Missouri sees effects of declining casino visits

JEFFERSON CITY, Mo. -- A recent decline in Missouri's casino revenue has created funding shortfalls for public schools and state-run veterans' nursing homes, raising questions among lawmakers about the extent to which the state can continue to rely on gambling to fund some key programs.

Underlying the concern is an uncertainty over whether the shortfall is a temporary event caused by a cold winter, the economy and increased casino competition from neighboring states, or whether it is the start of a trend.

Missouri relies on two sources of casino revenue. A portion of a per-patron casino fee is used to pay for the operations of the Missouri Veterans Commission, which oversees seven nursing homes for 1,350 retired soldiers. A state tax on casino revenue helps fund public schools.

But fewer people are visiting and spending money at Missouri's 13 casinos, leaving lawmakers to scramble for a solution.

"We do have a problem in the veterans funding that has kind of gotten away from us," House Budget Chairman Rep. Rick Stream, R-Kirkwood, said last week. "We are going to have to address it for this year's budget."

Missouri's veterans' homes are funded through a combination of casino fees, federal dollars and an average $2,000 monthly resident's fee.

Concerns about long-term funding for veterans homes led lawmakers in 2012 to dedicate a larger share of the casino fees to the homes. But a decline in casino attendance is causing lawmakers to revisit the issue.

A recent report from the Missouri Gaming Commission shows patronage at casinos decreased about 9 percent through the first seven months of Missouri's 2014 fiscal year compared with the same period the previous year. That means funding for veterans programs is down by a similar amount.

"If more people gamble then the odds are the funds will increase," said Daniel Bell, a spokesman with the veterans' commission.

The Gaming Commission's report shows casino tax revenue, which supports schools, has declined by 4.7 percent from the same time last year. That drop-off contributed to the House's decision last week to approve an additional $22 million for public schools in a supplemental budget for the current fiscal year.

From the July 1 start of the fiscal year through the end of January, the state had received $26 million from the admissions fee and $180 million for education funding, according to the Gaming Commission.

Stream and Missouri Gaming Association Director Mike Winter both said this year's cold and snowy weather kept people from casinos. Winter also attributed the revenue decline to an economic downturn.

"We continue to see that the economy bounce-back is not as quick as experts predicted," he said.

State Budget Director Linda Luebbering said falling revenue also could be the product of increased competition from other states or transitions in Missouri casino ownership. A Hollywood Casino opened in 2012 at the Kansas Speedway in Kansas City, Kan. Last year, Pinnacle Entertainment sold a casino in downtown St. Louis to a different owner.

Absent an increase in casino gambling fueled by warmer weather, some lawmakers already are looking at long-term solutions for veterans' home funding. The commission estimates it will need an additional $10 million during the next budget year to avoid an interruption in services.

The House passed legislation this year that would create a special lottery ticket with the proceeds exclusively going to veterans' homes. That plan has faced opposition in previous years over concerns it would divert money away from education. Currently, lottery proceeds exclusively fund K-12 and higher education.

Stream said the House also was considering a boost for veterans' home funding. But Gov. Jay Nixon did not include additional money for the homes in his proposed budget, and Luebbering said the department should have enough money in its trust fund to continue operating the homes at their current funding level.