OH Governor Shelves Racetrack VLT Plan

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Democratic Ohio Gov. Ted Strickland Sept. 30 put his plan for racetrack video lottery terminals on hold indefinitely in light of a recent state Supreme Court ruling and a need to balance the state budget.

About $900 million a year in VLT revenue was included in the budget approved by the state legislation and Strickland in July. The Ohio Supreme Court in early September ruled the racetrack VLT plan is subject to a statewide referendum that probably won’t be held until November 2010.

Strickland, in a statement, said he disagrees with the court decision but must abide by it. Thus, he won’t be issuing an executive order—in the summer he issued only a directive—for racetrack VLTs that would be operated by the Ohio Lottery.

“That decision by the state Supreme Court made it a practical impossibility to utilize video lottery revenue in the current budget and reopened an $851-million hole, placing our schools at risk of funding cuts and our budget at risk of imbalance,” the governor said. “Waiting for a November 2010 referendum, even if it is successful, still denies the state the revenue necessary to protect our schools from devastating funding cuts in this biennium.

“Some have suggested placing video lottery terminals on the ballot at an earlier date, such as May (2010). That would still be too late to generate the necessary revenue to fund education. And this would not resolve the legal challenges facing the state today.

“An outstanding question remains before the courts: Whether or not the Ohio Lottery has the authority to implement video lottery terminals without legislative approval. We need to hear from the courts on this constitutional question, and I will seek a declaratory judgment for clarification. But while we wait for that clarification, we must find another way to balance the biennial budget.”

Strickland listed three options: tax increases, cuts in education spending, or rescind a reduction in income taxes.

VLT application and licensing fees already paid by racetracks will be returned, officials said.

Harrah’s Entertainment, which announced it would buy Thistledown near Cleveland from bankrupt Magna Entertainment Corp. for $89 million, hasn’t commented on the latest developments, but the deal allows the gaming company to opt out. Other tracks have been negotiating with casino interests on partnerships.

The results of a November referendum on full casino gambling in Ohio’s four largest cities could play a role in the future of racetrack VLTs.

Also on Sept. 30, horse racing interests again came out against Issue 3, the casino ballot measure.

"Issue 3 calls for a constitutional monopoly for two out-of-state casino operators, and it would hurt horse racing and other existing businesses,'' River Downs general manager Jack Hanessian said.

"If the casino issue passes--and racetracks lose the right to install VLTs--Ohio's horse racing industry will collapse," Ohio Harness Horsemen's Association president Steve McCoy said.

The Ohio State Racing Commission earlier issued its opposition to Issue 3, which was fashioned by casino interests. Under the referendum, Ohio counties would get 33% of gaming revenue; the racetrack VLT directive calls for the state to get 50% of gaming revenue.