LISTEN UP KENTUCKY! You're Losing! Ohio’s first racino off to a very busy start

Racing, slots combo near Columbus gives Dayton officials hope.

By Joanne Huist Smith
 and Jackie Borchardt 
Staff Writers

12:29 AM Sunday, July 8, 2012

COLUMBUS — If the initial success of Ohio’s first racino is any indication, combining slots and horse racing in Dayton would draw a crowd, at least in the beginning.

Scioto Downs south of Columbus, which opened June 1, generated so much traffic on opening day some of its video lottery terminals crashed.

Even last week’s derecho that wiped out electricity in two-thirds of the state didn’t shut down Scioto Downs.

The racino stayed open with generators and even saw a bump in business as Ohioans sought refuge from the heat.

Dayton officials hope a similar buzz occurs when Penn National Gaming Inc. puts a racino on 125 acres at the site of a former Delphi Automotive plant near Wagner Ford and Needmore roads.

“We have been looking forward to a racino coming to Dayton for a long time,” Dayton City Manager Tim Riordan said. “It will create a lot of jobs and we’re going to do everything we can to speed that up.”

That plan moved a step closer to reality with Penn National’s June 30 filing with the Ohio State Racing Commission to relocate racetracks from Columbus and Toledo to Austintown and Dayton respectively.

In Dayton, Penn plans to build a $125 million racino — Hollywood Slots at Dayton Raceway — that would feature harness racing, simulcast wagering and a gallery of 1,500 VLT games, restaurants and bars. The gaming company says the facility would bring about 1,000 racino-related jobs, both on-site and with suppliers, and 1,000 construction jobs.

It would also provide a payoff for the state. Under terms of a memorandum of understanding with Ohio Gov. John Kasich’s office, Penn agreed to pay a $75 million relocation fee for each racetrack in addition to the $50 million VLT license fee per racetrack.

Construction of the Dayton racino could get under way this fall and open in 2014, if the state applications are approved.

The state racing commission meets Tuesday to consider rule changes related to racetrack relocations. Penn also filed with the Ohio Lottery Commission last week for video lottery sales agent licenses for its Ohio racetracks.

A Hollywood theme

Penn has released few design details for the venue other than to say the decor will have a 1930-40s Hollywood-related theme, similar to the company’s Hollywood Casino Toledo. Patrons must be at least 21 to play the slots and the minimum age for parimutuel betting is 18.

Bob Tenenbaum, spokesman for Penn National, said the company plans to keep Raceway Park in Toledo open until the Dayton deal is finalized and the new facility comes online.

The Dayton racino is part of a huge increase in gambling operations in Ohio that critics say can’t be supported over time. So far, though, Ohioans seem to have an unquenchable thirst for gaming.

Michael Newsome, marketing director for Scioto Downs, told the Dayton Daily News that he plans to advertise in the Dayton market to reach those who can’t yet gamble here.

West Virginia-based MTR Gaming Group invested more than $150 million in the Scioto Downs gaming facility and $1.5 million in upgrades to the racetrack.

“Once you see it, there is no debate. You understand you’re getting the same experience you would at any gaming facility in the world,” Newsome said.

The large parking lot and modern facade of the 100,000-square foot facility starkly contrasts with surrounding cornfields. Inside there is a continual hum from the racino’s 1,787 video lottery terminals.

The decor is not over the top; this is central Ohio, not Las Vegas.

Games can be played for as little as a penny or hundreds of dollars in the high-limit area, which offers a full bar with built-in video game terminals. The main bar, a lounge located in the heart of the racino, offers refuge to gamers tired of flashy video screens.

The Clubhouse Restaurant overlooking the racetrack seats 840, and 2,000 spectators can stand behind the dining area during races.

A 300-seat buffet area with 400 more machines will open in August and a big-name concert on the track is planned for September.

Already, VLT sales there are out-performing state expectations.

VLT revenue from June 1 to June 9 topped $4.1 million, according to the Ohio Lottery Commission data. The state gets 33 percent of that pot for education programs, or about $1.4 million.

“The numbers are slightly better than we projected,” said Lottery Commission spokeswoman Danielle Frizzi-Babb, adding revenue figures from Scioto Downs first month of operations will be released Monday.

The state has projected that racinos with 1,500 VLTs, such as Penn’s Hollywood Slots at Dayton Raceway, should generate $3 million a month for Ohio.

Richard Thalheimer, president of Kentucky-based Thalheimer Research Associates, says there is room in the Midwest’s expanding gaming industry for a racino in Dayton’s mid-sized market, where the draw will be local and most of the revenue will come from VLTs.

“It’s a smaller market that’s for sure, but there is potential where you are,” Thalheimer said. “Penn’s not going to build to lose money.”

Video poker and other table games are a wish list item for Scioto Downs, which currently operates just the VLTs controlled by the Ohio Lottery Commission.

Unlike racinos in Pennsylvania and West Virginia, which have table games, the one in Columbus — in fact all racinos in Ohio once they come on line — will operate with a potential handicap. The Ohio Constitution limits the playing of table games such as blackjack and craps to the state’s four casinos.

Like Ohio, West Virginia, Pennsylvania and Iowa all launched their racino operations with just slot machines. All have since expanded to include gaming tables.

Thalheimer said the same could happen in Ohio.

“It’s not outside the realm of possibility (for Ohio racinos) to have table games in the future,” he said.

Slots favored over table games

Nationally, patrons at casinos, riverboats and racinos said they prefer slot machines over card games.

In the 2012 American Gaming Association’s survey of casino entertainment, 53 percent of respondents said electronic gaming machines such as the VLTs were their favorites, followed by blackjack at 23 percent, poker at 7 percent and craps and roulette at 3 percent each.

Randy Burnside, public relations manager for the West Virginia Lottery Commission, said the state’s four racinos represent the largest portion of its gaming revenue. In Fiscal Year 2011, the West Virginia Lottery’s gross revenue was $1.4 billion, with $727 million of that coming from racetrack video lottery receipts.

“Our racinos offer slots and game tables. It hasn’t always been that way,” Burnside said. “A lot has changed to keep up with the competition. We’re competing for customers with border states.”

A full year of table game operations at Hollywood Casino at Charles Town Races in West Virginia drove overall gross gaming revenues at the racino up 9.2 percent in 2011 to $958.7 million.

Competition from West Virginia was one of the reasons Pennsylvania added table games to its racinos, and the state now has four of the top 10 racetrack/casino markets in the country, according to the American Gaming Association’s survey.

Doug Harbach, director of communications for the Pennsylvania Gaming Control Board, said about 60 percent of the state’s gaming revenue comes from six racinos, which all have slot machines and table games.

“We came into the market with just slot machine, then West Virginia and Delaware added table games,” Harbach said. “We saw that as direct competition.”

With The Field: Regional racino jobs advance in Ohio!

By Joanne Huist Smith, Staff Writer

Updated 8:49 PM Monday, July 2, 2012Article - Click Here

DAYTON — Construction of a $125 million harness racing track — Hollywood Slots at Dayton Raceway — could get under way this fall and open in 2014.

“I don’t think there is anything to be but excited,” standardbred racehorse owner Tom Gray said. “I think Ohio is going to be the heart of harness racing once again.”

Penn National Gaming Inc. on June 30 filed for permission with the Ohio State Racing Commission to relocate racetracks from Columbus and Toledo to Austintown and Dayton, respectively. The slot-equipped Dayton racetrack will encompass 125 acres on the site of a former Delphi automotive plant near Wagner Ford and Needmore roads.

In addition to up to 1,500 slot machines per track, both new properties will feature restaurants and bars.

“We are hopeful we can receive state approval in a timely manner, allowing us to break ground this fall on the new facilities in the Mahoning Valley and in Dayton,” Tim Wilmott, president and COO of Penn National Gaming, said.

Shelley Dickstein, Dayton’s assistant city manager for strategic development, said Penn has been meeting with city staff to discuss particulars of the development plan such as zoning issues, wellfield protection and traffic enhancements long with the design of the facility.

“Everything seems to be moving forward,” Dickstein said.

Penn also filed with the Ohio Lottery Commission for video lottery sales agent licenses for its Ohio racetracks.

“Filing for VLT licenses and formally requesting that the Racing Commission approve our relocation plans is another major step forward for these two significant economic development projects,” Wilmott said.

The VLT license applications must go through administrative reviews, which includes criminal and financial background checks of the applicant.

“It’s not going to happen overnight. It’s going to take a few months,” Danielle Frizzi-Babb, spokeswoman for the Ohio Lottery Commission said.

Under terms of a memorandum of understanding with Ohio Gov. John Kasich’s office, Penn National has agreed to pay, over time, a $75 million relocation fee for each racetrack, in addition to the $50 million VLT license fee per track.

Robert Schmitz, chairman of the state racing commission, said the change in rules reflecting the relocation fee likely will be considered by the commission at a July 19 meeting.

The new rules then come under review by the Joint Committee on Agency Rule Review (JCARR), which includes members from the Ohio House and Senate, to determine if they exceed the scope of the filing organization’s legal authority, conflict with the intent of law, or conflict with another rule of the same agency or a different rule-making agency.

“I can’t do anything until the rule is effective,” Schmitz said, adding JCARR reviews takes 75 to 90 days. “Once the rule is effective, we’ll probably move expeditiously.”

Owners of a second racino being planned approximately 30 miles from the Dayton track near Monroe in Warren County, said they are not deterred by the close proximity of Penn’s planned attraction.

Miami Valley Gaming and Racing, LLC., a joint venture of Delaware North Companies Gaming and Entertainment and Churchill Downs Inc., want to build a $255 million racetrack near the intersection of Ohio 63 and Union Road in Turtlecreek Twp. after they purchase the gaming license from the Lebanon Raceway.

“We are proud to be building off Lebanon Raceway’s more than 60-year tradition of harness racing in Southwestern Ohio, and are moving forward with a new gaming and raceway facility along the I-75 corridor,” the company said in a statement.

Justin McClellan contributed to this report. Contact this reporter at (937) 225-2362 or josmith@DaytonDailyNews.com.

Harness Racing - No harness races at fair, at least for this year

Seckel said he hopes money from the new casinos in Ohio will filter down to harness racing. He said there is a possibility the Marion County Fair could hold the races in the future.

MARION, OHIO - This is the first year the Marion County Fair will not host harness racing, but this change may not be permanent.

The fair board voted last year to remove races from the list of entertainment for financial reasons.

Keith Seckel, the fair board president, said the decision was difficult.

"I grew up watching harness racing," he said.

Candy Tripp, the fairgrounds director said the Marion County Fair used to have more than 20 races a day. In 2011, it had five races one day and six races another.

Without the entry money coming in from races, she said, the fair board's budget was strained.

"It was not an easy decision," she said. "This was a longstanding tradition."

Jerry Knappenberger, the general manager of the Ohio Harness Horseman's Association, said horse breeding in Ohio has declined in recent years.

Ohio used to lead the nation in thoroughbred horse breeding. Now, breeders of thoroughbreds and other horses are concentrated in New York, Pennsylvania, Indiana and West Virginia.

When Ohio House Bill 386 passed in May, gambling laws changed in Ohio. Now, video slot machines are allowed at race tracks. Knappenberger said more people are attending races at Scioto Downs in Columbus because purses are bigger and more people are spending money at the tracks.

He said the horse industry will probably make a resurgence in Ohio.

Seckel said he hopes money from the new casinos in Ohio will filter down to harness racing. He said there is a possibility the Marion County Fair could hold the races in the future.

"If the industry turns around, I'd love to see (harness racing) again," he said.

Seckel said the horse track is still used for the motorcycle races and the rodeo. Events such as the demolition derby and truck pull are held at the grandstand every night.

"I'm very happy with what they've got," he said.

Tripp said there are no plans to remove or modify the racetrack.

Knappenberger said Marion was the only county fair that had harness racing in 2011 but did not in 2012. He said 65 fairs in Ohio will host a harness racing circuit this year.

Knappenberger said the OHHA has seen "two or three" clients remove harness racing from fairs in the last five years.

State's billion-dollar casino industry set to launch

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.