Colorado casinos count on Amendment 50 to reverse slide

Colorado casinos went all in on Amendment 50, putting more than $7 million into the successful push to get voters to approve the measure, which will raise betting limits and expand the hours and games casinos offer.
The gaming industry won its bet, but, at the tail end of the worst year in gambling's 17-year history in Colorado, will the pot be as big as everyone hopes?
Casinos are counting on the changes to reverse their year-long slide. If, as expected, the citizens of Cripple Creek, Black Hawk and Central City vote to approve the full slate of possibilities, casino betting limits will rise twenty-fold to $100, casinos will stay open 24 hours a day and roulette and craps will join poker and blackjack at the tables when the changes go into effect July 1, 2009.
Long-term, Amendment 50 should mean rising property values, new investment and more jobs for Cripple Creek, said Cripple Creek Mayor Dan Baader. He had hoped to hold the special election on the changes in December, although a January vote now looks more likely.
"It looks like a January special election for all three cities," he said. "And then we're off to the races."
Short-term, though, the picture is cloudier. The Colorado Legislative Council estimated the changes would bring in $300 million over the first five years. Amendment 50 directs 78 percent of the new tax revenue to the state's community colleges. The economy has gotten a lot worse, though, since that analysis was done.
Casino owners blame the overall economy and the statewide smoking ban, which was extended to casinos at the beginning of the year, for their troubles. David Minter, general manager of Johnny Nolon's Casino in Cripple Creek and one of the backers of Amendment 50, said casinos had a simple choice.
"The industry was going nowhere - it wasn't even going nowhere, it was going backwards," he said. "It was a choice of do this or sit there and watch the industry gradually die."
Gambling revenue has dropped precipitously in 2008, bringing in 11.4 percent less statewide compared to 2007. Revenues have been down every month this year, usually by a double-digit margin. On Halloween, the Wild Horse Casino in Cripple Creek closed its doors, putting 62 employees out of work.
Closing a casino a week before a vote on a bill intended to save the industry seems counterintuitive, but Wild Horse general manager Todd Fred said the casino's owners couldn't take months of further losses.
Although the Wild Horse's closing is a bad sign for the industry, it will relieve some of the pressure on the city's 16 remaining casinos, assuming its clients take their business elsewhere.
"From a business standpoint, you have to look at it as, ‘Now there's one less piece out of the pie,'" said Kevin Werner, general manager of the Wildwood Casino in Cripple Creek. "(On the other hand), it's a tough time of the year for people to be losing a job."
The Wildwood (not to be confused with the defunct Wild Horse) opened in May, adding 700 slot machines to the city's total. The Wildwood sports a large section of table games in the center of its gaming floor, even though poker and blackjack are not major money makers for casinos with the current $5 limit.
"We always thought it was part of our culture in the gaming industry to have table games," Werner said.
Come July, of course, those table games will suddenly become a very important part of the Wildwood's business. Werner said he plans to swap some of the existing games out for craps and roulette, rather than expanding the table games area. He is contemplating, however, adding some kind of Vegas-style high rollers area.
"We're already working on finding tables and trainers," he said.
Johnny Nolon's, on the other hand, will likely stand pat come July, Minter said. He'll stay open 24 hours and raise betting limits, but 2008 has taken such a toll that Minter said he doesn't have the money to bring in table games and train the staff to run them.
"We're probably going to have to wait at least a year," he said. "Yeah, it's frustrating, but it's just a fact of life."
For the state's community colleges, there's really no downside to Amendment 50, since the amendment states that the gaming tax revenue only be used to supplement existing funding and leaves the colleges free to decide what the money is used for.
"It will enable us to continue to do some very good things in community colleges and to improve on our successes," said Nancy McCallin, president of the Colorado Community College System. "It is really an incredible vote of confidence in us that the citizens of Colorado approved this."
Although this year has been rough for the industry, historically the gaming industry is less volatile than the economy at large, McCallin said, so the new money coming the college's way is likely to fairly predictable.