Ohio Back At The Table?

by Ed Meyer

posted on January 10, 2009 in News | 2 Comments >>

The company that spent $36 million to defeat a gambling measure last year, has returned with a proposal to transform Ohio’s seven horse-racing tracks into gambling emporiums and to allow four casinos in cities.

Penn National Gaming Inc., the owner of a Toledo racetrack and one of the nation’s deepest-pocketed gambling companies, is talking to lawmakers about sponsoring a November 2009 ballot measure.

The discussions come only two months after Ohio voters overwhelmingly defeated a ballot measure for a casino near Wilmington. Penn National put up virtually all of the money for the campaign against that measure.

A draft of Penn National’s proposal obtained by The Dispatch includes the following points:

• The seven racetracks each would pay a $50 million licensing fee for full Las Vegas-style gambling.

• Cleveland, Columbus and Cincinnati would be potential sites for the four stand-alone casinos, with no city getting more than two. Companies would bid for licenses to operate those casinos. In the cities with a single casino, the licenses would cost at least $100 million; in the city with two casinos, licenses would fetch $50 million or more each.

• Casinos would be taxed at a rate of 30 percent, with 12.75 percent going to the state’s general fund, 10 percent split among counties on a per-capita basis, 3 percent for college scholarships and the rest for regulation, compulsive-gambler services and enhancement of horse racing.

• The state would create a new regulatory body to oversee the expanded gambling.

Penn National spokesman Eric Schippers, the author of the memo, characterized it as a “back-of-the-napkin type document that never was intended to leave the drawing board.” The provisions are no longer current, he said.

A draft of a proposed bill modeled on Schippers’ later ideas changes the funding formula somewhat and allows cities other than Cleveland, Columbus and Cincinnati to vie for casinos. Two of the casinos would be in Cuyahoga County.

Penn National representatives have discussed the ideas with leaders of the Ohio House and Senate as well as Gov. Ted Strickland’s chief of staff.

If 60 percent of the members of both the House and Senate vote in favor, the measure would appear on the November ballot without Penn National having to collect more than 400,000 valid signatures on a petition. Although the legislative route would save time and as much as $2 million, it means that lawmakers — not Penn National — would have the final say on the ballot proposal.

Gambling proposals in 2006 and 2008 made the ballot through the petition process.

Strickland’s spokesman, Keith Dailey, said the willingness to listen doesn’t imply an endorsement. Still, Dailey said, the governor would be remiss to ignore Penn National at a time when state revenues are deteriorating.

“The governor continues to believe that expanded gambling would be bad for Ohio,” Dailey said. Strickland himself said much the same thing a day earlier.

Schippers said Penn National’s polling during last year’s casino campaign showed that Ohioans are open-minded about gambling. He said the company hopes to rejuvenate horse racing in Ohio as well as provide a new revenue source for the state.

“Where a gaming expansion may or may not fit into the Ohio budget situation is something we’re trying to learn about,” Schippers said.

The Ohio Roundtable, a conservative public-policy group that has opposed previous gambling measures, is no more inclined to support something with the imprimatur of the General Assembly, the group’s vice president, Rob Walgate, said.

“At what point does this become an insult to the voter?” he asked, noting the failed 2006 and 2008 campaigns. Casino measures also failed twice in the 1990s.

The group behind the 2008 measure for a Wilmington casino, MyOhioNow.com, also is aiming for the 2009 ballot, with a proposal for casinos in Ohio’s three largest cities.

Penn National’s moves haven’t deterred MyOhioNow.com, said Rick A. Lertzman, a partner in the effort.

“You can’t turn your back at a time when you’re bleeding jobs in Ohio,” Lertzman said.