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As a decision by Gov. Scott Walker draws near, debate over a proposed $800 million casino in Kenosha is rekindling on social media and the airwaves.
The Menominee tribe aims to build on the site of the long-closed Dairyland Greyhound Park dog track. The latest plan, which has received federal approval, calls for a project that would include a casino, hotel, spa and concert venue that would be developed and managed by Hard Rock International, which is owned by the Seminole tribe of Florida.
The Kenosha plan has drawn strong opposition from the Forest County Potawatomi, who argue the project would drain revenue from their Milwaukee casino, which recently added a $150 million, 381 room hotel.
Walker has the final say and has until Feb. 19, 2015 to make his decision.
Anti-casino group Enough Already Wisconsin, Inc. has been active on social media, including regular tweets criticizing the project. The group — which is not required to reveal its funding — is also running a new batch of television ads urging Walker to reject the plan.
A Nov. 8, 2014 tweet zeroed in on a key opposition argument — that the casino would benefit out-of-state interests, specifically the Seminoles in Florida: "The Kenosha Casino, backed by the FL. Seminole Tribe, would send a majority of its rev to FL."
That’s a lot of money, given that the casino is expected to generate revenue of more than $436 million in its first year of operation, according to figures provided to the state by Hard Rock and the Menominee.
Is the group correct?
When we asked Enough Already spokesman Brian Nemoir for evidence to back the claim that most of the revenue would flow to Florida, he walked back the statement.
"What I should have said is the money is being sent out of state, not just Florida," Nemoir said.
The Nov. 8, 2014 tweet was subsequently removed, but the same statement remains in the organization’s feed from the previous two months.
The financial picture
So what about the numbers? Let’s break down the anticipated spending and see what part of the Hard Rock revenue would go to Florida.
Enough Already and the casino backers agree — roughly — on how much revenue the project could generate each year. Nemoir said he used $410 million, based on a Menominee report to the federal government. A more recent figure, $436.7 million, was in a Menominee/Hard Rock report filed with the state in October 2013.
So for Enough Already to be right, a majority of that money — some $205 million to $218 million — would have to go to Florida.
Management fees: The Seminole-owned Hard Rock would receive an annual management fee. The Menominee-Hard Rock report lists that fee at $34.7 million in the first year that the facility is open — about 7.9 percent of total revenue of $436.7 million.
But Nemoir used a figure that was nearly four times higher — that the Seminole would receive $143.5 million a year, or about 33 percent of the gross revenue.
He said that figure was based on an estimate made by University of Wisconsin-Madison law professor Richard Monette in a Sept. 19, 2014 story in the Appleton Post-Crescent. The story contained this line:
"‘Hard Rock would likely receive 30 to 35 percent of the Kenosha casino's total revenue and as much as 40 percent,’ predicted University of Wisconsin-Madison law school professor Richard Monette, who is director of the Great Lakes Indian Law Center."
But Monette told us his comments were basically a guess.
"When I was asked, the reporter didn't have the facts and I hadn't researched the matter, so I speculated based on other deals," he wrote in an email.
"That said, I would be very surprised if that $34 million were a total," he said, adding that the sum sounded like the "development and management of construction only. Once the casino is opened, operations management is usually greater than that, annually."
Construction loan: The Kenosha complex will cost an estimated $800 million, and the Menominee will have to repay with interest whoever lends that money. Nemoir puts the annual repayment amount at $58 million per year and assumes it will go the the Seminole tribe.
But there’s been no indication that the Seminole are planning to finance the project themselves.
Kenosha project spokesman Michael Beightol said three banks have said they would consider participating in the project, including Green Bay-based Bay Bank, which is owned by the Oneida tribe. He said the other two banks are much larger and neither is in Florida, or connected with the Seminole tribe.
The document that the Kenosha group filed with the state lists $50.5 million as the interest payment for the construction loan in the first year that the facility is open.
Nemoir pointed out the Menominee also owe money to the former owner of the dog track, based in Alabama, and the Connecticut-based Mohegan tribe, a former partner with the Menominee for the Kenosha project. Those payments total about $53 million.
That money would go out of state, but not to Florida, as claimed. What’s more, they would be one-time payments.
On the other side, Beightol noted that the casino would generate a projected $42.8 million in state and local payments and taxes; have $167.8 million in spending on money and goods purchased in the state, including labor; and $15.4 million in "promotional allowances" such as marketing and advertising.
Those expenses alone amount to about $226 million — well over half of the gross revenue.
As for what is going to the Seminole tribe, the best figure based on public filings is $34.7 million in the first year. That’s about 8 percent of total revenue -- a far cry from more than 50 percent.
A group opposing the Kenosha casino project tweeted that the majority of revenue from the business would go to the Seminole tribe in Florida. For that to be right, it would have to be at least $200 million.
However, the claim is based a guess and a faulty assumption. The group’s spokesman admitted that the numbers fall short.
We rate the claim False.
Enough Already Twitter account
Emails, telephone interview, Brian Nemoir, Nov. 11, 12, 2014
Emails, telephone interviews, Michael Beightol, Nov. 11, 12, 2014
Menominee/Hard Rock International proposal, Oct. 22, 2013
Milwaukee Journal Sentinel, "Menominee application for Kenosha casino to receive fresh look," Aug. 16, 2011
Milwaukee Journal Sentinel, "Menominee Tribe will try again to build Kenosha casino," Jan. 15, 2012
Milwaukee Journal Sentinel, "Feds approve plan for Menominee casino in Kenosha," Aug. 23, 2013
WTMJ-TV, "No decision expected on Kenosha casino before 2014 elections," Aug. 6, 2014
Appleton Post Crescent, "Wisconsin casino expansion may benefit Florida tribe," Sept. 29, 2014
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