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OP-ED: Proposed Beloit casino missing impartial analysis

As a longtime senior manufacturing executive, I am a Beloit, Rock County, southern Wisconsin and northern Illinois region economic stakeholder with a history of serving manufacturers throughout the region for more than 40 years. We all recognize the economic leadership and revival efforts underway in the Beloit region with current and future employers in great need of workers. These needs must be met if Beloit is to succeed in attracting startups and growing existing businesses.

While I look forward to and support the possibility of federal approval for the largest-scale Beloit casino possible, there are serious adverse socioeconomic impact problems with the Ho-Chunk Nation proposal and what appears to be a major conflict of interest in the socioeconomic impact analysis completed for BIA’s Final Environmental Impact Statement.

Federal casino guidelines require that the Bureau of Indian Affairs measure the socioeconomic impact of the proposed Ho-Chunk casino on the people of Wisconsin (and Illinois). This BIA must determine if the proposed Beloit casino will have a favorable or adverse socioeconomic impact as key criteria in order to determine if the casino will be approved or denied.

Under the direction of federal guidelines, the BIA engaged an independent consultant, Analytical Environmental Services, to assess the socioeconomic impact of the Beloit casino and to prepare the Final Environmental Impact Statement that is required to address the casino’s socioeconomic impact on the people of Wisconsin.

AES then hired The Innovation Group, another consultant, to determine the casino’s socioeconomic impact component of the FEIS. However, it is now confirmed that TIG is the same consultant hired by the Ho-Chunk to perform their socioeconomic impact analysis of Ho-Chunk Beloit. This directly calls into question the integrity of the entire FEIS and its socioeconomic impact conclusions related to the proposed Ho-Chunk Beloit casino. This unacceptable conflict will most certainly be of interest to the Office of the Inspector General at the United States Department of the Interior.

While the BIA’s conflicted FEIS paints a rosy picture of the Beloit casino’s socioeconomic impact, a casino of the magnitude proposed for Beloit can have numerous types of adverse socioeconomic impact.

For one, the opportunity cost imposed upon the people of Wisconsin (and Illinois) due to diverting the region’s limited pool of human capital to fill lower wage gaming and hospitality jobs as compared to the growing number of higher paying vacant manufacturing and other jobs that pay substantially higher wages to workers when trained to fill these vacancies.

The BIA need only look at the low wages paid by the Ho-Chunk in their existing gaming operations and then look at the state’s job center website that shows nearly 100,000 in growing number job openings in recent years. Further, while there are a significant number of underemployed workers throughout Wisconsin (and Illinois) as referred to by TIG in their responses to concerns raised in previous public comments, hiring underemployed workers for placement into other underemployed (gaming and hospitality) positions does not mitigate this adverse socioeconomic impact defined herein under today’s growing shortage of workers in the Beloit region, throughout Wisconsin and certainly throughout the United States with some 7.6 million job vacancies today that have grown by 1 million in only the last 12 months.

Second, the conflicted FEIS and its equally conflicted socioeconomic impact analysis fails to effectively recognize the adverse socioeconomic impact of family wages lost to gambling in the casino. These lost wages amount to billions of dollars of lost low- and moderate-income family wages over a 10-year casino lifecycle, which is significant adverse socioeconomic impact on the people of Wisconsin (net of the socioeconomic impact of the casino’s operating expenses spend in the local economy). Over a 20-year casino lifecycle, this adverse impact is much greater in magnitude.

BIA’s earlier Draft Environmental Impact Statement describes 2% of the new casino’s “net win” amounts to $20.9 million to be paid per annum to the city of Beloit with 30% of this amount then paid down to Rock County. While these payments could be significant and exciting levels of local government income to smaller communities like Beloit and Rock County thus leading to their unequivocal support for the casino, BIA has a regulatory duty to ensure the socioeconomic impact is properly considered including the input of other qualified outside independent stakeholders. Further, the DEIS figures make the Beloit casino one of the largest in Wisconsin since this level of annual Intergovernmental Agreement payment translates to a projected $1 billion “net win,” which is net of casino operating expenses that do benefit the local economy.

In what would have otherwise become the Beloit Region’s highly favorable economic impact, the lost federal, state and local tax revenues, in addition to the billions of dollars in overall lost family wages, are staggering. This staggering impact is net of the federal and state income taxes that have already been paid on gambled wages.

We can assume that some of the more than $1 billion in “net win” economic impact will remain in Wisconsin to help cover per capita payments to some Wisconsin tribal members and used for other Ho-Chunk operating expenses thus having some economic impact. However, most of the Beloit casino’s “net win” will simply go to the “bottom line” and then be reinvested by the Ho-Chunk Nation outside of Wisconsin.

These facts present a much more challenging picture of the socioeconomic impact of the Beloit Casino. However, as allowed under the federal guideline’s checklist used by the BIA to review, approve or deny proposed casinos, the Ho-Chunk should be provided an opportunity to present to the BIA a viable solution to the components of adverse socioeconomic impact described in this op-ed.  This is especially important now that BIA has been made aware of the dilemma and is in process of completing its final review in the days ahead.

The absence of a cure solution by the Ho-Chunk Nation could lead to a BIA denial of the casino.

While it is true that so many of us are eager to gain the federal approvals for the Beloit casino, it is important to be sure we get it done right. I look forward to learning from the BIA of the Ho-Chunk plan to mitigate the significant adverse socioeconomic impact of the casino while at the same time becoming a great community development neighbor doing good for the Wisconsin economy.

Edward J. Panelli is the founder of Executive Business Services doing business throughout Wisconsin and Illinois. He is adjunct professor of management at the Lubar School of Business at the University of Wisconsin-Milwaukee. He is a recognized global expert in organizing leadership teams, leading award-winning global product development projects, and driving global manufacturing revenue growth in Mexico, China, and Europe. Throughout his work as a senior executive, he has received numerous awards for business transformations and revenue growth through innovation. He also has the distinction of being awarded patents in both the health care industry and in the arc welding manufacturing industry.

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