Exec: Casinos are ‘a great economic development tool,’ not a silver bullet

State by state economic impact of commercial casinos

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By Laura A. Bischoff, Staff Writer Updated 5:24 PM Saturday, August 22, 2009

DETROIT — It’s 12:30 p.m. on a Wednesday, but already eight of the MotorCity Casino’s poker tables are buzzing with Texas Hold ‘Em.

Compared with the rest of the 146,000-square-foot casino floor, the poker room is an island of calm and concentration — no music, no smoking, no clanging machines.

The players are serious, carefully gauging when to throw down their red five-dollar chips. A player wearing a Detroit Tigers cap stretches his back as though he’s been sitting too long while a heavyset man sits calmly with well over $500 in neatly stacked chips in front of him. A third player nervously plays with his dwindling pile of chips.

By evening, all 120 seats at the 10 tables are taken.

Just outside the poker room, “Disco Inferno” over the sound system mixes into the din of slot machines clanging, ringing and beeping. Slots players sip on drinks between and even during pulls. Cigarette smoke permeates the air — casino operators estimate that more than half of their customers like to smoke when they gamble.

Security cameras dot the ceiling like pimples, watching everything and everyone.

Despite economic catastrophe in Michigan, Detroit’s three casinos are packed on weekends and see a steady stream of customers midweek. The casinos cater to celebrities, sports stars, wedding parties, blue collar workers, retirees and everyone in between.

“It’s a beautiful place, I think,” said Gerald Kowalczky, a General Motors worker from Southgate, Mich., who spent Monday, Aug. 17, at the MGM Grand Detroit with his buddy, Ken Montroy of Allen Park. Kowalczky usually plays the Greektown Casino because it’s closer to the GM plant where he works. But, he said, “I prefer here. It’s bigger, obviously, and has more to offer in food and amenities.”

The casinos offer more than gambling. The Detroit Red Wings put on their 2008 Stanley Cup rings at MotorCity’s 1,200-seat theater and, in May, the rapper Eminem held his CD release party there.

The casinos are sprawling, gleaming islands in a downtrodden city where 22 percent of the residents are out of work, only 35 percent of the public school students graduate high school, and its one-time pride and joy — General Motors — was forced into bankruptcy.

In 1996, Michigan voters narrowly passed Proposition E to legalize three casinos in Detroit. It failed in most counties but passed overwhelmingly in the city. Only a few years before, the Canadian province of Ontario opened a government-owned casino in Windsor across the Detroit River.

Proponents pitched Proposition E as a way to create jobs and keep gambling money from going across the Ambassador Bridge to Canada and elsewhere. It’s the same argument proponents of the casino proposal in Ohio are using to drum up support for their Nov. 3 ballot issue: Unless casinos are built here, they say, gambling money will continue to go elsewhere.

Thirteen years after the passage of Proposition E, casino owners have poured $2.5 billion into Detroit, building three high-end hotels with 1,200 rooms, bars and restaurants, convention meeting space and sprawling gambling floors. Detroit hadn’t seen this kind of substantial investment in decades.

The casinos hope to eke out more revenue if they can snag conventions and business meetings as well as draw patrons from a wider region and get them to stay overnight.

With only so much gambling money available, Ohio’s ballot issue is being watched closely in Michigan. After all, there’s a chance casinos and “racinos” — the recently approved racetrack video slot parlors — could cut into the Detroit market.

“To a certain degree, I think it would,” said MGM Grand Chief Operating Officer Lorenzo Creighton. “We wish we had more people from Ohio coming here.”

Supporters of Issue 3, Ohio’s casino issue, are promising $1 billion in private investment, $200 million in licensing fees, and $651 million per year split among schools, state and local governments. They also say the proposed four casinos will result in 34,000 new jobs.

That’s more than the roughly 8,500 casino jobs in Detroit, although economic analysts say another 5,500 workers are indirectly employed by the gaming industry here. The jobs also pay well. Wages average more than $50,000 a year and include benefits. On top of that, the casinos spend tens of millions of dollars a year with Detroit-based vendors.

“That’s pretty powerful stuff,” said Jake Miklojcik, a financial and economic consultant as well as a board member for the Greektown Casino. “It is one part of the economic stew of Detroit. People want to say ‘Ah-ha, there are still problems.’ Well, yeah, there are still problems.”

The casinos themselves aren’t without problems — Greektown, which is owned by the Sault Ste. Marie tribe, entered bankruptcy more than a year ago — but officials here insist that warnings about organized crime haven’t materialized while crime in general has dropped since the casinos came in. And in a decade of mostly economic woe, Detroit’s gambling meccas have generated more than $2 billion in tax revenues since 1999.

“Casinos are a great economic development tool,” said the MGM’s Creighton. On the heels of the casinos came new baseball and football stadiums, Comerica Park and Ford Field.

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