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July 30, 2014


Will South Carolina roll the dice on casinos at the beach to solve infrastructure dilemma?

Todd Rutherford thinks gambling is stupid.

“It’s throwing away money,” he said.

But the Richland County Democrat is gambling that a plan to legalize high-end, luxury casinos in the Myrtle Beach area will bring in stupid amounts of cash and be the answer for funding the repair and maintenance of South Carolina’s crumbling bridges and woefully inadequate roads and highways without raising the state’s gas tax, which hasn’t budged since 1987.

Rutherford, Minority Leader of the S.C. House of Representatives, plans to introduce legislation next year that could transform the Grand Strand into Myrtle Vegas - and right on cue, opposition is already lining up.

"The people support this. Businesses support this. Many Republicans in the legislature are open to casinos. Anyone who loves individual freedom, personal liberty, and lower taxes should get behind this issue 110 percent,” said Rutherford.

Not these people...Something called the Myrtle Beach People’s Rally set for Aug. 8-9 in the parking lot at Field in Myrtle Beach is conducting an anti-gambling campaign, among other things, and proclaims that it will draw 30,000 protesters. The rally is being touted as a Christian-themed event, and is “an anti-Gambling group. We are against bringing legalized, institutionalized Hotel Casino Gambling into Myrtle Beach. We feel strongly about the negative impact and dramatic shift this would have on the culture of our community” according to its fire-and-brimstone-laced Web site.

Rutherford, who claims he doesn’t personally gamble, or drink or smoke for that matter, scoffed at the religious-based arguments against casinos.

“Those same people ride church buses up to (Harrah’s Casino in) Cherokee (N.C.),” quipped Rutherford.

A pipe dream?

Imagine, if you will, Rutherford said, golfers from New York coming down to Myrtle Beach for vacation, but instead of it being a boys’ weekend, they bring their wives and families, and after a day on the links, at night they gather up their better halves and head out to have some fun and drop some coin at an Ocean Boulevard casino overlooking the waves of the Atlantic.

We’re talking 24-hour resort-style casinos, with other amenities besides gaming and sports books, such as concerts, Broadway shows, MMA fights, posh accommodations with spas, and fine and casual dining, the kind like you would find in Las Vegas, Atlantic City, Mississippi’s Gulf Coast, and even closer to home at Harrah’s in Cherokee, N.C.

“It would make Myrtle Beach, truly, a year-round destination,” said Rutherford.

That translates into more disposable income being dumped into the Myrtle Beach area’s tourist dependent economy, along with creating jobs and generating tax revenue.

And get this: South Carolina is one of only 10 states that doesn’t have some form of legalized gambling casinos - a far cry from a few decades ago when you could only (legally) get your betting fix sated in Nevada and Atlantic City.

While casinos are not a cure-all, and not without their problems, the smaller the area, the bigger the economic impact, said Doug Walker, an economics professor at the College of Charleston. An expert on casinos and gaming, Walker thinks adding casinos to the Grand Strand’s array of attractions and entertainment options would enhance that portfolio.

“If someone is considering visiting Myrtle Beach, and Myrtle Beach has casinos, it will make that destination more attractive to some people,” said Walker, the author of “Casinonomics: The Socioeconomic Impacts of the Casino Industry.”

But why Myrtle Beach - and why not say, another coastal South Carolina tourist town, such as Charleston, Beaufort or Hilton Head? Why should Myrtle Beach basically shoulder the load for the rest of the state’s shitty roads without getting something in return - except maybe a higher crime rate?

Myrtle Beach, according to Rutherford, already has the tourist-friendly infrastructure in place, with plenty of accommodations, attractions, restaurants, airports, roads (that’s debatable), a service industry work force and the available land that our neighbors to the south do not.

He says his plan could generate $300 million in licensing fees from big-time casino operators and help defray a projected $20 billion deficit in state highway improvements over the next 20 years.

But don’t start doubling down on your Texas Hold ‘em skills and perfecting your one arm bandit release point just yet, Grand Stranders - Gov. Nikki Haley, although not necessarily guaranteed a second term in November’s election, has vowed to veto any legislation that legalizes gambling in the Palmetto State. “Governor Haley has never and will never take any action that leads to the legalization of gambling in South Carolina – she simply believes we don’t have to settle and that there is a better way to fund our state’s infrastructure. When our state is doing so many things right, it just doesn’t make sense to drop to this level to get the job done,” said Haley’s spokesman Doug Mayer.

And Haley’s Democratic challenger, State Sen. Vincent Sheheen, isn’t exactly coming to the aid of his party mate, as a Sheheen spokesperson told Surge: “Casinos are not a part of Sen. Sheheen's plan.”

Said State Sen. Ray Cleary (R-Murrells Inlet), totally bursting Rutherford’s bubble: “This isn’t going to happen.”

Cleary said it’s taken him eight years to get a referendum on November’s ballot to legalize raffles - yes, grandma, that raffle you held at Wampee Church of the Divine Intervention was actually against South Carolina law - so it’s going to take a few more years before legalizing casinos in Myrtle Beach would be put before voters as well - if ever.

Sheheen expounded a little bit more on his view in a recent story by The State newspaper: "If we do consider casinos, however, there must be significant input from local citizens and leaders, as well as strict regulation and safeguards built into the proposal to ensure that South Carolinians are protected, and we don't do more harm than good.”

So, we turned to some local leaders, including all 14 members of Horry County’s legislative delegation, the city of Myrtle Beach, the city of North Myrtle Beach, the Myrtle Beach Area Chamber of Commerce, the county chapters of the GOP and Democrats and local casino boat operators, and it seems, with a couple of notable exceptions, they’ve all got their poker faces on.

Calling the bluff

Although bringing land-based casinos to Myrtle Beach has been bandied about for years, the recent hubbub began in June when Palmetto State Democrats cleverly slipped three advisory questions on the primary ballot:

• Question 1: Do you believe each state – not Congress – should decide for itself whether to allow online gaming and determine how to regulate online gaming in their state?
• Question 2: The S.C. Department of Transportation estimates more than $20 billion is required to fix South Carolina’s crumbling roads and bridges. Should gaming laws be modernized to fund the repairs instead of a tax increase?
• Question 3: Should medical marijuana be legalized for use in cases of severe, chronic illnesses when documented by a physician?

The results were non-binding and basically amounted to nothing more than a way for Democrats to gauge public interest on the topics - and drum up voter participation in the primaries.

The second question, dealing with the modernization of gaming laws, was approved by a hair more than 80 percent of Democratic voters, which set the wheels in motion for Rutherford’s announcement on July 2 that he intended to introduce legislation next year that would amend the state constitution to allow “well-regulated, upscale casinos” in the Myrtle Beach area. If this is passed by the legislature, it could possibly appear as a referendum on the November 2016 general election ballot (you know, the big one, the one when we’ll be electing a new president).

According to Ballotpedia: “The proposed amendment must be approved by a two-thirds vote in both chambers of the South Carolina Legislature to be placed on the ballot. If approved by voters, the amendment goes back to the legislature for a second approval before becoming law.”

Rutherford said business leaders, the people of South Carolina and even Republicans across the aisle in the statehouse support the idea of legalizing casinos in Myrtle Beach to specifically fund the state’s road improvements - but we couldn’t find any local leaders to jump on the bandwagon.

Does the Grand Strand want casinos in its back yard - or even the chance to vote on it?

“Although the topic has not been discussed on the City Council level recently, it is my understanding that past Councils have not been in favor of casinos,” said Pat Dowling, Public Information Officer for North Myrtle Beach. “On a broader scale, if you look at what’s happening right now in Atlantic City and elsewhere, casinos are having a tough time keeping their doors open. Even when they are successful, some of the secondary activities that occur around them are really not conducive to maintaining positive or established community standards.”

In Myrtle Beach, city spokesman Mark Kruea said the mayor and council had not discussed the possibility of casinos, although the city is specifically mentioned in Rutherford’s proposal. “Nor has Council discussed the proposed legislation, which is just that: proposed,” he said. “Casinos aren’t legal in South Carolina, other than for the Indian tribes.”

What about the local business community?

“The chamber has not taken a stance relative to gambling and the board of directors has not discussed the topic in recent years,” said Brad Dickerson, Media Communications Manager for the

Myrtle Beach Area Chamber of Commerce.

Do Horry County Democrats back this proposal - or at least the general idea, since details have not yet been released?

“At this time, the Executive Committee of the Horry County Democratic Party has not taken a position on Representative Rutherford's proposal. The idea of legalized casino gambling has certainly sparked vigorous debate in all quarters. Democrats are open to looking at all options for funding the road repairs which are so desperately needed in Horry County and across South Carolina,” reads an e-mail statement from the party.

The Horry County Republican Party did not respond to Surge’s inquiry by press time.

Meanwhile, State Rep. Tracy Edge (R-North Myrtle Beach) didn’t completely dismiss the notion of casinos on the Grand Strand and said that he warmed up to the idea of legalized gambling after visits to Las Vegas and Atlantic City, but said there would be “a heck of a lot of opposition” to it here. “I don’t hear a burning cry for it,” he said.

Gambling on history

Gov. Haley, as previously mentioned, has vowed to never take action that allows casinos and gambling, and has rebuffed attempts by the Catawba Indian Nation to establish a casino near Rock Hill.

But isn’t the S.C. Lottery legalized gambling?

“Yeah,” said Edge, bluntly.

“South Carolina already has gambling - it’s called the lottery,” said Rutherford.

And don’t we already have legalized gambling based in Horry County with casino boats that dock in Little River and head out to international waters where there are no restrictions?

Well, yes, except we’re down one riverboat gambler as Sun Cruz abruptly closed its doors on Monday, leaving the Big M as Little River’s sole casino boat operation.

And if you recall, the Grand Strand has had a taste of gambling fever before when video poker machines and parlors cropped up like mushrooms before being outlawed by the S.C. Supreme Court in 1999, wiping out a $2.8 billion per year industry.

Video poker left a bad taste in many people’s mouths, tarnished South Carolina’s image, and could be why politicians are gunshy about supporting anything that has anything to do with gambling. Interestingly enough, several of the politicians and their mouthpieces that we communicated with seemed to be more interested in what “the other guy” said, before making a statement. For instance, Haley’s spokesman Mayer twice asked if the governor’s opponent Sheheen had weighed in on the issue before responding to Surge’s questions.

“Video poker taught everybody a lesson,” said Edge.

That is perhaps why Rutherford is insisting his proposal is a far cry from the video poker days when machines lined every smoke-filled convenience store and mom-and-pop shop along the Grand Strand.

“We’re talking high-end, luxury casinos,” he said. “This will not be a resurgence in video poker.”

And he’s not talking about having as much bling-bling as Vegas or Atlantic City, rather one to three luxury casinos spread out around Myrtle Beach and Horry County - perhaps even one in neighboring Marion County.

But limiting the number of casino licenses is a bad idea, says Edge, and could create a situation rife with corruption - i.e. who decides who gets the licenses, could it be whoever contributes the most to politicians’ warchests or bureaucrats’ slush funds? Rather, he’d like to see the market dictate how many casinos the Myrtle Beach area can handle - an idea supported by economist Walker. “Maybe it’s up to 20 casinos,” said Walker. “The industry is a pretty good judge. No one is proposing (that Myrtle Beach should become the next) Atlantic City.”

Rutherford admits “all the details are not worked out” regarding his casino plan.

But he feels that for it to work, a South Carolina Gaming Commission will have to be created - and casinos shouldn’t come under the purview of an already existing agency, such as the S.C. Education Lottery Commission.

Ruh-roh, would that mean more government bureaucracy and red tape - a tough sell for conservatives who decry the ills of “big government”?

“You’ve got to create oversight - not bureaucracy,” said Rutherford.

Walker said it is standard practice for states that allow gaming to build in the financing for the regulatory agency with the fees and taxes that are levied - and also address things such as increased law enforcement and security.

“I’m very interested in this topic,” said Edge. “But I want to be sure we have the best regulatory agency possible.”

He said any plans need to be spelled out in detail for the masses so that John and Joan Q. Public can know exactly where the money is going, similar to Horry County’s Riding On a Penny sales tax program for road projects.

Asked how his plan would be drawn up, Rutherford, who is a lawyer, responded, “very carefully.”

The pros of cons

Many opponents of establishing casinos in Myrtle Beach point to what’s happening up the coast in New Jersey, as the beach town Atlantic City struggles with a loss of casino revenue, closures and layoffs for workers. Even the industry in Biloxi, Miss. is taking a hit as the Gulf Coast town’s Margaritaville Casino announced recently that it will close by September, and it’s backed by Parrothead mogul Jimmy Buffett.

But casinonomicist (we made that title up) Walker says likening Myrtle Beach to Atlantic City - or even coastal Mississippi - is comparing apples and oranges, or slot machine cherries and grapes.

He said when New Jersey legalized casino gambling in the mid-1970s and restricted them to Atlantic City, the only state in the U.S. at that time with legal casinos was Nevada.

Fast forward, and the feeder markets for Atlantic City - Delaware, Pennsylvania, Massachusetts, Maryland, West Virginia all have gaming casinos now - diluting the market. “Up until the early ‘90s, (Atlantic City) had a monopoly,” said Walker.

Why drive four-plus hours from Western Maryland to Atlantic City, for instance, when you can stay close to home at the Rocky Gap Casino Resort which opened in May 2013 near Cumberland, Md.?

A similar thing has happened affecting Mississippi as Midwest states have opened casinos so folks in that region stay closer to home to try their hands at Lady Luck instead of traveling and the Mississippi Gaming Commission reports that revenue is down for the first half of this year compared to 2013.

“What would happen in Myrtle Beach isn’t necessarily what has happened in Mississippi,” said Walker. “You don’t have a lot of regional competition - yet”

The other arguments against gambling include the moral and religious beliefs that it is simply wrong - a vice, a sin. And you can’t counter that argument with statistics, Walker said.

But, he said, you can counter the claim that casinos bring more crime to an area.

According to the abstract of Walker’s contribution to “The Oxford Handbook on the Economics of Gambling,” published in 2013, “in probably each jurisdiction in which casinos are being considered there is debate over whether casinos will create or attract crime. For example, the fact that casinos will attract tourists carrying cash might be a catalyst for criminals to flock to casinos - customers may represent easy prey. Alternately, people who develop problem gambling may turn to crime to get money for gambling. There are any number of situations which might suggest a relationship between casinos and crime.”

And a 2006 study by Grinols and Mustard did show through an analysis of data that casinos contributed to crime in the U.S.

Yet, Walker writes, “the empirical analysis by Grinols and Mustard, and other studies in the literature, is suspect because they often mis-measure the crime rate.”

There’s going to be more crimes committed because of an increase in the permanent population and these studies also do “not adjust the population by visitors,” he said.

“To apply this crime rate in which casinos are introduced, we must recognize that there will likely be an inflow of tourists into the jurisdiction that introduces casinos,” wrote Walker. “Simply because the number of people in the area has increased, we would normally expect an increase in the raw number of crimes committed. When the jurisdiction sees a large number of tourists, both residents and visitors my commit and /or be victimized by crime.”

Interestingly, this is the same argument that local leaders use when debunking the annual rankings that classify Myrtle Beach as one of the most dangerous cities in the U.S.

“Casinos generally have a positive impact,” said Walker. “But not as great as the industry would suggest.”

In the end, Rutherford thinks many people, including the Grand Strand, are simply resistant to change.

“People were opposed to Broadway at the Beach, too,” said Rutherford, adding that he hasn’t heard any other proposals to fund the state’s infrastructure dilemma, and accused Gov. Haley of sticking her head in the sand. “We’ve got to figure out a way to do something.”

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