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Colorado Considers Gaming Expansion to Finance Troubled Education System

Posted on April 12th, 2011

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The state legislature is considering the passing of an electronic gambling bill that would fund efforts in growing higher education in the state but many lobbyists and casino owners and operators are calling it a bad idea. Senate Bill 233 seeks to authorize the state lottery commission to allow expanded gambling on at least two racetrack facilities in the form of video gaming terminals. The earnings from the expansion would then go to the commission on higher education for funding state colleges and universities who are heavily impacted by the recession and the reduced subsidies from both the federal and state governments.

The bill is sponsored by Sen. Lois Tochtrop (D-Thornton) who calls it an excellent way to “provide a way to try to get some money back into higher ed.” In Colorado, higher education is the subject of fierce debates in the legislature and the executive Gov. John Hickenlooper. The governor’s office recently rolled out a plan that would slash back the funding for education institutions by a staggering $36 million, this despite the already suffering figure that the sector is forced to deal with every year. According to Sen. Tochtrop, the Senate is looking into getting a financial analysis of the bill to determine if it would really become a viable alternative to education spending. The extra caution comes from the realization that similar bills have failed to gain traction contrary to expectation. A 2003 bill which sought to amend the state constitution to create video lottery terminals to fund projects for state parks and recreational facilities hit a wall when voters refused to let it pass.

The casino community is likewise showing resistance to the bill because, according to Lois Rice the executive director for the Colorado Gaming Association, the bill violates stipulates in the Limited Gaming Act of 1991 which exclusively limits gambling activities to three locales – Central City, Cripple Creek, and Black Hawk. Rice also questioned the bill’s language which granted exclusive monopoly of potential gaming operations to one company, Mile High Racing and Entertainment based in Aurora. Mile High’s current assets and areas of operation include off-track betting sites in Commerce City and Aurora as well as the Arapahoe Park Race Track in Aurora itself. Explained Rice, the bill called for a 30-day race season last year and a 30-day race season scheduled this year to the operator that will qualify for the expanded gambling measure. Following such definition, all other candidates would be eliminated leaving only Mile High Racing as a suitable candidate.

Rice added that the provision is exclusivist in nature which is contrary to the ideals of public bidding and transparency. Mile High responded through spokesman Bill ray saying that while Mile High gains the inside track into operating the facilities because it is the sole qualifier based on the law, other operators also have the chance to join in as secondary retailers. Ray also added, from an independent analysis and estimation perspective, that the move would raise $81 million for Colorado and its target sector. Mile High commissioned the Innovation Group to do the study. The bill is currently on the table of the Senate Business, Labor and Technology Committee, which not by coincidence, is chaired by Tochtrop. Sen. Mary Hodge is a co-sponsor of the bill.

Meanwhile, independent observers argue that the bill would be bad for the state even assuming that it would indeed raise funds for troubled schools. There is a strong consensus that Colorado has been successful in limiting expanded gambling in the state and indeed, Colorado has remained tighter in regulating gaming expansions that most other legislatures. Observers and pundits alike understand the necessity for propping up the education system especially given that the $377 million budget cut for the education sector back-filled by the influx of federal stimulus money would be depleted by 2011-2012. Instead, lobbyists want a strong argument to shift the funding back to education rather than allowing gambling as a means to sustain it.

This is most certainly an area of contention that will not rest given Colorado’s track record of limited engagement with gaming institutions. But in the end, one thing has to be answered: what should be done to help the schools who continue to go through meager budgets even if the number of students has not decreased over the recession period.