Gambling Revenues Fall in 2013 at Detroit's

3 CasinosJamal Hamade

Monday, January 27, 2014Economics 5520

State and Local Public FinanceBy: JC Reindl

Detroit Free Press Business Writer; Link

Monday, January 27, 2014 1Economics 5520

Total Revenue Fell

Total Revenues From Gambling at MGM Grand Detroit, MotorCity Casino Hotel, and Greektown Casino-Hotel fell 4.7% to $1.35 billion, According to Figures Released by the

Michigan Gaming Control Board

Each Casino Earned, Roughly, $1.23 Million a Day

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Less Revenue For City of Detroit

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20122013

With Less Money Coming IntoDetroit How Will The CityAdequately Finance Their AlreadyCrippled Services?

Budget Line

Such As… Police, Fire,Public Transportation, & etc…

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What/Who is To Blame

• Four New Casinos in Ohio; Particularly Hollywood Casino Toledo

• According to the Article Toledo Stole Northwest Ohio Traffic That Normally Flows to Detroit

Could it be the Feds?

• January 2013 Expiration of the Social Security Payroll Tax Cut

• A $1,000 value to workers making $50,000 a year

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Does Detroit Have a Bleak Future?

The Detroit Market May Have Shrunk Permanently

•Downtown Lansing Has a Tribal Casino Being Proposed•Detroit is Facing Competition from Windsor•In Addition, Other Tribal Properties Throughout Michigan

If the Pie is Not Growing and New Supply Continues to Be Added, it Means That the Size of Everyone’s Slice is Going to Continue to Decline – Alex Calderone a

metro Detroit native and senior vice president at Las Vegas-based gaming consultant the Fine Point Group

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Financial Blood For Detroit

Detroit Used the Casino’s Tax Revenue as Collateral:

•Bank of America Merrill Lynch•UBS

This is How Detroit Avoided Default in 2009

When Its Credit Got Downgraded To JUNK

Normative Analysis –There Are Two Possible Solutions To Providing Additional Revenues For City Services

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Casino Revenue and Tax Payment

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• Greektown Casino gambling revenues falling 6.7% to $328 million• MGM Grand dropped 6.2% to $566 million.• MotorCity Casino year-over-year decline at 1.1% to $454 million

MGM GRAND DETROIT MOTORCITY CASINO GREEKTOWN CASINORevenue Tax Revenue Tax Revenue Tax

2012 2012 2012

$604,879,416.74 $48,995,232.76 $459,750,323.64 $37,239,776.21 $352,104,685.88 $28,520,479.562013 2013 2013

$566,813,352.85 $45,911,881.58 $454,344,330.43 $36,801,890.76 $328,345,985.98 $26,596,024.86

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Kevin Orr’s Role

• Emergency Manager of Detroit

• An Unelected City Leader with More Power Than Mayor

• U.S. Bankruptcy Judge Steven Rhodes Rejected the City’s Proposed $165-Million Settlement with the Two Banks, Saying the Deal Was Too Generous to the Bankers

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