Governor authorizes video slots at racetracks; casino amendment on ballot in November

Ohio Governor Ted Strickland issued an executive order in July that will place video 2,500 lottery terminals in each of the state’s seven racetracks. Ohio joins the ranks of Pennsylvania, Rhode Island, Delaware and New York, which all have lottery racinos.

While Strickland rejected a proposal to allow four full-scale casinos in the state’s major cities, a petition drive gathered enough signatures to be certified for a referendum in November. The Ohio Jobs and Growth Plan would authorize four $250 million regional casinos in the state’s four largest cities, Cincinnati, Columbus, Cleveland and Toledo. The effort is being financed by Penn National Gaming and Dan Gilbert, the majority owner of the Cleveland Cavaliers. The state’s Fraternal Order of Police has come out in support of the measure because some of the tax revenue is dedicated to law enforcement.

While the casinos will have to wait for voter approval, the slots could be up and running very quickly.

The legislature approved 17,500 racino terminals and also passed a bill recognizing that Strickland has the authority to put slots in racetracks under the existing lottery amendment that was added to the Ohio constitution in 1973.

Strickland has said he expects the new revenues will add $933 million to the $55.5 billion two-year state budget over the next two years. Proceeds will be earmarked for education.

The action represents a deal between Democratic Governor Strickland and Republican Senate President Bill Harris, who initially locked horns over gaming, until they realized that no other way remained to them to raise revenues without raising taxes. However, it was really Strickland who gave in since Harris had always said that he had the authority to install the VLTs.

 The casino referendum has tempered interest in the racinos, however. The casino initiative would, proponents claim, pump $200 million in licensing fees the first year plus $651 million a year in tax revenues that would go to local government and schools. It would also, they say, create 7,000 permanent jobs and 13,000 temporary construction jobs.

However, it is also possible that the casinos could hurt the revenues from the racinos. The racetracks will definitely be at a disadvantage since they will pay a 50 percent tax rate, while the initiative proposes a 33 percent rate for the casinos.

Harrah’s Entertainment has already begun to eye several racinos, which could cause it to campaign against the casino proposal. That will certainly be the case with MTR Gaming Group, Inc., owner of Scioto Downs. However, Robert Griffin, president of the company, said it is prepared to spend up to $8 million to defeat the initiative in order to prevent its investment from being undermined by the regional casinos.