Casinos Versus Racetrack Slots in Ohio

In anticipation of a push by a consortium for casino gambling in Ohio’s four largest cities, the Ohio State Racing Commission is formulating its own legislative proposal for video lottery terminals at the state’s seven racetracks.

The casino group, which includes Penn National Gaming Inc., announced March 11 a proposal to put the casino question on the November ballot this fall. PNGI and the majority owner of the Cleveland Cavaliers in the National Basketball Association are part of what they call the “Ohio Jobs and Growth Plan,” which they claim will produce $600 million a year in revenue for the state.

The group, which could expand, has submitted a petition to the state with language that sets a tax rate of 33% and requires each developer to pay a $50-million licensing fee. The group claims the bulk of the revenue from casinos would go to “counties and school districts throughout the state.”

The casinos would be located in Cincinnati, Cleveland, Columbus, and Toledo. The group indicated privately-operated casinos would generate more revenue and economic development.

PNGI chairman and chief executive officer Peter Carlino, whose company owns Raceway Park, a Toledo, Ohio, harness track, said the casino plan would benefit the horse racing industry but offered no specifics. A published report indicated 3% of casino revenue would go to the state racing commission; no casino gambling would be offered at racetracks.

“These investments will help to revitalize struggling Ohio metropolitan areas while providing support for counties, cities, and public schools across the state as well as Ohio’s horse racing industry,” Carlino said in a statement. “This plan was structured to ensure that developers of casinos in the state would invest appropriately to create first-class gaming facilities.”

Meanwhile, PNGI is said to have an option to purchase Beulah Park, the Grove City, Ohio, racetrack that has pushed for gaming for years. Beulah Park majority owner Charles Ruma was a major supporter of a failed racetrack-backed casino referendum in 2006.

OSRC executive secretary Sam Zonak told The Blood-Horse March 11 the commission plans to present details of a racetrack VLT plan to legislators shortly. Zonak said he first discussed the plan when he presented the commission’s budget request for the next fiscal year. The commission, like the horse racing industry, continues to see its revenue decline each year as pari-mutuel handle falls.

Last year, the OSRC commissioned a study that suggested gaming revenue offers the best long-term fix for racing.

OSRC member Tom Zaino, a former Ohio tax commissioner, prepared an analysis that said the state General Assembly is within its right to expand gambling through a state agency, in this case the Ohio Lottery. The state already has done so; in 2008, it implemented Keno games at thousands of outlets, including racetracks, at the urging of Democratic Gov. Ted Strickland.

“We’re trying to save the horse industry, so why doesn’t the state enact this?” Zonak said. “(The state) would get to determine how the money will be spent, and who makes the money. (The revenue) would boost horse racing, and the state would get the rest to balance the budget.”

Though Strickland, through spokespersons, repeatedly has said he doesn’t view expanded gambling as the ideal way to generate economic development, racing insiders have said the governor would find a Lottery expansion—effectively state-run gaming—more palatable. Zonak said several legislators expressed interest in seeing the OSRC proposal.

“I told them the industry is dying,” Zonak said. “Thistledown has filed for bankruptcy, and River Downs almost didn’t open this year. It’s just the tip of the iceberg.”

Magna Entertainment Corp., parent of Thistledown, filed for Chapter 11 bankruptcy protection March 6. Thistledown has been on the market, but the MEC filing didn’t list the Cleveland-area track as one of the assets it plans to sell in a $195-million package.

Ohio voters repeatedly have defeated casino ballot measures. They did so last year when a casino in southwestern Ohio was proposed; PNGI, which owns the Argosy riverboat casino in neighboring Indiana, spent more than $35 million to defeat the referendum.

Along with Raceway Park, the only other Ohio track owned by a gaming company is Scioto Downs, a Columbus harness track. It’s owned by MTR Gaming Group, which operates Mountaineer Casino, Racetrack & Resort in neighboring West Virginia and Presque Isle Downs & Casino in neighboring Pennsylvania.

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