Secondary Effects of Gambling on Local Communities

1. Tuesday, September 16, 2008 Work Session V: Gaming Tiberius 1,2,5,6 8:30 a.m. to 10:00 a.m. Secondary Effects of Gambling Uses Michael J. Watza Michigan Gaming Control Board Member Kitch Drutchas Wagner Valitutti & Sherbrook Detroit, Michigan Gaming and Local Authority to Regulate Tribal Casinos Robert J. Miller Professor of Law Lewis & Clark Law School Portland, Oregon

2. GamblingSecondary Effects on Local Communities

3. Pros • Direct Benefits • Local and Regional Tax and Fee Revenue

5. Indirect Benefits Employment (Construction and post construction) Local customer spending Local employee spending Local and regional development of supporting businesses (Construction and post construction) Population enhancement Convention development Tourist development Pros(continued)

6. CONS • *The greatest single difficulty with looking at the literature concerning the problems with gambling is surprisingly, the paucity of hard evidence from what I would deem reliable and substantive sources of verifiable data. Many authors of this literature admit this readily. Much of this literature is permeated with speculation and conjecture. The exception appears to be with respect to the pathological gambler comprising an unknown percentage of the general population. • Pathological or Problem Gamblers •                 The one likely verifiable problem with gambling •                 Estimates of .3% to 5% of the population •                 Estimates of ripple effect out to 5-8 additional people •                 At Risk Population: Youth •                                                     College population •                                                     Elderly •                                                     Ethnic minorities •                                                     Poor •                 Requires: Care and support resources •                                   Pre emptive education and advertising          •                                   Monitoring and research •                                   Impact: 50 mile radius? •                 Industry to pay this cost? vs disproportionate taxation? • B.Regressive Taxation • Impact on the poor double as they tend to be disproportionate users of the system and the least likely to enjoy the benefits of the government revenue collected from the industry?

7. CONS (continued) • C. Increased Reliance upon existing social welfare programs • D. Increased Reliance upon existing police resources • (Internal Casino issues) • E. Increased Crime? • F. Overall loss of community wealth? • G. Consumer shift from traditional recreational/entertainment businesses •                 (Carl’s)   • H. Electronic Gaming Machines (EGMs)? •                 (Favorite villain of much of the literature) • I. Disproportionate Local and Regional Political Influence • J. Casino BBBBBBankruptcy??

8. Casino Bankruptcy • Issue: • Balance Local Regulation with Federal Bankruptcy Law and Jurisdiction • Working with the Bankruptcy Court • Patience • Motive for Filing

9. Michael J. Watza is a graduate of the Detroit College of Law, now known as the Michigan State University College of Law. He is a share holder and co-chair of the commercial litigation and governmental affairs group at the law firm of Kitch Drutchas Wagner Valitutti & Sherbrook. Mr. Watza's areas of concentration include litigated, legislative and administrative solutions on behalf of municipal, non profit and private sector clients alike. Michael has represented clients in State and Federal trial courts throughout the State of Michigan and argued in both the State and U.S. Court of Appeals as well as attended to regulatory matters before the Michigan Public Service Commission, Tax Tribunal, Department of Labor and Economic Growth and Federal Communications Commission. Mr. Watza has also represented his clients' interests in the halls of the Michigan Legislature through the negotiation and drafting of legislation on various issues including tort reform, telecommunications, cable, pipeline regulation and the formation of inter-governmental authorities. He serves as General Counsel to PROTEC, a consortium of several dozen Michigan municipalities with unique interest in local government right of way issues, founded by former City of Dearborn Mayor Michael Guido. Michael also sits on several Boards including the Michigan Gaming Control Board, Michigan State Bar Association Public Corporation and Administrative Law Section, Covenant House Central School Board of Detroit Michigan and is the Chairman of the City of Novi Economic Development Corporation. He is Chairman of Panel #9 for the Michigan Attorney Grievance Commission, has been an adjunct member of the Michigan State University Law School Faculty, teaching a course on Ethics and the Practice of Law and serves as a mediator for the Wayne County Mediation Tribunal. In 2007, Mike was honored with a “Super Lawyer” designation by his peers as noted in the national publication of the same name. Biography of Michael J. Watza • Michigan Gaming Control Board • Kitch Drutchas Wagner Valitutti & Sherbrook • One Woodward Avenue, Suite 2400 • Detroit, MI 48226 • Direct Dial (313) 965-7983 • FAX (313) 965-7403 • Email Address: Mike.Watza@kitch.com