Video Slot Threat

Cripple Creek casino operators win tax victory; face fears of horse track slots

by Rick Langenberg

Cripple Creek gaming operators and local elected leaders have netted a final tax victory, but once again are engaged in a huge legislative battle against a familiar foe. Or as some local officials have concluded, “It’s one (battle) down and one to go.” Cripple Creek leaders last week received the news they were expecting from the state gaming commissioners, but learned they will have to combat the threat of video slots at horse race tracks, including a venue in Pueblo.  And unfortunately, Colorado voters won’t be permitted a say in the pending video slot explosion.  The Teller County Commissioners are scheduled to address the issue this Thursday (Feb. 23) at their regular meeting.     

Tax Finale

Last week, the Colorado Limited Gaming Control Commission finalized their long-awaited decision and unanimously agreed to maintain the status quo policy regarding the holding of multi-gaming licenses by casino companies.  The 5-0 decision was expected and followed months of testimony and lobbying by Cripple Creek casino owners, Teller elected leaders and city officials. In essence, this verdict amounts to a nearly $5 million tax reprieve for key casino operators in the Creek who have used these multiple licenses to expand into nearby establishments.  If the commission had voted to change the law and abolish the use of multi-licenses, a handful of casino operators would have faced a dramatic three-fold hike in their annual taxes and the city may have lost several hundred jobs.

In finalizing their decision, the commission mainly concluded that the multiple licensing rule, while providing a slight tax break for certain Cripple Creek operators, didn’t represent an “abusive situation.”  The commissioners noted that the establishments taking advantage of this provision in the law (allowing each company to have up to three licenses) have invested a considerable amount of money into preserving historic structures in the process and have abided by the spirit of the original gambling amendment. The commissioners’ comments mirrored those of a previous meeting during which the commission surprised local leaders by publicly stating that they supported the claims of Cripple Creek and Teller County officials regarding this issue and were learning towards not changing the current rule.   “They see no reason to change the existing law,” said Cameron Lewis, spokesperson for the Division of Gaming, in describing the commission’s stand.  But a final decision did not become official until last week’s regular meeting in Golden.  “We are very pleased,” said Cripple Creek City Administrator Ray White.  “We were expecting this decision but we weren’t completely sure until the final vote.” During last week’s regular council meeting, Mayor Pro Tem Steve Zoellner publicly thanked Finance Director Paul Harris, and credited him for playing a key role in convincing the commissioners to keep the status quo system.

Harris stated that the “historic preservation piece” in their argument amounted to the real turning point.  City officials tried to demonstrate how the use of multiple licenses by key operators, such as Bronco  Billy’s and Triple Crown, paved the way for the preservation of historic buildings.  They emphasized that historic preservation was a key part of the original gaming law, finalized in 1991. Plus, Cripple Creek and county leaders noted that a reversal of this law could lead to considerable job and revenue losses  

 Fighting a familiar enemy

While local leaders are happy with last week’s gaming commission verdict, they don’t have much time to celebrate if they want to hold onto their current pot of gambling revenue. City leaders are preparing to testify against another legislative effort to legalize video slots at certain Colorado licensed horse tracks, including a site in the Pueblo area.  A legislative hearing on the bill, referred to House bill 1280 and introduced by representatives Don Coram and Jerry Sonnenberg, is scheduled for this week. The bill would allow for video lottery terminals, referred to as VLTs, at three licensed horse race tracks throughout the state, with 2,500 slots at each location. The legislation represents a mirror image of a Senate bill introduced at the close of the 2011 session, which suffered an abrupt death. Similar attempts have been made in the past, but have never advanced past the proposal stage.  A state-wide vote on VLTs occurred about 11 years ago, with Coloradoans rejecting this bid by a huge margin.  Still, the new legislative package, which has to initially get approved by several committees, has created much local financial and political angst. “We feel this would be a direct threat to us,” said White.  “We are very concerned. VLTs are nothing but a fancy term for slot machines.” He and other city officials see the possibility of video slots at the race track in Pueblo as a devastating blow to Cripple Creek. Pueblo is considered a key player in the Cripple Creek casino market. And once again, the bill proponents are using the perk of education funding as a special enticement.  A portion of state revenue from the pro-VLT legislation would reportedly establish a Colorado College Scholarship Fund. 

What worries White and other leaders is that the VLT proponents are getting a head-start this year by introducing the plan at the beginning of the session.  The bill also makes no allowances for a state-wide vote. In fact, if the legislation passes and gets signed by the governor, the only additional approvals required deal with the majority elected representatives or voters of the towns or counties where the video slots would be located.  The bill calls for one VLT center to be located in the city or county of Pueblo, and another east of the Continental Divide and another site west of the Continental Divide.   Besides the site in Pueblo, legislative insiders expect VLT race tracks to be chosen in the Denver and Grand Junction areas, if the measure moves forward

Bill proponents say the measure could generate $34.3 million in revenue for the state in the first year of operation, and more than double that for the following year. Unlike limited stakes gaming, the VLTs would be governed and licensed by the Colorado Lottery Commission. Proponents hope to have the VLT operations up and running by the beginning of 2013.Already, several key legislative groups have taken a stand against race track slots. Action 22, which represents the entire southern Colorado region, has voiced official opposition to any future expansion of gaming in Colorado. In addition, the Colorado Counties, Inc. organization is expected to join Cripple Creek in this fight.  The Teller County Commissioners are scheduled to adopt a formal resolution opposing the VLT legislation this Thursday. Also, city officials are trying to convince key representatives of Colorado Municipal League to oppose the bill. With the recurring VLT threat, city and county leaders worry that sooner or later, one of these gaming bids will squeak through and Cripple Creek could face hefty competition.