Ohio VLT Supporters Fight Against Casino Vote

Pro-racetrack gaming forces are opposing a casino referendum in Ohio.

Pro-racetrack gaming forces in Ohio have taken a strong stand in opposition to a November referendum on full casino gambling in the state’s four largest cities.

The campaign began Oct. 3 at Northfield Park, a Cleveland-area harness track. The Ohio Harness Horsemen’s Association handed out literature and solicited support for what it calls a “grassroots” effort to defeat the ballot measure, and also held a meeting with horsemen in the paddock.

“The OHHA board of directors voted to be opposed to Issue 3,” organization executive director Jerry Knappenberger said. “(The casinos) would not be paying a fair tax rate. Nothing would go to the state, and 1% would go to the racing industry. It would kill more jobs in racing than it would create (at casinos).”

Ohio Horsemen’s Benevolent and Protective Association executive director Dave Basler said his board of directors also opposes Issue 3, which would authorize casinos in Cincinnati, Cleveland, Columbus, and Toledo. The state’s seven racetracks are located in or near those cities.

Mark Robinson, the OHHA campaign chairman for Issue 3, said there are other ramifications. “Not only would it be a blow to the racing industry, but it could dry up small businesses,” he said.

Pro-casino interests fashioned the ballot question, which was approved the Ohio Attorney General’s Office. It calls for a tax rate of 33%, most of which would go to Ohio counties, not the state. The Ohio State Racing Commission would get 3% of the 33% to fund horse racing.

A shelved directive by Democratic Gov. Ted Strickland for the Ohio Lottery to install video lottery terminals at racetracks set the state tax rate at 50% and ordered each track to pay a $65-million license fee. The tracks, which would build VLT casinos, would get 50% of the revenue even though the state would purchase the gaming machines.

Racetracks and horsemen’s groups would have to negotiate a percentage of revenue for purses and breed development. There was no deal before the VLT directive was sidelined by the Ohio Supreme Court, which said the plan is subject to a statewide referendum.

Senate Republicans are now pushing to have companion legislation to the VLT directive repealed. Still, the group LetOhioVote.org, which pushed for the state Supreme Court ruling, plans to continue gathering enough signatures for a 2010 referendum.

Strickland, meanwhile, has asked the high court to rule on whether the Ohio Lottery can authorize racetrack VLTs without legislative action. In 2008, it implemented statewide Keno under Strickland’s order.

Ohio racetracks haven’t thrown in the towel; sources said there remain scenarios under which the Ohio Lottery could move forward with the VLT plan. There also are two outstanding lawsuits filed over the plan.

Strickland, whose four-year term ends in 2010, hasn’t said the plan is dead, but he also didn’t suggest he would issue an executive order for VLTs. Such orders can be repealed by another governor.

“Obviously, the racing commission and horsemen are hopeful it will make its way through the legal process,” Knappenberger said. “If that’s the case, we feel they will go ahead. We’d still be in the hunt.”

No immediate racetrack closures

A racetrack VLT proposal released earlier this year by the OSRC suggested five of seven tracks in the state eventually would close without gaming or if non-track casinos were approved and the tracks had nothing. Thus far, all seven tracks intend to race in 2010.

“Race dates have been requested for next year,” Basler said. “River Downs and Thistledown are below the minimum (number of dates required to offer full-card simulcasts in 2011), and we are looking to sign comprehensive dates agreements with both of those tracks similar to what we did this year.”

Northfield Park, which has plans for a VLT casino, was approved to race 213 dates next year, as usual the most of any track in the state.

“We’re still profitable, so we can hold out,” said Dave Bianconi, Northfield executive vice president of racing and simulcasting. “Of all the tracks in Ohio, we’re probably in the best shape financially. We’ll just keep on grinding.”

This year through Oct. 3, in-state Thoroughbred pari-mutuel handle at all Ohio tracks was down 16.3% from the same period in 2008, while handle on harness races was 9.1%, according to OSRC statistics. Northfield was down 7.1% on site.

“It’s not that we’re happy with it, but it could be a lot worse (given what’s happening around the country),” Bianconi said.

Thoroughbred owners and breeders are preparing for further declines, said Tim Hamm, president of the Ohio Thoroughbred Breeders and Owners. Hamm and others were on hand at Thistledown near Cleveland Oct. 3 for the Best of Ohio championships.

“We’re probably going to have to make more cuts,” Hamm said of purse money for the Ohio-bred program. “Revenue is down again. We had our hopes up with slots. Everyone seems optimistic it’s coming, but without slots, we don’t know how many of the tracks will stay open.

“Maybe they’ll stay open if (the state) keeps dangling the carrot.”

“It’s just a matter of time before it’s a slow death,” said trainer William “Doug” Cowans. “The way I’ve been hanging in there is by going to (Mountaineer Casino, Racetrack & Resort in West Virginia), and I was stabled at Presque Isle Downs & Casino (in Pennsylvania) this summer. I’d like to run in my own back yard, but my owners can’t hang in there with the purse structure the way it is.

“A lot of my owners are Ohio breeders, and they can’t make it on anything other than good allowance or stakes horses in Ohio.”

Plans subject to speculation

Numerous organizations have come out in favor of Issue 3, whose backers claim will generate 34,000 jobs in Ohio. Opponents claim only half that number would be permanent positions.

The ballot language doesn’t say when or if the casinos will be built, which has led to speculation about the backers’ intentions.

In a release from TruthPAC, which opposes the referendum, Republican Rep. Louis Blessing, a longtime supporter of racetrack VLTs, said Issue 3 doesn't identify who would own or operate the casinos.

"If we are going to hand over the keys to our constitution, shouldn't we at least know who we're giving them to?" the lawmaker said. "Issue 3 supporters should tell the voters who would own and run these casinos."

Penn National Gaming Inc., one of the primary principals in the ballot initiative, already operates the most successful riverboat casino in the country in Indiana, not far from Cincinnati. The company also owns Raceway Park, a Toledo harness track.

PNGI has said it wasn’t part of the effort by LetOhioVote.org to get a court ruling on the legality of racetrack VLTs. It was one of two track owners that paid the first installment of the $65-million licensing fee for VLTs. Northfield Park was the other track.

Republican Ohio Rep. Bill Seitz in an affidavit said an individual who was part of the LetOhioVote.org lawsuit told him it was being financed by PNGI. The company issued a statement saying the claim was “patently false and potentially libelous.”

When the Supreme Court ruling came down in early September, some tracks hadn't even found gaming partners. Just days before the ruling, Harrah's Entertainment was approved to purchase Thistledown from Magna Entertainment Corp. for $89.5 million; the company hasn't commented yet on its intentions.

Beulah Park near Columbus sued PNGI over a previous purchase-option agreement, while River Downs was having trouble lining up financing. Published reports that Northfield planned to spend $300 million-$400 million on a VLT casino were inaccurate; the track intended to spend more than the $80-million minimum required under the VLT directive to construct a quality facility, Bianconi said.