Blog Posts For The Week Of March 25, 2015 Through March 31, 2015

Column: Why are Gaming Revenues so far below what was Promised?
By Gongwer Staff
Posted: March, 31 2015 12:56 PM

A Guest Column by State Sen. Bill Coley (R-Liberty Township)

Back in 2009, the developers proposing to build casinos in four Ohio cities promised Ohio voters over $500 million per year for schools and local governments. The first casinos opened in May of 2012. However, annual casino tax revenue peaked at $272 million and has been falling since 2013.

A number of us are asking, why is casino tax revenue about half of what was promised?

The dangers of problem gambling are well known. Ohio has done its part to limit the number of gambling locations in the state. Ohio has a population of almost 12 million residents and has 4 casinos and 7 racetrack ‘racinos’. With over 1 million residents per facility, Ohio has more residents per facility than all but 5 other states. The number of residents per slot machine and table game is also high. Therefore, any claim that there is too much competition is without merit.

After the voters approved the constitutional amendment permitting casinos, the casino developers decided to build casinos that were much smaller than originally planned. It was widely reported in 2011, that instead of building facilities that included large dining and entertainment venues with 18,960 seats at slot machines and gambling tables, the facilities would be much smaller and would only include about 11,500 such seats.

The casino developers assured us that the reduction in the size of the facilities would not have a negative impact on the promised tax revenues. However, the percentage reduction in gaming seats (about 40 percent) is very similar to the percentage shortfall in promised tax revenue (about 46 percent).

What can the Ohio legislature do to get the casino operators to live up to their promises? Well, one thing that can be done is to restrict the amount of “Promotional Gaming Credit”.

Many of you have seen the solicitations from the casinos and racinos that offer $10 and $20 in free play. As long as regulators approve, gaming establishments are permitted to send such promotions and are allowed to deduct such “Promotional Gaming Credit” from their gaming revenue. Thus they pay less in taxes. Well, this month, the total amount gaming establishments have deducted from their revenues surpassed $500,000,000.00. That is about $165 million that did not go to Ohio’s schools and local governments in just the short time that we have had gaming in Ohio.

There is no requirement that Ohio allow a deduction for Promotional Gaming Credit. Most states do not permit such a deduction. Michigan does not permit such a deduction. Indiana has strict limits on such a deduction. If passed, the proposed legislation will prevent casino developers who have failed to live up to their promises from receiving deductions for Promotional Gaming Credit.

We’ve done a lot to improve Ohio’s economy over the last few years. However, our schools and local governments have been counting on the gaming revenues that they were promised. It’s time that the principles set forth in the proposed legislation are enacted into law.

As always, I would greatly appreciate it if you would contact me if you have any questions or concerns regarding any state-related matter. You can reach my office at (614) 466-8072 or write me, State Senator Bill Coley, at 1 Capitol Square, 1st Floor, Columbus, OH 43215.

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