In Detroit, casinos bring glitz and grit

THE BALTIMORE SUN

DETROIT -- The three glitzy casinos in the heart of the Motor City offer a preview of what Maryland could expect if the General Assembly approves expanded gambling this year.

The huge, neon-lit facilities on the edge of mostly poor, predominantly African-American communities are open 24 hours a day and house thousands of slot machines. The bets range from nickel-a-pull to $100- a-pull for high-rolling risk takers.

The casinos are pumping millions of dollars into state and local government coffers, as intended. But they have carried a human toll as well -- family breakups, bankruptcies and similar problems.

The deal in Detroit differs from the one that Gov. Robert L. Ehrlich Jr. has proposed for Maryland in some significant respects. For example, Detroit -- rather than the state of Michigan -- gets the biggest share of the money raised through gambling taxes.

And Detroit has full-scale casinos, with blackjack, roulette, craps and other table games; Ehrlich wants slot machines only at three racetracks -- Pimlico, Laurel Park and Rosecroft -- and at one planned for Allegany County.

But that difference is not as significant as it may appear.

By far, most of the space at each Detroit casino is devoted to slot machines, from which casino owners say they earn 80 percent or more of their money. Each houses 2,500 to 3,000 slot machines and 80 to 100 table games. Ehrlich's plan would allow up to 3,500 electronic gambling devices at three Maryland tracks but no table games.

If Maryland gets its slots casinos, one lesson can be learned from Detroit -- there's no turning back the clock. Last year, the city received $111 million from the casinos -- 6.2 percent of its $1.8 billion general fund budget.

"The city government has already become addicted to the revenues," said slots critic Keith Crain, owner and publisher of Detroit-based Crain Communications Inc. "They wouldn't know what to do without it. It's just a fact of life."

'My only entertainment'

There is little question that Detroit's casinos are popular. They attract thousands of visitors a day -- mostly from the city and surrounding suburbs.

Juanita Thomas, 62, a retired housekeeper, was playing slots on a recent weekday afternoon at the Motor City Casino, owned by Mandalay Bay and local investors. She said she goes two to three times a month and usually takes about $100. Her primary income is her monthly Social Security check.

"This is my only entertainment," Thomas said. "It gets me away from the house. ... I worked for 36 years. The money I have, I do what I want with it."

If Thomas is happy sitting in front of a blinking slot machine, city officials are happy to have her sitting there, helping generate their take.

"We rely heavily on those funds for operations," said Sean Werdlow, Detroit's budget chief. "Without it, we'd have some serious problems right now."

But gambling also has carried social costs that are difficult to measure. Some local gamblers have resorted to embezzlement and other crimes after getting in over their heads.

In one case, a 50-year-old apartment manager was accused of losing her tenants' rent money in slot machines at Detroit's Greektown Casino. The woman was arrested when she tried to rob a bank to cover $5,200 in missing rent money, according to local news accounts.

In another reported case, an elementary school teacher from Cleveland turned to bank robbery after racking up big casino gambling losses in Detroit.

And there have been suicides related to gambling -- including one inside the Motor City Casino. In that instance, an off-duty police officer from suburban Detroit who was losing big at blackjack pulled out his service revolver and shot himself in the head as terrified gamblers scrambled for the exits.

Virgil Carr, president of the United Way of Southeast Michigan, said the number of personal bankruptcy filings "went up substantially" in the tri-county Detroit metro area after casinos opened for business.

The social problems were easy to foresee, but government failed to provide the resources needed to address them, Carr said.

"Social organizations are not the power brokers," Carr said. "We didn't have the political muscle to get things moving the way we wanted to."

Casino company executives say the vast majority of people gamble responsibly.

"If people want to gamble, they'll gamble," said Jack C. Barthwell III, a spokesman for Motor City Casino. "It's entertainment."

He said many residents from the Detroit area have good-paying factory jobs and, on average, spend $50 to $60 a visit -- about the cost of a night out for dinner and a movie.

Marvin Beatty, one of the minority owners of the Greektown Casino, said Detroit's three casinos promote "responsible gaming" and make sizable contributions to charitable groups that assist Detroit's poor.

The impact of the casinos on existing businesses hasn't been as bad as critics had feared.

The Greektown Casino, owned by the Sault Ste. Marie tribe of Chippewa Indians and local investors, placated worried merchants by including them in the casino's "comp" program for players. The casino is adjacent to a strip of Greek restaurants and bakeries. Gamblers get vouchers that can be exchanged for meals at Greektown restaurants based on how much they spend at the casino.

"We gave out $6.2 million in 2002 that went to 10 to 12 merchants that participate," said Salvatore P. Semola, chief operating officer for Greektown Casino.

Crain, the publisher, said he has been surprised the casinos do not seem to have had a noticeable impact on other businesses.

"Honestly, nobody's complaining," Crain said. "You take $1 billion out of the economy, somebody's got to be losing. I don't know who it is."

Crain said he objects to the government raising money through gambling because he views it as a tax on the poor and bad public policy. He said the casinos are a magnet for people who can ill afford to lose their money.

"You will not see a lot of suits over there," Crain said.

Tightly policed

One other fear hasn't materialized -- that crime rates would soar in areas around the casinos. But that's no accident.

The casinos, which also have an internal security force, pay $10 million a year for extra uniformed police patrols outside, according to Lt. John Autrey of the Detroit Police Department's gaming unit. The 76 police officers patrol the casino areas around the clock.

"This is one of the safest places you could be," said Barthwell, the Motor City Casino spokesman. Payment for the patrols is on top of the $111 million a year betting tax the casinos pay to the city, he said.

While street crime hasn't been a significant problem, police have faced other challenges, Autrey said, including an increase in false felony reports.

Seeking a cover story for an angry spouse, some patrons will tell police they were robbed when they lost their money inside a casino, Autrey said.

And police also have learned to question people who report their cars stolen from casino parking lots. Were they, perhaps, behind on payments?

"The repossession people know to check the casino parking lots for cars they are looking for," Autrey said.

More worrisome are problems of parents going to gamble while leaving children inside parked cars. Initially, that happened four or five times a month, Autrey said, but police cracked down hard, and the problem occurs far less often now.

2 decades of defeats

The push for casinos in Detroit followed a tortuous path. It took several public votes over two decades before they finally won approval

A voter referendum to allow casinos in Detroit as a revitalization tool first appeared on the ballot in 1976 and was defeated, as were local initiatives that followed in 1981, 1988, 1992 and 1993.

Attitudes changed in 1994, after Windsor, Ontario, across the Detroit River, opened a wildly successful temporary casino. It was a five- to 10-minute drive from downtown Detroit via tunnel or bridge. Hundreds of cars waiting to cross lined Jefferson Street every day.

"It was incredible the amount of money they were taking in," said Jacob Miklojcik, a consultant who does work for gambling companies.

In 1996, casino advocates collected 430,000 signatures on petitions to force a statewide vote on an initiative to allow three casinos in Detroit. It passed by a narrow margin and was signed into law in July 1997. Motor City Casino and MGM Grand opened for business in 1999; Greektown Casino followed in 2000.

The Detroit casinos are in temporary facilities. All told, the companies spent $610 million to renovate older buildings around downtown Detroit, each providing 75,000 square feet of space for slots and table games.

The deals the companies have with the city require them to build huge, permanent facilities with 400-room hotels at a total additional estimated cost of $1.1 billion. The idea is to create destination resorts, city officials said.

Because of these building requirements, taxes on revenue are far less than has been proposed in Maryland.

Detroit casinos pay 18 percent of the gross -- the amount left after they pay winning players -- to government. Of that, 55 percent goes to the city's operating budget and 45 percent goes to state government for public education.

Last year, the casinos produced gross gambling revenues of $1.1 billion -- meaning the city got $111 million and the state got $91 million.

In Maryland, the Senate approved legislation that would steer 46 percent of the gross from slots to public schools. That would yield about $700 million based on estimated gross revenues of $1.5 billion.

But local government would get a much smaller share -- 4.7 percent, or $71 million.

The money would be divided among local jurisdictions where the tracks are located, based on the revenue at each track. In Baltimore's case, it would be about $22 million.

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