Local Officials gather to voice support of Gaming Initiative and come up with a plan

by Michelle Saeger
June 25, 2008 - Our elected officials got together last Wednesday in a rare joint work session. All three Gilpin County commissioners, the Mayors of both Black Hawk and Central City, and the majority of both cities' council members gathered at the Central City Hall. The topic was Initiative 121, a ballot question to allow enhancements to existing gaming in the state. (see sidebar story)
Proponents of the bill are attempting to secure 121,000 signatures of eligible electors to send a message that the measure has strong backing. If the required 78,000 signatures can be collected and verified by mid-August, Initiative 121 will appear as a ballot question for statewide vote this November.
They came to request a referendum from the County and Cities in support of the gaming initiative. Lobbyist Rick Reiter described the measure as a way to "ease some of the limits in a 17 year old law."
Basically, the question will be put to statewide voters whether the electors in each gaming community should be allowed to enhance their gaming offerings through a combination of three options: increased bet limits, adding new games which are currently not allowed in Colorado, and/or expanding operating hours from the current 8 AM until 2 AM.
If the statewide initiative passes, local elections could be held to allow the voters in each of the three gaming cities to decide what is right for their community. The local citizens can decide which, if any, of the three enhancements they would like to make available to local casinos and at what level.
Black Hawk Mayor David Spellman set the tone for the discussion when he began with the prediction that "if this [gaming initiative measure] fails, the capital investment from new casinos will cease…and reinvestment by existing casinos will diminish". He noted the state would be seen as "hostile to gaming." Spellman said, "To me, it is not a question of whether these communities support this, but what we can do to help it pass.” He then said, "I think we should start working on a joint resolution."
Central City Mayor, Buddy Schmalz, expressed concerns over how the money would be distributed to the gaming communities. As the Mayor of the gaming town with the lowest revenues, and whose family owns Dostal Alley Casino, he wants to make sure Central City would get their fair share for any enhancements they enact.
With Mayor Schmalz (D- District 1) wavering on whether he supported the initiative, Mayor Spellman called for others in attendance at the meeting who are running for County Commissioner to weigh in on the issue.
Jerry Ward (R - District 3) stated emphatically, "The sooner you can get this resolution together, the better."
Bob Giancola (R- District 1) noted that "Gaming has progressed in every other state," and that Colorado was the lone hold out for such restrictive gaming laws. He opined "If we don't do something, we will lose gaming."
Web Sill (R - District 1) noted that he did not historically support gaming in our community. He said "It's here now. I support this."
County Commissioner Jeanne Nicholson suggested that a joint resolution be prepared by staff for consideration by each entity's governing board without committing to a position.
In the end, a consensus was reached to prepare a joint resolution between Central City, Black Hawk and Gilpin County. Teller County and Cripple Creek will also be invited to participate in the joint resolution.

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INITIATIVE 121
Gaming Enhancement
Initiative 121 is designed to allow voters statewide to give permission for each of the three limited stakes gaming communities to hold their own local election to allow local voters to decide whether and how to ease gaming restrictions within their community.
If passed in the statewide election, local voters will be able to decide on three ways to increase gaming revenues by enacting less restrictive rules.
One way is by increasing bet limits; the current antiquated $5 limit could be raised to as high as $100 per bet. Another choice would be adding new games, craps and/or roulette, which currently are not allowed in Colorado. The third enhancement would be to expand operating hours from the current 8 AM through 2 AM.
If the statewide initiative passes, local elections could be held as early July 2009 to allow the voters in each of the three gaming cities to decide which, if any, of the three options they would like to make available to local casino customers and at what level. Each casino in that jurisdiction could then decide if they wish to take advantage of the enhancements offered in their municipality.
The initiative also clarifies that new gaming taxes require voter approval, as do other taxes in our state under TABOR. The initiative proposes to freeze the gaming tax rate structure for casinos at its current graduated rate structure with a 20% maximum rate. According to current law, the tax rates are allowed to be between 4% and 40% with the Colorado Limited Gaming Control Commission setting the rate annually as it sees fit.
Easing restrictions on the 1990 Constitutional Amendment that created limited stakes gaming in Colorado will bring our gaming laws up to date and make Colorado a more competitive gaming market. It will also increase revenues for our local casinos and the gaming taxes they pay to the state.

How Initiative 121 will
help Higher Education
Proponents of the "gaming initiative" hope that it can do for our state community colleges what gaming has done for historic preservation in the state.
Currently, gaming taxes paid to the state by over 40 casinos is first used to pay for the state's expenses associated with the governing body, the Colorado Limited Gaming Control Commission, and its enforcement arm, the Colorado Division of Gaming. After expenses, the remaining gaming taxes are distributed 50% to the state General Fund, 28% to the Colorado Historical Society for preservation efforts statewide, 12% to the county where the revenue originated, and 10% to the city where the revenue originated.
Last summer, the Colorado Limited Gaming Control Commission distributed $106 million of the $112 million in gaming taxes paid by local casinos, according to the formula above.
Initiative 121 is drafted so as not to "steal" revenue from the current beneficiaries. If the measure passes, a "base revenue level" will be established based on current annual revenues. All gaming taxes distributed up to that base level amount as adjusted for 6% growth annually will be distributed according to the current formula above.
Any additional gaming taxes above the base level plus 6% would be distributed with 78% of the proceeds going directly to Colorado's 13 community colleges and two district colleges. The remaining 22% would go to the county and city of origin in the exact same manner as it does now.
The gaming monies will be distributed to the community colleges based on enrollment and are earmarked for classroom academic resources or financial aid.
Currently, state support of community colleges in Colorado ranks 49th in the nation. The goal is to use gaming revenues derived from gaming enhancements to put Colorado in the top five nationwide.
Colorado used to rank in the high 40's for historic preservation, but is now 1st or 2nd (with Texas our main contender) since gaming began to support preservation efforts. Over the first 15 years of limited stakes gaming in our state, the industry has contributed over $1 billion in gaming taxes with over $280 million going to historic preservation efforts.
Revenue projections by two state agencies show that the community colleges could benefit at this same level.