The Great St. Louis Casino War

Published the week of July 5-11, 2000

Meet the new Exhibit A in the case for some form of city-county merger in St. Louis.

It's the proposed Ameristar-Futuresouth casino in the Lemay area of South County.

A war over approval of the casino -- now raging before the Missouri Gaming Commission -- has touched off the ugliest city-county feud since the glory days (news-wise) of the '80s, when then-Mayor Vince Schoemehl and then-County Executive Gene McNary had missiles pointed at one another over stadiums, bus service, health care, the airport and pretty much anything else they could think of.

Those times were great fun for those of us in the media, but everyone pretty much agreed that the Hatfield-McCoy model of regional governance was causing your basic civic meltdown. So for the past decade, politicians on both sides of the great divide have chanted a mantra of "regionalism," especially when they want something from the other side.

Not on this one, though.

City officials are virulently opposing gaming-commission approval of the Lemay casino solely on the protectionist grounds that it will torch the President Casino on the Admiral, thus costing the city precious revenue and jobs. This has sent county officials into orbit, with at least one councilman, Jeff Wagener, threatening retaliation in the realms of transportation, health care and downtown revitalization.

In one sense, it's easy to understand all the self-centered views. In another sense, it's just as easy to wish a pox on all their houses and wonder whether there isn't a better way.

The numbers -- to the extent one can believe casino numbers -- appear to convince politicians that even a struggling gaming operation is better than none at all. As reported in these pages last month, the Admiral continues to live up to its original name -- the Albatross -- with a decaying physical structure and operating losses that make its future look shaky at best.

But on May 2, Mayor Clarence Harmon wrote the gaming commission, urging it "to recognize that as goes the President, goes the City of St. Louis and goes the State of Missouri." This was consistent with the mayor's efforts to put St. Louis on the world map, as that statement now goes to the Guinness Book of Records for its "Hyperbole" section.

Just this week, St. Louis Comptroller Darlene Green told the gaming commission that the President Casino generates $6 million-$7 million in annual revenues for the city and is responsible for about 800 jobs. She quoted figures given by the President's chief operating officer, Jim Zweifel, who claimed his boat could lose about half its business if a Lemay casino is allowed to operate, forcing the operation far into the red, the Post reported.

In response, County Executive Buzz Westfall said the stance taken by the mayor and comptroller "surprises and disappoints me."

"It's quite preposterous," Westfall told the gaming-commission members. "If we're talking true regionalism, you should vote in the ones in North St. Louis, Lemay and Jefferson County and let the best boats win. That's a true free market."

Westfall has a good point there -- although nothing the city officials said is as "preposterous" as Wagener's threat to let the casino war be waged on the backs of those needing regional health care and transportation -- and it's understandable that he is fighting for the several million dollars in new county revenues and hundreds of new county jobs envisioned for the Lemay project.

Meanwhile, the owners of the proposed "boat in a moat" in Lemay have calculations strangely different from those of their colleagues in the city, claiming that 80 percent of their business would be from new gamblers, with only 8 percent coming from the Admiral's customer base.

This is a rather interesting argument, considering the gaming industry's customary claim -- when battling anti-gambling interests -- that casinos merely serve existing demand and don't create many "new gamblers." Guess it depends on whom they're talking to.

Somewhere in the middle of all this bogus rhetoric lies the truth. In the May 1 St. Louis Business Journal, analyst Steve Schneider of Huntleigh Financial Services predicted that the President would lose 5 percent to 10 percent of its earnings to a Lemay competitor but that it would then recoup most of the lost volume within a year.

"Initially what always happens is most of the other casinos feel a little bit of a pinch when a new facility opens," he said. "The market in St. Louis has proven after a period of time that it can absorb new facilities."

Schneider added, though, that the President would be hit worse than other area casinos by the proposed newcomer: "I wouldn't want a competitor if I were the Admiral."

This brings us to larger questions:

Should the government be concerning itself with limiting competition in the gaming marketplace so as to assure the survival of weaker operators?

Whatever happened to "survival of the fittest"?

And would this issue be so hot and emotional if the revenues generated in Lemay and the revenues generated downtown were going into the same pot?

The answers are no, who knows and definitely no.

When you're talking casinos, everyone is in it for the money, from the customers to the owners to the pit bosses to the tax collectors. When competing jurisdictions see another's gain as their extreme loss, you have a recipe for disaster.

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