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Tuesday, March 31, 2015

Is Gaming in the Cards for the Volunteer State?

By W. Stuart Scott

Dickinson Wright has learned that Tennessee House Representative Jason Powell has submitted a proposed constitutional amendment that could permit casino gaming in Tennessee. This is designed to amend Article 9, Section 5 of the Tennessee Constitution regarding casinos. It proposes that the Tennessee Constitution be amended to permit gaming in a fashion similar to the previous amendment that allowed for a lottery in Tennessee.

Tennesseans are taking advantage of the relatively easy access they have to legalized gaming in surrounding states. The fact that multiple millions of Tennessean’s dollars are streaming across its borders to other states in gaming revenues has not gone unnoticed by the legislature. For example, in the third quarter of 2012 alone, the Mississippi Gaming Commission confirms that over 30% of its gaming revenues in its Northern River Region, which includes Tunica, came from Tennessee residents.

The current proposal adds to the constitutional language that allowed lotteries in Tennessee by allowing the Tennessee legislature to authorize casino gaming. It also directs that all state revenues derived from the proposed casino gaming, less an amount to administer gaming, will be allocated to K-12 education and gambling addiction programs.

Passage of the proposed amendment through the initial process is a gamble. Assuming the amendment makes its way out of the state government full committee, it will then be assigned to another committee. The House of Representatives Clerk’s office decides which committee it would be assigned to. Since the revenues from gaming could be multiple tens of millions of dollars, it is anticipated that the proposed amendment might be assigned to the Finance Ways and Means Committee because of its potential, significant fiscal impact on the state’s coffers. Another possibility is that the bill would proceed straight ahead to the Calendar and Rules Committee. The next step would be to send the proposed amendment to the House Floor for a vote.

Exact timing is uncertain, but it is possible the subcommittee meeting would take place on Wednesday, March 25, 2015. If the amendment receives the necessary votes there, it will then be heard in the state government full committee on March 31, 2015.

If the proposed amendment makes it through the committee system, it would then need to receive a constitutional majority in the House Floor vote. But, it does not appear the House has even authorized a fiscal effect study on possible gaming in Tennessee. There has been no official discussion on the proposed amendment yet, and the scope of potential gaming in Tennessee has not yet been addressed.

If gaming were to be legalized in Tennessee, it could be intelligently crafted in such a way to maximize revenue and control location, and the potential economic windfall to the state and its school system from the proposed amendment could be in the hundreds of millions. In a state where even passing the lottery was controversial, discussing gaming may create a storm of protest, though.

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