Senator William P Coley of the Ohio Senate in the US has advised Brazil’s gambling reformers to learn from the mistakes of other jurisdictions as the country seeks to go legitimate with a fully regulated gambling sector. He also warned that they should not expect a replica of the Las Vegas model.
Speaking at the recent Brazilian Gaming Congress, he told delegates: “I was where you are now – I did not have gaming in my state. And everyone in my state was going to the surrounding states – Indiana, West Virginia, Michigan, Pennsylvania to gamble. We had in our state problem gaming and all the social ills that you deal with in gambling but none of the benefits. We didn’t have the jobs, we didn’t have the revenue that comes in from gaming. It’s very similar to what Brazil is going through today.
“The important thing to remember here is that you’re not alone. You have people with experience like myself and others throughout the world that have experienced these kind of problems. If there was one thing I learned it was that I would have made sure that I attended conferences like this and spoke with other other legislators that were in a similar position. Because we made numerous mistakes that could have been avoided had we been learning from others who have been in those positions.”
A major part of the learning curve, according to Coley, was recognising that the interests of a casino operator are very different from the interests of the state. “One of the classic mistakes we made is not understanding that a casino, especially in today’s world, is a business that’s very focused on return on investment,” he explained. “Operators want to maximise the highest percentage return they can get for the least amount of money they can invest. When you talk to the operators they’re going to build as small a facility as they can given the revenue that they anticipate. And the revenues are going to be affected by the tax rate you impose and they’re going to do everything they can to maximise the percentage return they can get.”
Managing expectations is another key factor. Said Coley: “One of the issues we came upon is that everybody thinks that when operators build a casino it’s going to be like Las Vegas. It’s not – Las Vegas is a ‘one place in the world’ kind of place. There’s a unique cooperation in Las Vegas between all of the property owners. You can walk from one property to the next – it’s a very common thread that flows through everything.
“If you ever go to Atlantic City, it’s very different. Each property is an island unto itself with a different feel. You have to know that, as someone who’s setting up gaming, that operators are going to build as small a facility as they can build. On that basis they are going to make it look more like Atlantic City. You have to work very hard to make sure that you work with the architects and the developers to get the flow of people through your casino and the surrounding area that is pleasing to you. They (the operators) are not going to do that on their own and you have to work with the developers to make sure you get the right outcome.”