Motorcity Gambles on Casinos

Even by the standards of America's poorest major city, Bagley Street has seen better days. A Salvation Army building with smashed windows, a weedy patch of wasteland, an energy company's office and a deadbeat hotel line the scruffy strip.

On a weekday morning, barely a soul is visible and traffic lights swing aimlessly in the wind. A man shuffles up and demands: "'Scuse me bro, I need 20 cents for the bus."

It seems an odd place to build a Las Vegas-style casino resort. But looming over the bleak urban landscape are the black and silver windows of a gleaming new MGM Grand casino which threw open its doors this month at a cost of $805m.

Battered by the near collapse of America's motoring industry, Detroit is betting on gaming as a way to revive its fortunes. MGM's 400-room hotel is the biggest of three huge gaming developments in the city. It incorporates a spa, designer restaurants and an upmarket nightclub with room rates of up to $4,000 a night for a VIP suite. MGM's marketing material declares that "the world has seven wonders - now Detroit has one".

The casino's chief financial officer, Mike Neubecker, says: "Detroit definitely isn't glamorous like Las Vegas, New York or Los Angeles but the state ranks highly in its propensity to game."

He believes that Midwesterners, who are distant from the bright lights of Las Vegas and Atlantic City, want a regional gaming hot spot on their doorstep.

"What we're saying is that if you're going to come and visit friends in Michigan or if you're going to do business in Detroit, why not come to the MGM," says Neubecker.

Once 80% dependent on the motor industry, Detroit's economy has been shredded by the failure of Ford, General Motors and Chrysler to cope with competition from Asian arrivistes. Government figures show that the number of people working in auto manufacturing in Michigan has fallen from 275,200 to 181,100 in five years.

Motown

For the hometown of Aretha Franklin, Diana Ross and Eminem, a deeply entrenched decline stretches back much further - once America's fourth largest city, Detroit's population has slumped by 49% since 1960 and it now ranks 11th with fewer than 850,000 residents.

Faced with dwindling tax revenues, the city's council first mooted casinos as a revenue-raiser two decades ago. Voters rejected them four times before finally backing them in a 1994 referendum. Three modest "temporary" casinos - the MGM, motor city and Greek town - opened at the turn of the decade and in keeping with an original deal struck with the authorities, they are now being upgraded to vast hotel and leisure complexes.

Just as critics attacked plans for Britain's first "super casino" in Manchester, opponents in Detroit voiced passionate concern. Matt Allen, press secretary to the city's mayor, Kwame Kilpatrick, says: "Detroit is the largest African American city in our country. There was a lot of consternation from preachers that people would lose their homes, that morally this was wrong."

But the sheer volume of money raised from the casinos has quietened some of the more strident criticism. Allen says the three sites yield taxes of between $440,000 and $500,000 a day - or $170m annually. "That buys a lot of fire trucks, a lot of police officers, a lot of parks and recreation and it keeps the lights on in a lot of public buildings."

Fans and critics alike agree that an explosion of organized crime feared as a byproduct of gaming has not materialized. Gambling addiction has proved relatively rare despite a handful of high-profile incidents - including the suicide in 2000 of an off-duty policeman who shot himself in the motor city casino after losing $15,000 in a day.

Robin Boyle, professor of urban planning at Detroit's Wayne State University, says counselors have reported barely any psychiatric problems arising from gambling - and the industry's creation of 10,000 jobs has been a benefit. But he says the casinos' impact has been positive: "I actually think they are giving some direction to where a post-industrial city might go."

This view is far from unanimous, though, and he qualifies it carefully. The biggest problem, he suggests, is that the casinos pack so many attractions on to their premises that visitors have little need, or desire, to explore the city. "The downside is that the casinos themselves are like three little islands of glitter," says Prof Boyle. Customers almost all arrive by car and use a covered walkway from parking lots into the complexes. They gamble, eat, relax in the spa, sleep in their rooms and then drive straight home.

"They attract disposable income but it doesn't really spin off into the adjacent communities," he says.

Detroit's Second Baptist Church is directly opposite the Greek town casino - and pastor Kevin Turman is a skeptic. In addition to resenting the philosophy that "you can pay your bills by gambling", he says local traders have seen scarce benefit. "Casinos do everything in their power to have as many shops and restaurants, at prices designed to keep people inside," says Rev Turman, who doubts that tax proceeds have significantly improved city services. "It is the nature of casinos to promise more than they deliver."

The industry's local expansion is still in its infancy. Next month the motor city casino will open a 17-story automotive-themed hotel with design input from Chip Foose - the brains behind vehicles in RoboCop and Blade Runner. Hot on its heels will be the Greektown Casino, which is majority-owned by a tribe of Chippewa Indians, with a $200m leisure complex next year.

Detroit's city authorities point out that a portion of casino tax is earmarked for extra police - and that the casinos are required to fund a state regulator which vigorously promotes sensible gaming. The advice of business leaders to British cities is that gambling can work. John Carroll, director of the Detroit Regional Economic Partnership, says: "My belief is that casinos are inevitable. It's a way politicians can raise money without having to raise [personal] taxes. They're cropping up everywhere - you've got to work with them to benefit the local community."

In the shadow of Detroit's giant casino building sites, there is a reluctant sense of acceptance. At the Temple Trumbull Market, a grocery store behind the motor city casino, the staff are cagey.

"It's improved the neighborhood - there used to be a lot of crack houses. Now it's a good, safe environment. There are more police," says the manager, who gives his name as Sharky.

He gestures, however, to a sign on the shop's wall advertising lottery tickets. "We don't sell as many of them these days."

Detroit in numbers

Total population

1960: 1.67m 2000: 951,270 2005: 836,056

White population

1960: 1.18m 2000: 116,599 2005: 92,796

Vacant housing lots

1960: 38,302 2000: 38,668 2005: 63,917

Jobs in city

1960: 642,704 2000: 345,424 2005: 321,996

Income tax revenue

1960: n/a 2000: $376m 2005: $282m

· Source: Wayne State University