 on Granite Grok

Coalition for Open Democracy

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