Casinos and Detroit: odd couple with mixed results
Early on, downtrodden town's experiment with gambling yields its share of benefits, but also tragedy.
It is hard to imagine an odder fit for this city than the MGM Grand casino.
Showgirls, flashing lights, and getting rich quick have little in common with Detroit's blue-collar, working-man image. This is the city that invented the assembly line, a city that greets those arriving from its main airport on I-94 with an eight-story-high steel-belted radial.
But ironically, as the fight over legalized gambling rages, this city may prove to be one of the issue's most intriguing battlegrounds. Detroit has become the largest US city ever to invite casino gambling inside its borders, and its early experiences are being watched closely by all sides.
Struggling to rise above 30 years of economic woes, the city isn't looking to gambling as a panacea, but as part of a broader development effort. By heavily taxing the casinos, the city will offer tax breaks to lure other businesses downtown.
But critics say casinos will rake in not only money but also political clout, while the city and its residents deal with mounting social costs.
The experiment can be traced back to 1996, when a narrow majority of Michigan residents approved a measure that welcomed three casinos into Detroit. The next year, the city decided to let in temporary casinos while the larger betting houses, complete with chain restaurants and 800-plus hotel rooms, were planned.
Now, here sits the MGM, 80 tables and 2,300 slot machines housed in a glitzified downtown building that was once home to Detroit's IRS offices. It opened a year ago, one of two temporary casinos that will soon be joined by a third.
Gambling experts say Detroit is now the industry's fourth-largest market in the United States, and many residents see the casinos as a boon.
Tax money and jobs
In not even a full year's operation, the temporaries have generated an extra $51 million in tax revenues for the city while creating about 7,000 new jobs.
While the tax money will be used for the business tax breaks, the new jobs are already - at least in part - responsible for the drop in the city's unemployment rate from 8.2 percent in January 1999 to 6.5 percent in January 2000, according to state statistics.
Mayor Dennis Archer, who was skeptical of the casinos at first, has been surprised at the progress.
"We've really had no major problems to speak of, no major fiascoes," says Greg Bowens, a spokesman for the mayor.
For the future, Mr. Bowens says the mayor is hopeful that the additional hotel rooms the casinos bring could help lure more conventions - particularly if the Big Three automakers use their pull.
But not all the news surrounding the casinos has been rosy.
The number of Gambler's Anonymous chapters has more than tripled since 1995, according to the Michigan Council on Problem Gambling.
And there has been tragedy.
In January of this year, an off-duty police officer from a nearby suburb shot and killed himself at a high-stakes blackjack table after losing more than $15,000 in one afternoon.
Also worrying to some critics: The permanent casinos are preparing to buy out and move into one of the only areas of Detroit that seems to be flourishing, the warehouse district on the waterfront known as Rivertown.
"The idea was originally supposed to be to put the casinos in various neighborhoods spread around the city," says Tom Grey, national field coordinator for the National Coalition Against Legalized Gambling, in Leesburg, Va. "But once they got in they grabbed the best land and grouped themselves together."
Such moves, Mr. Grey adds, are harbingers of the casinos' growing political clout. He points to Atlantic City, N.J. - which legalized gambling for casinos in 1978, but has not seen the benefits forecast by city and state officials - as an example of how gambling can hurt a town.
Yet others say that is an unfair comparison. Casino defenders note that Detroit, with its powerful auto industry, is less likely to be overrun by gambling interests. Also, the city has had a chance to learn through others' mistakes.
"Atlantic City, because it was first, became the guinea pig," says Roger Gros, senior editor of Casino Journal. "It didn't get the controls that other places got. Detroit has done things smartly."
For instance, Detroit and the state of Michigan tax the casino revenues - something Atlantic City never did - at a rate of 18 percent. They also limited the number of casinos that could move into the city.
As for the rise in problem gambling, city officials point out that casino gambling was already legal just across the Detroit River in Windsor, Ontario. Every day, the city watched a long line of cars packed with suburbanites drive through the city to get to Canada's slot machines and blackjack tables. Detroit's casinos have at least allowed the city to lure some of those suburbanites back downtown.
And regardless of whether Detroit's experiment succeeds or fails financially, city officials stress that casinos alone can't save a blighted city. "This is just part of a larger plan," Bowens says. "We have to have the kind of diversified economy that can succeed regardless."
(c) Copyright 2000. The Christian Science Publishing Society