Detroit is broke. Where is all that casino money?

[detbest]

Considering the Casinos are one of the largest employers in the city, one of the largest property owners in the city in terms of assessed value, and pay city gaming taxes of well over $150 million per year....it is pretty reasonable to say that things would be, relatively speaking, much worse without them. Hence they've had the "positive" benefit that was predicted/promised.

I see the point you're trying to make, but I disagree with the historical analysis regarding passing of casino gambling. What tipped the balance in my opinion was Windsor opening their casino and all of the people and dollars going across the border. There was even a flyer showing cars heading over to Canada during the casino referendum. The main point was we now had gambling in Detroit once Windsor opened their casino. And we were getting all the social problems associated with gaming without any of the benefits.

I believe you got the spirit of what I was getting to which was politicians promising "pie in the sky" and then come back to the people crying broke.

My question of "where is all that casino money?" was not meant to really be answered because the casino money was "pie in the sky" that was sold to the people back in the 90's to get casinos into the city. We knew the casinos would provide jobs. We knew the casinos would build hotels. We knew the casinos would pay a tax. We knew all this things which is why they was voted down time and time again because Detroiters did not want casinos in Detroit despite the jobs, the tax, the hotels, etc... The reason why Detroiters agreed to have casinos in the city [[this includes the churches) is because the city leaders like Archer was telling the citizens that casinos in Detroit would generate much needed money to improve services, lower taxes, make life in Detroit better. Detroiters were more than happy to travel to Windsor or Saint Ste. Marie but we told that that money could make Detroit better.

[Ray1936]

#1. I don't get 'liquored up' when I visit a casino.
#2. Drinks are not really free. If you don't tip the cocktail waitress for her service, you're a cheap bastard.
#3. Kids are 51 and 53. If I'm spending their college money, they blew their chance long ago.
#4. People living on a shoestring should NOT visit a casino. I'm retired and have a comfortable degree of spendable income, and I have fun at the tables and slots. Therefore, I go.
#5. As a local and regular patron, I get many comps to shows, dinners, etc., that add to my enjoyment. I also get free slot play nearly every day of the week at varous casinos.
#6. Just got back. Here's my best hit today. I have fun in my old age. I hopw somehow all of you do, too.

#6.

[English]

The casinos aren't the issue. Our lack of any other major private industry within city limits, along with endemic corruption in educational and civic institutions, is the real problem.

Now, my mom believes the casinos are responsible for Detroiters losing their homes long before the bubble burst. I loved the Express Mortgage jingle of the late 90s/early 00s: "if you own a home, and you need a loan/Express Mortgage, get your cash in a flash/Money from your home fast/Call 321-CASH." My mom called those "hock your house" ads, and she said people all over metro Detroit would lose their homes in order to feed a gambling addiction.

Casinos are like alcohol, in my view. If you don't have an addiction, they're kind of nice. I [[and many others) haven't play a slot of zillions of years, but we use the casino's free parking, grab cheap eats, or even catch a show. It's just a place to hang out, especially with the girls. I have to be honest and say that I'll meet friends the casino and leave late at night solo to go home because you can easily valet park instead of walking several blocks alone to a lot or a street parking space. It's different when you're with a guy or a group of friends, but when you're all meeting up at a place? It can be handy.

But there are folks with real addictions to gambling. Of course, those people would go to Windsor or up North, but when it's in your backyard, you'll frequent it. My sister's ex's mom was like that. Sweet lady, but never met a casino or bingo hall she didn't like [[in fact, our first forays into the casinos were because of her).

[R8RBOB]

Considering the Casinos are one of the largest employers in the city, one of the largest property owners in the city in terms of assessed value, and pay city gaming taxes of well over $150 million per year....it is pretty reasonable to say that things would be, relatively speaking, much worse without them. Hence they've had the "positive" benefit that was predicted/promised.

I see the point you're trying to make, but I disagree with the historical analysis regarding passing of casino gambling. What tipped the balance in my opinion was Windsor opening their casino and all of the people and dollars going across the border. There was even a flyer showing cars heading over to Canada during the casino referendum. The main point was we now had gambling in Detroit once Windsor opened their casino. And we were getting all the social problems associated with gaming without any of the benefits.

I will come back at your first statement but in regards to your comment to Windsor opening tipping the scales for Detroit getting casinos, I agree. In fact, I posted about it yesterday.

Good posts being posted. Something that people need to remember. Back in the 90's, Detroit was of course having its money issues like now and then Casino Windsor opened in 1993. There was always someone wanting to get casinos in Detroit but Detroiters would always vote them down. [[Anyone remember when Papas and Gatzaros got Babbitt to declare a part of the International Center Building as "Indian land")

After the opening of Casino Windsor, it was a must that Detroit had to have a casino but someone believed if Detroit had more than one casino then the city coffers would be overflowing with cash. Hence the sell job to get casinos by claiming that we need to keep the money in Detroit.

As to your first point, yes the casinos pay a large tax to Detroit, this is true. It does provide jobs, this is also true but so do General Motors. The point that I was making was that years ago Detroiters was told that if we voted to approve casinos which was voted down three times under Coleman Young then the city would have a windfall of cash flowing in. Years later Dave Bing is crying broke which validates that casinos were more or less a band-aid to the city.

[detroitsgwenivere]

In regards to older folks, going to the casino is like going to the club when you're younger.

Have your fun Ray, nobodys judging you.

[Ray1936]

In regards to older folks, going to the casino is like going to the club when you're younger.

You couldn't have said it any better, d!

[lit joe]

Casinos hire more people than they need at frist. Then when they see a steady number the layoffs start. Cheap pay rotten jobs they aren't worth your time or money. Mostly minumin wage for workers.

[Mikeg]

"Where is all that casino money?", you ask?

The answer is that since 2009 it has been pledged as collateral, the result of the city's habitually late audits that triggered a downgrade of Detroit's debt by the ratings agencies.

Swaps Deal Will Save Detroit From Insolvency-Mayor
CHICAGO, April 13, 2009 [[Reuters) - Detroit Mayor Kenneth Cockrel Jr called on the city council on Monday to approve a deal that will allow the city to avoid paying a financially crippling $400 million in termination payments for interest rate swaps.

Cockrel said the agreement in principle reached last month saves Detroit, which is already facing a projected $300 million accumulated deficit, from financial insolvency and from likely intervention by the state of Michigan.

Joseph Harris, Detroit's chief financial officer, said the agreement, which should be presented to the council in a few weeks, requires the city to appropriate payments annually on the swaps and to post collateral for those payments from its wagering tax....... [source].

What this means is that Detroit's wagering tax revenues for each month in a quarter are deposited in a trust fund and released to the General Fund only after the City of Detroit and the DWSD make their Swap Agreement payments for that quarter. In any given month somewhere between approximately $12 and $36 million dollars of wagering tax revenue are locked up in that trust fund instead of being available to pay for General Fund expenditures.

While that may seem like a small price to pay for avoiding $400 million worth of unbudgeted termination payments, more importantly, the wagering tax collateral agreement means that none of Detroit's approximately $150 million in annual wagering tax revenues are available to pledge as collateral for short-term borrowing to avoid Detroit's worsening cash flow problems:

City of Detroit's Cash Flow Challenges
.......casino wagering taxes are now pledged as collateral for Pension Obligation Certificate payments under the interest rate swap agreements and are not available for other debt restructuring or negotiations to reduce liabilities. [source]

This collateralization of the wagering tax revenue got very little attention when then-Mayor Cockrel and the City Council used it to dodge the $400 million bullet. They may have dodged the bullet then but they handcuffed the current Council by taking away a valuable tool for staving off the impending cash flow crisis.

Read the first three pages of the Oct. 2009 memo to City Council at the second link and it will make your stomach churn.

[R8RBOB]

"Where is all that casino money?", you ask?

The answer is that since 2009 it has been pledged as collateral, the result of the city's habitually late audits that triggered a downgrade of Detroit's debt by the ratings agencies.




What this means is that Detroit's wagering tax revenues for each month in a quarter are deposited in a trust fund and released to the General Fund only after the City of Detroit and the DWSD make their Swap Agreement payments for that quarter. In any given month somewhere between approximately $12 and $36 million dollars of wagering tax revenue are locked up in that trust fund instead of being available to pay for General Fund expenditures.

While that may seem like a small price to pay for avoiding $400 million worth of unbudgeted termination payments, more importantly, the wagering tax collateral agreement means that none of Detroit's approximately $150 million in annual wagering tax revenues are available to pledge as collateral for short-term borrowing to avoid Detroit's worsening cash flow problems:



This collateralization of the wagering tax revenue got very little attention when then-Mayor Cockrel and the City Council used it to dodge the $400 million bullet. They may have dodged the bullet then but they handcuffed the current Council by taking away a valuable tool for staving off the impending cash flow crisis.

Read the first three pages of the Oct. 2009 memo to City Council at the second link and it will make your stomach churn.

I just read the first three pages and my stomach is churning. Fuckin' WOW

[Packman41]

"Where is all that casino money?", you ask?

The answer is that since 2009 it has been pledged as collateral, the result of the city's habitually late audits that triggered a downgrade of Detroit's debt by the ratings agencies.

Wow is right!! Well that answers what happened to the casino money.

MikeG - thanks for looking up the source. Besides the interest payment on the RANs and TANs the City of Detroit also paid nearly $1.0 Million in "Issuance Fees" to sell/place these notes.

This short-term borrowing from Peter to pay Paul gets expensive fast.

[MikeyinBrooklyn]

Selling debt to pay debt. If there were investors instead of taxpayers, it would be called a Ponzi sheme and people would be going to jail. But why make hard choices today when you can just create a much worse situation for the next guy?