10/22/2004 12:00AM

Welcome mat has been rolled up


While we wait to see who wins the presidential election, the gaming industry is seeing a change of attitude in recent polls. No longer are state legislators tripping over each other to embrace gaming as a way to ease their budget crunches. And, no longer are gaming companies willing to pay an unrealistic price to expand their product into jurisdictions that don't fully embrace them.

Major gambling initiatives on the ballot in California, Florida, Nebraska, and Oklahoma appear headed for defeat. Of the five states with major gaming measures, only Washington seems likely to pass its initiative.

The biggest defeat come election day is expected in California. Both referendums - sponsored by the state's racetracks and card clubs - seeking alternatives to the compacts that several Indian tribal casinos negotiated with Gov. Arnold Schwarzenegger have lost their steam. The racetracks and card clubs pulled the plug on promotional financing for the referendums and will now look for relief in the California courts.

In Nebraska, vigorous opposition to gaming comes from billionaire Warren Buffett. Florida, where slot machines are proposed at parimutuel venues, has the 400,000-member state Humane Society leading a strong anti-gambling coalition. And in Oklahoma, a measure to legalize the lottery is being contested by church groups.

Gaming companies are no longer aggressively lobbying for ballot measures or looking for expanded gaming in other jurisdictions as they did in the golden decades of the 1980's or 1990's. Outside of Pennsylvania, where the state's legislature legalized slots at racetracks, the opportunities are not there for gaming companies.

One reason for the slowdown is the rate of tax the gaming industry must pay. When gaming is brought into a community purely for tax revenue, it no longer becomes a profitable proposition for major gaming companies. Illinois raised its highest incremental gaming tax rate this year to 70 percent, forcing gaming companies there to reduce operations and trim jobs. Even the 50-percent proposed tax rate in Pennsylvania would only make good business sense to the existing racetracks in the state.

For now, major gaming companies are turning to mega-mergers - such as the current Harrah's-Caesars Entertainment and MGM Mirage-Mandalay Resorts deals - looking to consolidate the U.S. market and expansion projects, such as the new Wynn Las Vegas and the Venetian, in the gaming-friendly environment of Nevada. They are also looking at greener pastures overseas, where politicians and voters are a little more friendly.

Ralph Siraco is turf editor for the Las Vegas Sun and host of the Race Day Las Vegas radio show.