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Gulf Casinos: From Disaster To Jackpot?

Gambling Foes Mobilize Over Recovery Funds

A measure designed to help the Gulf Coast economy rebuild has morphed into a new installment of a long-running battle between anti-gambling forces and the gaming industry.

Rep. Frank Wolf (R-Va.), a staunch opponent of gambling, and his staff have been quickly organizing a coalition of anti-gaming groups to write to Members of Congress and the Bush administration. Their goal: To make sure that no tax incentives included in post-Hurricane Katrina rebuilding legislation are used to benefit Mississippi casino companies.

The Bush administration has said publicly that casino companies should not be treated differently from other businesses

when it comes to such tax incentives. A call to the White House press office was not returned.

Wolf, in an interview, said the administration’s proposal was put together hastily, and he pointed to a recent Washington Post story in which a spokesman for one big casino company said the industry didn’t even ask for the economic incentives.

“There is no need for this,” Wolf said. In the hurricane’s aftermath, “we should do everything to help the poor and the vulnerable, so the people of Mississippi and Louisiana and Texas can get up and running. There has always been a policy against tax benefits for casinos. And the casinos said they didn’t need it.

“We’re beginning to crank,” Wolf said of his effort. His office is in the process of sending letters to 500 religious leaders and is communicating with a number of other groups around the country. Wolf himself already has written to President Bush, and is circulating a “Dear Colleague” letter around the Capitol. So far, Wolf has convinced 25 colleagues, including Reps. Christopher Shays (R-Conn.), Lucille Roybal-Allard (D-Calif.) and Joe Pitts (R-Pa.), to sign the letter to the president.

But the casino and gaming lobby is fighting back. Frank Fahrenkopf Jr., president of the American Gaming Association, said his group is asking Members and the Bush administration to treat its business like any other.

“First of all, in the Biloxi-Gulfport area of Mississippi, overwhelmingly the largest employer was the casino industry,” he said. “It was wiped out — all 13 casinos wiped out.”

That means 16,000 people are out of work, he said. The American Gaming Association’s member companies, which include Harrah’s Entertainment and MGM Grand, agreed to pay their employees for 90 days.

“If, in fact, the purpose of the legislation is to get the Gulf Coast back up on its feet economically, why would you somehow exclude the largest employer, which is a legal business?” Fahrenkopf said. “In effect, you’re then punishing the employees who pay tremendous taxes … because some people think that gaming is immoral, and want to punish that industry and those employees.”

June DeHart, a partner in the government practice at Manatt, Phelps & Phillips, said her client, Biloxi-based Isle of Capri Casinos Inc., is committed to rebuilding, paying its employees and finding them housing.

“Our client came to Washington last week, not to ask for any special treatment,” she said. “However, if there are incentives and help that the U.S. Congress is going to offer to businesses harmed in the path of Katrina and Rita, they want to be treated like other businesses.”

Fahrenkopf distanced his association — and the gaming industry — from the comments made by the Harrah’s spokesman in the Post story last week. That spokesman, Alberto Lopez, told the Post, “We can’t ever remember an instance of being offered a tax credit — ever.”

Jan Jones, a spokeswoman with Harrah’s, clarified her colleague’s statements, saying they did not mean that the company wants to opt out of the tax incentives.

She added: “The mistake is to use this disaster for any individual’s personal agenda, whether it’s pro-gaming or anti-gaming. The priority should be rebuilding the Gulf Coast region and putting the thousands of people who are out of work back to work. Congressman Wolf is trying to make this an anti-gambling issue.”

Connie Mackey, vice president for government affairs at the conservative Family Research Council, said Tony Perkins, the group’s president and a one-time state representative in Louisiana, has been in his home state since Katrina to help with relief work.

“He has expressed to us, as much as he wants to help all of the people directly, … a real strong opinion that when FEMA or government money goes back, that gambling is not something we feel should be financed,” Mackey said. “That’s an industry that can replenish itself, unfortunately.”

Mackey said the Family Research Council has been in close contact with Wolf and thinks “he’s doing a good job of raising the issue.”

Tom Grey, executive director of the National Coalition Against Legalized Gambling, said his organization is working with Wolf to prevent casinos from getting tax breaks in the Gulf region.

In a phone interview from Kentucky, where he was fighting the spread of slot machines, Grey said his grass-roots organization, which has an annual budget of $120,000, can’t compete with the political influence of the American Gaming Association. Fahrenkopf, a former chairman of the Republican National Committee, “was in the White House,” Grey said, and he came out with more than what he asked for.

By contrast, Grey said, his group has been sending letters to Bush against gaming for the past five years. “All we’ve gotten is silence. To see them then hand the gambling industry money they didn’t even ask for … this is not government of the people, by the people, for the people. It’s a pay-as-you-go government.”

Grey added that his group also is reaching out to Members such as Sens. Jon Kyl (R-Ariz.) and Mike Enzi (R-Wyo.), as well as Rep. Bob Goodlatte (R-Va.).

Wolf said he has been in contact with officials from the White House and “my sense is that they’re not going to go ahead” with the incentives for casinos.

But he’s not taking anything for granted. “We’re writing a lot of the church groups around the country, anti-gambling groups around the country and asking them to contact the Treasury Department and the White House. My hope is that the Bush administration will, when they send this package up, make it clear that gambling casinos won’t be included.”

Fahrenkopf dismissed Wolf’s “Dear Colleague” letter and his other recent efforts on the issue. “He is vehemently opposed to gaming, and I think most people understand the source of where it’s coming from,” he said.

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