And this one’s about a real horse race...

Will voters allow gambling at racetracks to help fund education in the state?
The Colorado Statesman

Two former state legislators submitted signatures on Monday for a ballot initiative that proponents believe would raise millions of dollars for K-12 education by expanding casino gambling to racetracks.

But with millions of dollars already pouring into the race, opponents — largely made up of current Colorado casino owners — are alleging an ulterior motive by a Rhode Island-based casino to hijack the education issue in a selfish attempt to expand operations.

Currently standing as Initiative 135, the proposal comes following the crippling defeat of Amendment 66 last year, in which Colorado voters widely rejected a nearly $1 billion tax increase to fund public education.

Proponents of Initiative 135 believe Amendment 66 was flawed in its language, and so they are proposing another constitutional amendment that they say serves as a more creative solution in a state where voters clearly have no appetite for a tax increase.

They submitted 136,342 signatures to the secretary of state’s office. Initiatives need 86,105 valid signatures to qualify for the ballot.

Spearheading the bipartisan effort is former Sen. Bob Hagedorn, D-Aurora, and former Rep. Vickie Armstrong, R-Akron. Both former lawmakers had opposed Amendment 66.

Backing the initiative financially is Rhode Island-based Twin River Worldwide Holdings Inc., owner of Arapahoe Park.

The ballot proposal would generate more than $100 million annually for K-12 education by permitting expanded gaming at Arapahoe Park horseracing track in Aurora. Under the initiative, the racetrack would pay 34 percent of proceeds from gambling to support public and charter schools. An upfront payment of $25 million would also be paid to the new special education fund.

The initiative would also allow for gaming at one future horse racetrack in Pueblo and Mesa counties, respectively, if criteria were met, including hosting live horse racing and wagering for five continuous years.

Games included would be slot machines and card games, to name a couple. The minimum size to qualify would be 2,500 slot machines, significantly larger than current Colorado casinos. The largest casino, Ameristar Casino Resort Black Hawk, has just fewer than 1,500 slot machines, according to the Department of Revenue’s Division of Gaming.

“It’s a very good alternative for people to consider,” said Hagedorn. “One of the things we know very obviously is that from the defeat of the billion-dollar tax hike for education, people did not want their taxes raised.”

Hagedorn opposed Amendment 66 because he worried about the financial impact on working families, pointing out that the economy was still fragile and a tax increase would have been troubling. He also raised concerns about dollars not going into the classroom, worried that school districts would have used the excess dollars to backfill pension liabilities.

It was the first time he opposed a school-related tax increase. Hagedorn sat on the School Finance Interim Committee in 1993.

“We have to in Colorado be more creative in how to fund necessities for the state like public education, and I think this is a good option — it doesn’t raise anybody’s taxes and it gives more of a guarantee that it will go into the classroom,” opined the former senator.

Armstrong pointed out that the initiative is unique in that it outlines a voluntary way to pay for schools. She herself has two disabled foster children.

“I see the need all the time… in the schools, and I think this is a fabulous way of voluntarily asking people to contribute,” explained Armstrong. “No one is out there forcing people to gamble, and if people want to gamble, it’s a very much of a voluntary way to contribute to the funding.”

Armstrong, a former teacher who has been involved with school finance issues for more than three decades, said one of the things the ballot measure would do is offer greater control to schools over their financial resources.

“One of the things that’s exciting about this amendment is that the money goes directly to the schools,” she sad. “There is no middle man.”

The two former lawmakers acknowledged that gambling is a controversial subject. But they pointed out that the world has changed, especially considering the proliferation of online gambling and several other states approving limited gaming.

They also pointed out that revenue currently collected from gambling in Colorado goes to a variety of areas, including higher education, environmental causes and general spending.

“You can gamble on the Internet now if you know where to go and how to do it. So, it’s a different time, and I think that people whose animosity towards expansion of gaming for various reasons 20 years ago, a lot of them are no longer valid,” said Hagedorn. “So, let’s try it.”

He likened the issue to recreational marijuana, in which voters easily approved levying taxes on adult-use cannabis in order to fund school capital construction and other general spending.

“Let’s face it, it’s already happening that people are looking at cannabis taxes to fund other projects… in a sense you can say it’s a sin tax, and polling has shown that people are more likely to approve sin taxes…” said Hagedorn.

Ulterior motives

But opponents are already lining up to warn Colorado voters not to be fooled by what they believe to be ulterior motives. Don’t Turn Racetracks Into Casinos, the issue committee formed to oppose the initiative, points to Twin River Worldwide Holdings Inc.

The Rhode Island-based company’s chairman, John E. Taylor Jr., told the Providence Journal on July 10 that the push to expand gaming in Colorado is in part due to a need to survive competition from Massachusetts, where efforts are underway to expand gambling. Massachusetts casinos have been expected to siphon off business from Connecticut and Rhode Island.

“Growing the business… solidifies our position in Rhode Island at an important time,” Taylor told the Providence Journal by phone while he was in Colorado “spending a fair amount of… time looking at the situation.”

Becky Brooks, a spokeswoman for Arapahoe Park, acknowledged that it is no secret that there are two motivations behind the initiative.

“The motivation is twofold…” explained Brooks. “The company… is expanding its opportunities… and when you pair that with a contribution to K-12 public education, as well as charter schools, at the tax rate of 34 percent, we thought that was a good win-win…”

Brooks understands that opponents are likely to paint the initiative as a selfish grab by an out-of-state casino owner. But she believes Colorado voters are smarter than that.

“Colorado voters are very thoughtful, but at the same time, they’re a very open group to new and different ideas,” she said. “We’ve done a lot of research to see what the public would like to see as beneficiaries of any additional revenues, and K-12 pops up at the top of the list.”

Proponents, operating under the issue committee Coloradans for Better Schools Inc., have raised more than $2.1 million to support the initiative. Most of that money came from Mile High USA Inc.

Twin River Worldwide Holdings owns Mile High Racing and Entertainment and runs Arapahoe Park. Mile High USA Inc. is the parent company of Mile High Racing and Entertainment.

Opponents believe the money speaks volumes

“A single, financially troubled Rhode Island casino operator wants to write itself a sweetheart deal in the Colorado Constitution. But you can’t dress up a Rhode Island bailout plan to look like help for Colorado’s schools,” opined Michele Ames, spokeswoman for Don’t Turn Racetracks into Casinos.

“This initiative isn’t about public schools,” continued Ames. “Not a single one of Colorado’s 178 school districts have come out in support of this scheme. They paid to have signatures gathered because Colorado’s 36,000 teachers don’t support them. That’s because a plan to build mega-casinos to help one Rhode Island company isn’t a plan for our public schools. It’s a great deal for Rhode Island and a bad deal for Colorado.”

The Colorado Education Association, the largest union of teachers in the state, said it is not taking a position on the initiative.

Jane Urschel, deputy executive director of the Colorado Association of School Boards, or CASB, said her organization has not yet taken a position and doesn’t expect one until September. But she said there are concerns with unpredictable funding streams such as sin taxes.

“Bottom line: I don’t think that the sin taxes are the answer to K-12 prayers, and so I just think that we will probably have a divided board,” she said.

“What worries boards is an unpredictable source… I just don’t feel like the gaming is necessarily predictable,” she continued.

Meanwhile, the opposition committee is buoyed by a financial commitment from the Colorado Gaming Association, which represents the state’s current casinos in Colorado’s historic mining towns of Cripple Creek, Black Hawk and Central City. They have also seen major contributions from the casinos themselves. The coalition has raised more than $9.1 million to fight the ballot proposal.

Don’t Turn Racetracks into Casinos is still in the process of building its coalition.

The Problem Gambling Coalition of Colorado, which advocates for treatment and education on problem gambling, said it will remain neutral. But President Charlie Johns said his organization has some concerns as well.

“Every time we expand the gambling there’s still no provisions being made for helping problem gamblers and their families,” he said. “It’s a nice idea to have more money for K-12, but what about the people who are adversely affected by gambling?”

Beyond the concerns around ulterior motives, financial stability and problem gambling, opponents are also worried about a local control issue. They point out that the initiative would not require approval from local governments where the casino expansions would take place.

“This ballot initiative in its own language writes around the current requirement in our Colorado Constitution that would make them go to a local vote,” explained Ames.

“You’re going to see some folks taking public action over the next few months about their concerns,” she added. “I have gotten a flood of phone calls into my cell phone over yesterday evening and today from local residents out there who are trying to figure out how to get involved with our campaign because they’re worried.”

Ames acknowledged that current casino owners have their own selfish motivations for opposing the initiative. Clearly they don’t want the competition. But she said that the Colorado Gaming Association and individual casino owners didn’t start what could be perceived as “turf war.”

“I’m not going to sit here and be hypocritical,” said Ames. “What we would say is that if Twin River would like to come and join one of the most competitive gaming industries in the country, they’re welcome to come up to Black Hawk or Cripple Creek or Central City, or all three, build themselves a casino and compete on a level playing field with the rest of the gaming industry in Colorado.

“What they want is a special deal in the state constitution for themselves on the Front Range, and that is a different animal altogether than Colorado voters have ever contemplated,” she continued.

Ames is also unconvinced that proponents would actually raise $100 million per year for education. Colorado Legislative Council estimated the revenue impact for Fiscal Year 2016-17, the first full year in which the initiative would be in effect, to be $114.5 million. But opponents are skeptical.

“There’s no reason to believe this $100 million figure that they’re throwing around. They have yet to prove it,” said Ames.

Opponents also point out that the competition would likely result in damaging the gross proceeds of current casinos, which would impact revenue already collected by the state. That revenue supports historic preservation, tourism promotions and gaming oversight and impacts.

“If they take the lion’s share of the business from those casinos, where will the money come from?” asked Ames.

For his part, Hagedorn is not in denial about the polarizing proprietary and revenue aspects of the debate. But he said it’s worth having that conversation if it means more money for schools.

“The observation certainly is not in dispute… we do know that there would be competition…” he explained. “But it’s nothing unusual; it’s nothing new. It is certainly a strategy that convinced me after 66 went down that there needs to be an alternative way to increase revenues without increasing taxes on people.”

Brooks also suggested that America is the land of opportunity, and that the free market should speak for itself in this situation.

“This is a free country,” she said. “So, we’re going the same route that they went. They had to go to a vote of the public… and we’re doing the same thing…”

Peter@coloradostatesman.com