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Gov. Kasich on Ohio's money games



Published: Sun, June 19, 2011 @ 12:01 a.m.

RELATED: Mahoning Valley suitors ready for the gate

By DAVID SKOLNICK

skolnick@vindy.com

YOUNGSTOWN

After years of little movement to increase gambling in Ohio, the state is taking a new gamble on gambling.

That’s not happening by chance. Voters approved a constitutional amendment in 2009 for four Las Vegas-style casinos.

Also, Gov. John Kasich wants the seven horse racetracks in Ohio to pay fees to the state to use video slot machines at those locations — something that will generate money for the state and save the ailing horse- racing industry in Ohio.

“It’s good we’ll have more money, but I don’t look at this as solving the financial problems in the state,” Kasich told The Vindicator.

Slot machines, called video lottery terminals or VLTs for short, are likely to come to horse tracks over the next three years, Kasich said.

Of importance to the Mahoning Valley, Penn National Gaming Inc. wants to relocate its horse-racing gaming license from Raceway Park, a harness racetrack in Toledo, to a $200 million facility to be built in Austintown at the vacant 186-acre enterpointe business park. Penn also wants to move its gaming license from Beulah Park in Grove City, near Columbus, to the Dayton area.

“This administration is committed to getting VLTs to Youngstown,” Kasich said. “I can’t guarantee it. I’m hopeful it will work out.”

Kasich said, “There is tremendous interest” in the Youngstown area for a racetrack with VLTs.

“But we can’t force [Penn National] to come to Youngstown,” he said.

On Friday, Kasich announced an agreement with Penn National, building casinos in Columbus and Toledo, for the company to pay an additional $110 million in fees to the state over a period of 10 years.

That deal makes the relocation of Penn’s gaming license to Austintown easier, state Rep. Ronald V. Gerberry said.

Also, Bob Tenenbaum, Penn National’s spokesman, said the casino deal will help the company meet its goal of relocating the track to Austintown. “A lot of steps need to be gone through, but it’s our intention to work it out.”

The Penn National deal came two days after Kasich announced a similar agreement with Rock Ohio Caesars, building the Cleveland and Cincinnati casinos, for that company to pay an additional $110 million in fees to the state over a period of 10 years.

Every state surrounding Ohio has legalized gaming, including several with Las Vegas-style casinos and others with video slots.

Gerberry, of Austintown, D-59th, said Ohio is “behind the game” when it comes to gambling. The casinos and slots at the tracks will help, he said, but Ohio would be in better financial condition now if they had been implemented years ago.

But Kasich said there is still money to be made for Ohio with gambling.

“I don’t think [ROC and Penn National] would be making these investments in casinos unless they think it will work,” Kasich said. “Dan Gilbert [ROC’s chief executive officer] is confident he’ll be successful.”

It came as somewhat of a surprise that VLTs at the state’s seven horse racetracks were included in the casino announcements.

Kasich said he decided to handle all gambling issues at one time, and that he didn’t want to “lose control” over VLTs as the state did with gambling casinos.

“Not having a comprehensive process isn’t a good plan,” he said.

An executive order in 2009 by then-Gov. Ted Strickland to legalize VLTs at racetracks died after a lawsuit questioning his power to do so. The lawsuit was dropped later.

While some legislation approved by the General Assembly is needed for portions of the gambling deal, Kasich said he and his advisers “don’t think” it’s needed to legalize VLTs.

The process of relocating a racetrack gaming license is a lengthy and difficult one, requiring approval from the Ohio State Racing Commission as well as the signatures of at least 51 percent of the total number of voters in the last general election from the township in which the racetrack would be located. Owners of two other racetracks already have expressed objections to Penn National’s plans.

Robert Schmitz, appointed by Kasich as chairman of the Ohio State Racing Commission, said: The “movement of tracks will be a challenge. There are a lot of hoops that need to be jumped through. There’s a lot of checks to go through. The lottery commission and the racing commission will be involved.”

When asked about the commission’s relocation process, Kasich hinted the state would make it easier to move the gaming licenses of the two tracks.

“It’s our intention to have a streamlined process,” he said.

If any legislation is needed to help that process become streamlined, the General Assembly could consider it as early as this week, Gerberry said.

Strickland’s VLTs proposal called for each track to pay $65 million up front to the state and 50 percent of the slot profits, estimated at the time to be $933 million annually.

Kasich’s proposal is for $50 million from each track with $10 million upon application, $15 million at the onset of VLT sales, and $25 million a year later. Also, 33.5 percent of slot profits would go to the state, projected to be $400 million annually.

“With VLTs, you don’t know what you’ll have in terms of competition,” Kasich said of reducing the up-front money and the percentage of slot profits. “This is the right economic [structure] so you can have money come to the state. You don’t slap numbers on a piece of paper. I’m very comfortable with the amounts we’ll receive.”

Schmitz said, “VLTs will rebuild the horse-racing industry in Ohio. It’s definitely good news for horse racing in Ohio.”

Gerberry, a strong supporter of a racetrack with slots in his hometown, said, “VLTs have the ability to maintain and assist the growth of horse racing in Ohio.”

The horse-racing industry has declined significantly in the past decade with purses at the state’s commercial tracks dropping from $58.63 million in 2001 to $28.25 million last year, and owners desperate for VLTs in order to keep operating.

Horse racing isn’t the only struggling gaming industry in the state.

When it comes to gambling in Ohio, Gerberry said, “We haven’t been real progressive.”

Gerberry pointed to the state lottery, saying, “It’s been stagnant over the years. The state hasn’t been aggressive with the lottery. We could have had VLTs under the lottery or some form of sports betting years ago.”

There also is talk of privatizing the lottery with the Republican-controlled Senate including a provision in its version of the state budget requiring the budget director to compare and analyze possibilities to make the lottery “a commercially run enterprise.”

In response, Kasich said, “We’re not looking to privatize the lottery. We’re asking, ‘How do you make more money?’”

The state needs to look at the lottery’s operations to make them “more effective and more efficient,” Kasich said.

It’s too early to make those decisions now, he said.

The state sold the lottery to voters in 1973 as a way to provide money for schools. But only about 4 percent of total education funding comes from the state lottery commission.

Gerberry called lottery money for education “a shell game” because the state finds “out how much we’ll get from the lottery and eliminates it from education funding” from the operating budget.

And the Ohio Lottery Commission forecasts a 5 percent reduction in annual sales two years from now, said Marie Gilbane, its spokeswoman.

The addition of Keno in 2008 was supposed to generate $292 million in sales during its first year but took in only $99.8 million. The annual amount has grown to about $150 million, a little more than half of the original projection.

The lottery has grown from its first 50 cents weekly drawing, the Buckeye 300, in August 1974 to include dozens of games, including about 50 instant scratch-off tickets, Pick 3 and Pick 4, the Ohio Lotto, and the introduction of multistate games: Mega Millions in 2002 and Powerball last year, Gilbane said.

“You have to keep games fresh,” she said. “Like any product in the marketplace, you have to keep people’s interest.”

For the past 15 years, the lottery’s contribution to education funding has ranged from around $600 million to the low $700 million amount, Gilbane said.

The lottery’s contribution increased from $672.2 million in 2008 to $702.3 million in 2009 to $728.6 million in 2010. Last year was the second-best year for the lottery, with $748.5 million in 1997 being No. 1.

The commission is projected to give $743 million for education this year. But the commission expects a 5 percent decrease in annual sales by 2013 because of competition from the new casinos.

“It’s a projection; it’s hard to say the exact amount,” Gilbane said. “Some other states have seen a decrease in sales in the immediate area or the county with a casino. Some states felt the impact for a couple of years, and then it came back.”


Comments

1timOthy(802 comments)posted 2 years, 10 months ago

Where are the Jobs REPUBLICANS ?

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2author50(1121 comments)posted 2 years, 10 months ago

Penn Gaming buys and sells politicians and gets what it wants. This area DOESN'T need gambling with casinos all around us already. A Racino will HURT local bars and taverns and the 'profits' (if any) will go to the big boys who don't live here.

And that office park that is vacant got tons of government dollars already to be an office park - not a Racino! Will Gerberry get Penn Gaming to pay back the taxpayers of Mahoning County the millions already spent there? Doubt it - Gerberry is all about Penn Gaming - not the taxpayers!

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3Stan(9923 comments)posted 2 years, 10 months ago

A harness track is lackluster . I predict a flop with a harness track . Let's bring in real horse racing without those tacky carts ! The next step would be to promote it and bring in people with money from New York City to spend it here .

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4hmm(175 comments)posted 2 years, 10 months ago

If our governor says It's good for Ohio then it must be true , remember he only wants the best for his people

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5Rockabilly(93 comments)posted 2 years, 10 months ago

@hmm I agree with your post, it's just a shame that the people of Ohio aren't his people.

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6redvert(2007 comments)posted 2 years, 10 months ago

Lots of you have comments but none of you have answers.

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7Freeatlast(1991 comments)posted 2 years, 10 months ago

I do not like Gov K-- KK but thank you for the jobs . WE NEED THEM

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8Bigben(1996 comments)posted 2 years, 10 months ago

"$110 million in fees to the state over a period of 10 years."- - - Chump change.

Why does Penn want to leave their former locations if their concept is so great for the people?

They are going to soak the tax payers and go belly up.
The other tracks are failing.

As for the temporary construction jobs they can hire from Cleveland or where ever they like and remember they are temporary.

As for the casino jobs you don't know where they will hire from or how much they will make.

Penn is out for Penn not you.If our politicians were so jobs focused then why support the free trade agreements that killed millions of American jobs? Scratching head.

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9Bigben(1996 comments)posted 2 years, 10 months ago

If someone likes gambling and flushing their money down the toilet then fine .I can disagree with them but at least they are honest about why they are behind this.

However, to say it will turn the area around and create all these jobs and be a huge success -BS.The evidence is to the contrary.What did Penn do for the places they now want to leave ? What did they promise to them? Wise up.

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10Bigben(1996 comments)posted 2 years, 10 months ago

"Gerberry, of Austintown, D-59th, said Ohio is “behind the game” when it comes to gambling. The casinos and slots at the tracks will help, he said, but Ohio would be in better financial condition now if they had been implemented years ago. "

-- - - So he is going to be behind it but when it fails the excuse is already there, we should have done it sooner.

So it could have failed sooner here if we implemented it sooner here? What logic.

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11Bigben(1996 comments)posted 2 years, 10 months ago

"video slot machines at those locations — something that will generate money for the state and save the ailing horse- racing industry in Ohio."

If the folks who spent money on the slots spent their money on something else then why do we need the slots? Second why do we have to save horse racing in Ohio?

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12Brit(18 comments)posted 2 years, 9 months ago

Kasich is nothing but a delusional, greedy, Wall St. cheat. This state needs someone who cares about people and doesn't want to scrap every good program and agency that benefits people. Kasich is the worst thing that ever happened to Ohio and no patriotic American should put up with him, or his schemes that he passes off as a "solution". He is one of the ones that gave Wall St. breaks and helped so Wall St. and corporations could have free reign to lie, cheat, exploit, pollute and steal at the expense of our country. Now he wants to turn Ohio into a possible "sweat shop" place where workers can be over worked, over charged, under paid, and subjected to toxic and unsafe working conditions because power is taken away from them and handed over to greedy people where number one priority is greed! I have seen him way too many times over the years spouting anger and saying ridiculous and insensitive things. He doesn't care about people and his "solutions" will ruin this state. It is time for people by the hundreds of thousands across this country who care about people and want real solutions to protest and stop Kasich, Walker and others who have only self serving idea. They mislead into thinking they are going to make things better. People who supported these delusional politicians in some cases have to learn the hard way that they wasted votes, but the majority of this country isn't going to tolerate this. The people of this country are losing power. Even our votes are being belittled. Last year the Republican faction of the Supreme Court gave corporations the power to donate unlimited amounts of money to candidates. It throws the election to one person who can dwarf everyone else with propaganda and smear no matter how dishonest. It takes power away from ordinary people who want to donate and have their votes count and then that politician is bought and paid for to feel obligated. Kasich and Walker serve the rich 3% while 97% "middle class" pay! STOP THEM! All people should oppose SB 5 and find where you can sign the petition to recall SB 5 and kill it at the ballot box. This bill isn't about saving money. It is about power, greed and breaking the backs of workers so people like Kasich can exploit they easier while he gives his friends pay raises and takes bribes.

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