Detroit economy still falters despite revenue from casinos

The casinos have taken in nearly $5 billion in five years.
DETROIT (AP) -- When the first casino opened five years ago in a hulking building formerly owned by the Internal Revenue Service, hopes were high that it would change Detroit's economic fortunes.
But though that casino and two others now provide a reliable revenue stream for the cash-strapped city and have contributed to a mix of new industries and entertainment venues, they have not been a magic bullet for redevelopment.
That's because most of the money casino patrons bring to downtown Detroit stays within casino walls. Concerns also persist about the social costs of gambling, as some area residents find themselves unable to resist the jangling of slot machines.
"There are certain proponents of gambling -- self-interested groups -- that say that it will be a massive redevelopment tool. That is simply demonstrably false," said David Littmann, chief economist at Comerica Bank.
Income
The three casinos have taken in $4.8 billion since the MGM Grand Detroit Casino opened in July 1999, followed by MotorCity Casino in December 1999 and Greektown Casino in 2000.
They hand over 9.9 percent of their revenues to the city and another 8.1 percent to a state education fund. A separate $25 million fee funds the operations of state regulators and programs to help compulsive gamblers.
In the city's 2001-02 fiscal year, the city collected $122 million, or 12 percent of its revenues, from the casinos. Meanwhile, property and income tax collection has been crippled by decades of population decline and economic stagnation.
The three casinos employ about 7,600 people, more than half of them Detroit residents.
But those who hoped the casinos would bring more people to the city's restaurants and hotels have been disappointed. That is in large part because casinos are designed to be self-contained, round-the-clock operations, with their own restaurants, bars and musical entertainment.
Still, George Boyer, chief operating officer of MGM Grand, maintains the casinos have been a catalyst for other development by introducing Detroit to people who previously stayed away.
"There are new reasons for people to get refamiliarized with the city and get more comfortable coming here," he said.
Valuable to the city
Larry Alexander, president of the Detroit Metro Convention & amp; Visitors Bureau, said the casinos are a valuable attraction.
"I don't want to say that conventions have booked just because we have casinos," he said. "However, it has helped us bring in groups because it's another entertainment option that we have available."
Detroit is expecting another major round of casino investment -- provided certain hurdles are overcome. The current facilities were built with the understanding that they would soon be replaced by permanent casinos, complete with hotels.
The permanent casinos have been on hold since 2002 because of a lawsuit by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, which claimed Detroit's 1997 casino selection process was unfair.
That may soon be resolved, but other problems have emerged. Pending legislation could increase the taxes on the casinos and open them up to new competition in the form of "racinos," or slot machines at race tracks.
MGM Grand sees about 10,000 visitors a day -- a majority from the Detroit metro area, Boyer said. More than 15 percent of patrons travel to the casino from outside Michigan, he said.