By Joanne Huist Smith, Staff Writer
Updated 8:49 PM Saturday, May 12, 2012
Pro-gambling interests have invested heavily on a simple bet: that there is money to be made in Ohio.
Construction costs alone for four casinos will approach $1.5 billion. Millions more were spent convincing Ohioans that casino gambling would give the state a much-needed economic jolt — a campaign debt that as of January was still being paid off.
As the state’s first-ever casino is set to open in Cleveland on Monday, a review by the Dayton Daily News shows that as of January, subsidiaries of Penn National Gaming Inc. and Rock Gaming were still making contributions to the group that led the 2009 campaign to amend the Ohio constitution and allow casinos in Ohio.
Penn National and Rock each will develop two of the Ohio casinos, which will open in stages through the spring of 2013.
“I don’t know the casino business, but I do know a lot of money flows through it.” state Sen. Bill Beagle, R-Tipp City, said. “I don’t know if they would have invested all that money into a campaign if they felt the risks outweighed the benefits.”
The opening of the $350 million Horseshoe Casino Cleveland will be followed by the $320 million Hollywood Casino Toledo, the $400 million Hollywood Casino Columbus and the $400 million Horseshoe Casino Cincinnati.
The building bonanza follows one of the most expensive issue campaigns in the history of Ohio, as gaming companies sold voters on a promise of jobs if allowed to open casinos in Cleveland, Columbus, Cincinnati and Toledo.
According to campaign finance reports filed in January with the Ohio Secretary of State, Rock and Penn subsidiaries made $1.8 million in in-kind contributions to the Ohio Jobs and Growth Committee, the political action committee that led the 2009 Ohio Issue 3 campaign effort. The donation of anything of value is considered an in-kind contribution, such as if a donor pays a consultant’s fee or a printing bill for services provided to a campaign.
Bob Tenenbaum, spokesman for the PAC and for Penn National, which is building the casinos in Toledo and Columbus, said the contributions are paying off obligations incurred during the campaign. State records show those contributions funded campaign strategy, voter outreach and consulting fees.
“This is a significant amount of money, but Ohio is a large state,” said Tenenbaum, whose company is also considering relocating a harness racing track to Dayton.
Supporters of the ballot issue overall contributed just over $47 million in cash and $18 million for in-kind services to the PAC from 2009 through December 2011.
State Rep. Clayton Luckie, D-Dayton, who supported the casino ballot issue and favors allowing slot machines at Ohio’s seven horse racing tracks, said the campaign contributions were private funds, and the companies’ prerogative to make.
“It was their money. I’m glad they chose to spend it in Ohio,” Luckie said. “Our constituents were gambling anyway in other states. Now, we have more control over it.”
No magic bullet
The billion-dollar bet that gambling companies placed on bringing casinos to Ohio shows how convinced they are there is money to be made here. But, state officials and economists say gambling alone won’t create the economic windfall some expect.
Overall, Ohio’s four casinos and video lottery terminals proposed for the state’s horse racing tracks are expected to generate revenue of about $2.7 billion a year, said Rob Nichols, spokesman for Gov. John Kasich. The state’s estimated annual revenue: $475 million a year from the casinos and $425 million from the slot machines, once all are operational.
“It’s helpful. Is it a magic bullet? Absolutely not,” Nichols said. “Ohio can’t expect gaming to lead the state back to prosperity. It’s going to take more than that.”
Peter Vanderhart, a professor of economics at Bowling Green State University, said he doesn’t believe the casinos will have a dramatic impact on the state’s economy, though they will keep some Ohioans from spending their entertainment dollars at out-of-state casinos.
“I wouldn’t call it a bold new era,” Vanderhart said. “At the end of the day, these are service and entertainment jobs. It’s not like manufacturing where you export a product that brings money back.”
Beagle said he believes Ohioans have reason to be optimistic, as it appears the state is turning an economic corner. While it remains an unknown whether casinos will be the economic engine that supporters predicted, Beagle said the industry is creating jobs.
It was that prospect that drove many voters to support the casino issue in 2009, which was the state’s fifth major gambling referendum in two decades. A telephone survey of 687 voters a month before the election conducted by the University of Cincinnati’s Institute for Policy Research for Ohio’s major newspapers found a majority (53 percent) of casino backers cited the prospect of new jobs as the most important reason for their support of the issue.
The promise to voters made by the Issue 3 campaign: the casinos would create 34,000 jobs — 19,000 construction jobs and 15,000 permanent jobs.
Last week, Nichols said the state did not have an updated jobs number for the casinos, and Tenenbaum said it still is too early to tell how many jobs will be created.
But, he added, “We said 1,200 permanent jobs at the Toledo (casino) and we’ve already surpassed that and we’re not even open.”
Social consequences
Beagle said that voters made it clear they were ready for casinos in Ohio when they passed Issue 3.
“I have hope for great success for the casinos,” he said. “I’m optimistic for the economic benefits, but I also understand there are social costs.”
Ohio lawmakers are preparing for the potential social impact of gambling on communities by earmarking funds for addiction services, Beagle said. The version of HB 386, an overhaul of state gaming laws passed by the state Senate Wednesday, would give the Ohio Lottery Commission discretion on how much video slot machine revenue to earmark — up to 1 percent — for gambling addiction services.
A conference committee with members from the House and Senate will meet to reconcile differences between the two versions of the bill.
Sen. Peggy Lehner, R-Kettering, said Friday she’s concerned about the proliferation of gambling in Ohio, beyond the four casinos.
“My sense is that every time we turn around, we’re discussing another venue: video lottery terminals at race tracks, charity card rooms,” Lehner said. “My concern is that we’re seeing an explosion of gambling without paying any real attention to the consequences.”
She said the state needs to pay more attention to gambling addictions and crime related to gaming.
Robert Walgate of the American Policy Roundtable, a conservative, anti-gambling group, has been making the case for three decades that casino gambling and good government don’t mix. Currently, the Roundtable leads a number of plaintiffs in a suit filed to enforce the constitutional language of Ohio Ballot Issue 3.
“Once voters say yes to ‘limited’ casino gambling, the industry takes yes to never mean no,” Walgate said. “Sadly, the governor and Statehouse politicians are only too willing to please the new casino overlords. The voters have been kicked to the curb along with the constitution.”
Contact this reporter at (937) 225-2362 or josmith@DaytonDaily
News.com.
