REPORT SAYS CASINOS COULD ADD $106 MILLION TO GUAM

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By Gerardo R. Partido

HAGATNA, Guam (Marianas Variety, Oct. 7) – The introduction of gaming on Guam, coupled with sound government policies, could generate as much as $106.7 million in revenue for the island’s economy, an economic impact study on gaming commissioned by the island’s hotel sector concludes.

The study, conducted by Michael J. Pollock, managing director of Spectrum Gaming LLC, also concluded that gaming could add as many as 1,388 direct jobs leading to a total increase in employment of as many as 2,085 jobs, with a total annual payroll of about $42.7 million.

In addition, the government of Guam could realize up to $20.52 million in additional tax revenues from gaming taxes, gross receipts taxes, and personal income taxes.

The Spectrum Gaming Group is an international gaming consultancy specializing in services to casino developers and regulatory agencies.

Pollock, who couldn’t make it to Guam to make his presentation in person, discussed the results of the study by telephone during a press conference yesterday organized by the Guam Hotel and Restaurants Association.

His study estimated that casinos on Guam will likely budget about $10 million per year in capital expenses, with casinos likely purchasing up to $13.3 million worth of goods and services from businesses on Guam.

Pollock said this would translate into nearly 75 percent of gaming revenue remaining within the local economy, potentially "fueling" further upward growth.

According to the study, gaming would serve as a catalyst to attract desperately needed capital investment to a tourism economy such as Guam’s that requires a steady flow of capital to remain competitive.

"Gaming would be a small but significant addition to the attractions now found on Guam, and would complement many of those offerings… working well with retail, entertainment, and the natural beauty of Guam by creating a new revenue source," the study noted.

From the standpoint of tourists, gaming is also expected to add another attraction to the menu of offerings now found on Guam, making the island more competitive by allowing hotel operators to price rooms at a lower rate without sacrificing profits.

This would stimulate the tour and travel sectors as well as other segments of Guam’s visitor base, including meetings and conferences, the study predicted.

The study likewise noted that the provisions of Proposal A or "The Guam Casino Gaming Commission Control Act," if effectively implemented, will provide a strong foundation in regulating gaming on Guam because it contains the proper structure and controls that have been demonstrated to be effective in the regulation of casino gaming in the U.S. "as it is consistent with all gaming laws in the mainland."

Towards the end of his presentation, however, Pollock cautioned that not everyone would benefit from gaming and that high-end retail businesses and restaurants as well as well-capitalized hotels would be in the best position to share in casino benefits. But businesses that lack the ability to reinvest and maintain their quality and appearance are more likely to be left out.

He also warned that gaming alone cannot solve all of Guam’s problems, but could be a catalyst to help attract capital.

"Gaming, in our experience, works best when it operates in a tourism environment, targeting visitors as primary customers. It works best when it can enhance, rather than replace, other attractions.... Based on that, gaming can be a net gain for the economy of Guam," the study concluded.

October 7, 2004

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