Larry Flynt, the well-known publisher of Hustler magazine, has come to an agreement with the local government of Gardena, California to begin a $60 million renovation project of the former Normandie Casino. He has renamed it the Lucky Lady Casino, and his efforts are already beginning to reap benefits, as business profits in the local area are already up by 20 percent.
The physical site of the casino is surrounded by run down stores and shops, that once benefited from the success of the casino traffic, but have been left in despair since the late ’90s. Flynt’s new lady could be in a position to improve it all. The website Lucky Lady La is looking good and they do have a LinkedIn page as well, small, but a start.
A majority of the country have either supported the existence or reaped the benefits of state operated casinos. Across the country, crime rates have decreased steadily in general, and in Gardena specifically the violent crime rate has been cut in half over the last decade. State budgets are being balanced and in fact depend on a certain amount of revenue generated by the casinos. The anti-casino advocates continue to oppose the existence of casinos largely on moral grounds as those are only only ones that hold weight.
But the Flynt-Gardena connection brings the broader pro-casino/anti-casino issue to a new level, and what it will mean for future public budgeting.
State versus City
Initially, the Gardena City Council did not want to give in to Flynt’s demand for tax breaks to renovate the casino. However, with $60 million on the table and potentially millions more should the surrounding community return to prosperity, they caved in and, in effect, Flynt won the battle. The game changer was local residents and state employees who had been laid off criticizing the City Council’s stance.
As with most state casinos, the issues are always tax revenues and jobs. New casino sites are generally chosen by economically depressed areas, with promises of added business for restaurants and tourism. But in Gardena the casino is now tied to the jobs of city employees that are not hired by the casino. Well, not directly.
The first question is whether you are comfortable with a casino being the source of income for you and your family. The connection – that if the casino fails you are likely to lose your job – is clear, yet the residents of Gardena are willing to accept that risk. The thinking, a bird in the hand is worth two in the bush, works for them.
A Business – Government Partnership
This is the way some people will see it, much like the national partnership between the federal government and big business. Bringing this partnership to the local level and tying it to local jobs expands the national model. How you feel about the big business connection will also play into your view of the Gardena deal.
The final tax rate Flynt will pay is no more than 12 percent, and very likely he will pay less than that by being the victor. More than a few voices are shouting at the largest U.S. companies for paying little or no federal taxes. Flynt knew that Gardena was struggling to manage their budget without Additional sources of revenue, while also having to deal with the complaints from residents. According to 2012 data, the Hustler and (now) Lady Luck Casinos account for more than 1100 jobs and rank as the 6th and 2nd ranked employers, The Hustler Casino being 2nd only to the city’s hospital.
What is somewhat odd about these numbers is that big businesses such as Target department stores and Sam’s Club do not even come close to the number of employees Flynt’s casinos do. So the big business-government model has been usurped in Gardena by casino operators. The government is reluctantly satisfied with the deal, the residents are happy with being employed, and obviously Flynt is very pleased with the overall situation. The question to be answered is how much influence does Flynt exert on the business and economic decision making in Gardena.
Flynt has stated that he will build an adjacent hotel and retail stores once the Lucky Lady is well on its way to renovation and profitability. Based on casinos around the country, that is a logical next step forward to expanding the economic growth of the area and making the casino more than a place to spend a few hours in. Mini-vacation weekends and stays in the hotels keep people near the casino, with the added convenience of shopping.
But that is almost always at a state operated level. As the 2nd largest employer in Gardena, he will inevitable take his place as the city’s number one employer. That fact will undoubtedly increase his economic influence and, as has been demonstrated in this latest battle, will force the hand of the City Council for additional tax breaks and incentives.
What the residents of Gardena may see as a favorable situation now has the potential to turn into one where their political vote will become increasingly diluted in favor of the very jobs they are trying to keep.
A Matter of Degree?
Whether you are in favor of casino growth on a state or national level, the control of the economic health of local governments can get dicey, as shown in the Gardena situation. While Larry Flynt is obviously no saint, and the Gardena City Council knew what they were getting, there will always be wolves in sheep’s clothing. Whether in Las Vegas, Atlantic City, or a state operated casino, a certain amount of underhanded dealing should not surprise anyone.
Should there be an expansion of casinos controlled only at the local level? Will this evolution of the casino industry benefit not only the players but the local residents, or can we expect gaming to have to deal with another wave of criticism from anti-gambling opponents who will make the case that not only are morals being affected but every citizen’s right to have their vote count?