By Scott Surovell and Louise Lucas
Next month, Virginians will hear a large sucking sound coming from our northern border. It won’t be our tax dollars going to Washington, D.C., but millions of Virginians’ dollars crossing the Potomac River and flowing into Prince George’s County schools and to Annapolis.
On Dec. 8, Maryland will celebrate the grand opening of its sixth casino, MGM National Harbor, a two-minute drive from Alexandria over the Virginia-Maryland-District of Columbia border.
This $1.4 billion, sprawling resort will include a luxury hotel, conference center, theater, and many restaurants. It is within 30 minutes of over 1 million Virginians and is expected to draw 20,000 people per day and employ 3,600 people.
The MGM Grand is projected to generate $40 million to $45 million in tax revenue for Prince George’s County and more than $340 million per year for the Maryland state budget from the 61 percent tax on slot machine revenue and 21 percent tax on table revenue — revenues MGM committed to Maryland’s public schools during the bidding process.
MGM anticipates that nearly half of its business — $350 million per year — will come from Virginians. The Virginia Lottery’s senior economist estimates that the state’s lottery will lose $15 million to $30 million in sales and $5 million to $10 million in profits per year starting next year because of the MGM casino.
******
Nationally, the gaming industry generates more than $240 billion in sales and $38 billion in tax revenue annually. Maryland is one of 23 states that run state-controlled casinos. States like Colorado, Delaware, Iowa and Kansas use gambling proceeds to help fund their schools, social services for the elderly, property tax relief, law-enforcement training, and economic revitalization plans.
The gaming industry also creates jobs. In 2015, the gaming industry employed 1.5 million people. Minorities make up 45 percent of the gaming industry’s workforce, leading the national average of 33 percent across all industries. The gaming industry also leads the national average in hiring people with disabilities and millennials. This industry is on track to create over 62,000 new jobs in the next decade, studies show.
In the 2013 tax year, the Internal Revenue Service received 1.9 million tax returns that claimed nearly $30 billion in gambling income, and significant amounts already come from Virginia.
A 2015 Virginia Lottery survey of 4,803 Virginians found that 19 percent of respondents had placed bets at a regional casino or racetrack in-person in the past 12 months, and 5 percent had recently made wagers via internet/telephone. Forty-four percent said they would wager in-person or online if a full-service casino opened in the Commonwealth of Virginia.
******
According to the Fantasy Sports Trade Association, 18 percent of U.S. adults participate in fantasy sports, a form of gambling that Virginia legalized last year, and 64 percent of those users play fantasy sports daily. The Virginia Lottery estimates that Virginians currently spend more than $200 million on fantasy sports each year. If Virginians spent $200 million on lottery products, the state would earn a profit of $56 million.
Virginia now faces a $1.4 billion deficit partly generated by an antiquated tax structure designed for a 1920s’ farming and manufacturing-based economy. Virginia’s budget revenue growth has been below average for each of the past seven years, and we are once again facing a billion-dollar shortfall. Virginia clearly needs new sources of revenue.
Ten different bills over four years have been introduced by Sen. Louise Lucas to create a state entity to regulate Virginia casinos, but none has passed a committee.
While we could choose to continue helping Maryland, West Virginia and New Jersey’s taxpayers, we could also choose to start diversifying our revenue sources and keeping our money, tax revenue, and jobs right here in Virginia.
Scott Surovell, a Democrat, represents the 36th District, which includes parts of Fairfax, Prince William, and Stafford counties, in the Virginia Senate. Contact him at ScottSurovell@gmail.com.
Louise Lucas, a Democrat, represents the 18th District, which stretches from Portsmouth to Emporia, in the Virginia Senate. Contact her at district18@senate.virginia.gov.
