Casino-tax revenues for Ohio’s counties and eight major cities, including Youngstown, have fallen for the third-consecutive quarter, and some local officials blame the drop on the opening of competing racinos and the harsh winter.
Revenue for the first quarter of this year was more than 4 percent below that of the final quarter of 2013.
Ohio’s 88 counties shared a total of $25.9 million, and its eight most-populous cities shared an additional $7.8 million in the April 2014 quarterly casino-tax distribution. The four cities with casinos shared an additional $3.3 million in host-city revenue.
The casino-tax revenue grew for five-consecutive quarters as casinos opened in Cleveland, Toledo and Columbus in 2012, and in Cincinnati in March 2013, seeing its first decline in the third quarter of 2013.
For the first quarter of 2014, Youngstown and Mahoning County each received $341,549, down from $356,791 for the last quarter of 2013.
For the first quarter of this year, Trumbull County received $602,987, compared with $629,403 for the final quarter of last year.
For Columbiana County, the numbers were $309,298 for this year’s first quarter and $323,211 for last year’s final quarter.
“With good weather, more people will be out and about using those facilities, so right now I’m not concerned,” said Columbiana County Auditor Nancy Milliken, who noted that her county’s revenue decline from the last quarter of 2013 to the first quarter of 2014 is less than $14,000.
The money comes from a 33 percent tax on gross revenues from the four casinos, which opened between 13 and 22 months ago.
“When something’s new, it’s exciting,” but eventually its popularity wanes as the novelty wears off, said Kyle Miasek, Youngstown deputy finance director.
“As I had built into my revenue forecast, I believe we’re going to see that slowdown continue. It’ll probably bottom out by summertime, I believe,” with casino-gambling-tax revenue then remaining fairly constant, he said.
“Eventually, it matures, and you get competition in other places,” Miasek observed. “When you increase the number of options, it starts to spread everything thinner and thinner.
“Eventually, you’re going to have saturation in the market from all these different opportunities to go and gamble.”
The declining trend in casino-tax revenue is occurring as racinos open around the state and compete with the four casinos for Ohio’s gambling dollars.
“When you have more competition, it means you split the pie” of gambling revenues among more establishments, said Frank Fuda, president of the Trumbull County commissioners.
“As the racinos opened, people that would have gone to the casinos — they tended to go to the racinos,” agreed Columbiana County Commissioner Tim Weigle.
Two racinos opened in December, doubling the number of Ohio racinos to four.
By the end of this year, three more racinos will have opened, including the one in Austintown, bringing the total to seven racinos statewide.
austintown racino opening
Penn National Gaming’s Austintown racino, which is under construction and scheduled to open this fall, will be known as Hollywood Gaming at Mahoning Valley Race Course.
Unlike the casino tax, racino-tax revenue isn’t designated for cities and counties.
The Ohio Lottery Commission, which regulates racinos, gets one-third of their gross receipts and sends that money to public education in Ohio.
Fuda and Weigle agreed that, when the $125 million Austintown racino opens, Mahoning Valley residents likely will go there to gamble, rather than traveling to the Cleveland casino.
Although he said the racinos are cutting into counties’ casino-tax revenues, Fuda said the opening of the Austintown racino will be good for Trumbull County residents because many of them will be employed there.
Penn National expects the Austintown racino to generate about 1,000 jobs at the racino and among its suppliers, with the majority of the new jobs being held by racino employees.
The Austintown racino may be patronized by local residents who now gamble at Mountaineer Park in West Virginia or in Pennsylvania, said Audrey Tillis, Mahoning County budget director.
The Austintown racino and surrounding businesses will generate additional revenue for the county from sales taxes paid in that area by Mahoning residents and by visitors from other counties, she said.
The Austintown facility will feature video-gambling machines, live horse racing, musical entertainment, and food-and-beverage service.
“We just came off a really horrible winter where a lot of people didn’t venture out,” Weigle said, referring to the slump in casino-tax receipts for the first quarter of 2014.
Fuda said he also believes the harsh winter may partly explain the decline in casino activity in the first quarter of this year.
Fuda predicted a further decline in casino-tax revenue as the racinos continue to open, and Weigle said a continuing decline is a strong possibility.
The city of Youngstown deposits the casino-tax revenue in its general fund and doesn’t earmark it for any specific purpose, Miasek said. “It’s used for all services. We’ll just be more careful in our forecasting” of casino-tax receipts, he said.
Due to what they say is its unpredictability of that revenue, however, some recipients are designating the casino revenue for one-time projects, rather than relying on it to support essential ongoing government functions.
unstable revenue source
Columbiana County commissioners regard the casino tax as “an unstable revenue source, just not knowing how much it’s going to bring in,” Weigle said.
In that county, the commissioners intend to use casino-tax income for “one-time specific projects,” such as helping townships, villages and cities with paving, bridge replacement, water-treatment plant upgrades and storm-water management projects, Weigle said.
Columbiana County already has used casino-tax money to replace its county jail roof, pave the courthouse parking lot, enlarge the dog pound, acquire and train a drug-detection dog for its sheriff’s office, and demolish its former Job and Family Services building.
Trumbull County has used casino-tax income to buy new sheriff’s cruisers, replace computers in all sheriff’s cruisers, repair boilers in county buildings, replace air-conditioning units at the county administration building and repair roofs at the administration building and jail.
Mahoning County commissioners have approved putting 60 percent of the county’s casino-tax receipts in reserve for future debt payments and allowing the remaining 40 percent to be used for operations.
That formula remains in place until the reserve reaches 15 percent of the general fund, which would be about $8 million, unless the commissioners unanimously declare a financial emergency, Tillis said.
The general fund is the county’s main operating fund.