Several weeks ago, Columbus Underground took part in a conference call with Bob Tenenbaum, the spokesperson for the Ohio Jobs & Growth Plan, which is being proposed as Issue 3 on this November’s ballot and will allow for the development of four casinos in the state of Ohio.
We gathered up a variety of questions and got as many of them answered as possible during the conference. Read on to hear Bob’s overview of the issue, as well as the Q&A session.
Bob Tennebaum: First, we want to give you a brief rundown of what Issue 3 is about.
Issue 3 is a constitutional amendment. It amends Article 15, Section 6, which specifically authorizes four casinos. One in Cleveland, one in Columbus, one in Cincinnati and one in Toledo. It sets a flat permanent casino tax rate of 33% and that is in addition to all of the normal taxes that businesses pay. The tax will produce an estimated $651 million per year. We are using 2013 as the first year, although we believe the casinos will probably start operating sometime in 2012. The tax figure goes up gradually each year, by five years it is estimated to be $771 million. That money is divided primarily among the 88 counties, the eight largest cities in the state and every school district in Ohio. It also produces $200 million in upfront license fees. Those go to the state and are designated to job training and workforce development. This proposal requires a minimum of $250 million in private economic investment in each of the casinos. We are looking at a mandated $1 billion in economic investment. This will create an estimated 34,000 new jobs, split 50/50 between construction and permanent jobs. The University of Cincinnati estimates that these casinos will generate $11 billion in economic impact over their first five years of operation – construction phase included.
Issue 3 does NOT stop charitable gaming in the form of casino nights that are conducted by religious and fraternal organizations. Charitable gaming is authorized in the Ohio Revised Code. Issue 3 has no impact on anything outside of Article 15, Sect 6.
And there is no loophole that would allow the casinos to engage in cash wagering and not pay taxes on it.
The most common question we get is: “Casino proposals have lost in Ohio 4 times since 1990 and as recently as last Nov, why would this one pass?”
The answer is because the economic climate is so different today, even more than it was seven or eight months ago. This issue provides revenue for cities and counties and schools. Polling shows that a general question about favoring casinos in Ohio, a majority say yes. We believe people have not liked the proposals that have been put before them. We want this one to be the one voters say, “that’s the one we’ve been waiting for.”
I’d be happy to take some of your questions:
Walker Evans: Hi, Bob.
BT: Hi. Is this your question or one that you solicited from the Columbus Underground readers? Which I thought was a great idea.
WE: This one is from a reader – talking about Keno. The revenue with that program has been less than expected. How do you propose to use casinos to bring people back to gambling?
BT: I think they are two very different things. I think Keno’s implementation was ill-advised and not done well. Not a great accessibility. Marketing not terribly significant. No comparison to the kind of casinos we are talking about. These are Las Vegas style casinos, first class in every way. They are entertainment venues as much as they are gambling venues. If any of you have been to the newly remodeled Hollywood casino in Lawrenceburg, IN, the old Argosy casino, is operated by Penn National which would operate the Columbus and Toledo casinos. People have walked in and just been blown away. They spent $340 million on renovations. People say it felt like Vegas. Very different from Keno which is kind of hit or miss in various bars and restaurants.
WE: One of the touted benefits of adding casinos in Ohio is keeping that revenue from going outside of the state as it currently is going to casinos in our neighboring states. Is there any concern that with Keno, slots and the addition of casinos in Ohio, there will be too much market saturation to fully capture this in-house revenue?
BT: That’s actually not an enormous concern. Keep in mind that these are business judgments, but the belief is that there is sufficient market share in Ohio to support all of this. We have not yet revised our revenue estimates to take into account the slots proposal. Our belief is that it won’t make a difference. We have been waiting because the Supreme Court is supposed to rule soon whether the slots proposal was even constitutional. At that point we have indicated we would look at projected revenue.
Regarding out of state revenue – it’s a lot of money. The estimate is about a $1 billion. It is estimated that Ohioians wager about a $1.5 billion every year. That’s just the money being spent, not the lost tax revenue because the taxes are being paid in other states. It’s estimated that about $500 million would probably continue to go outside of the state. Some of that money is say people going to Vegas and you don’t go to Vegas just to gamble, you go for a lot of other reasons. We are hearing that is what bugs people the most – watching people they know get on a bus to go spend that money in other states when we could be keeping that revenue in Ohio.
WE: You mentioned the slots being reviewed to see if they will actually happen. Do you think that if they do happen will it effect the strategy or the polling situation to pass the casinos proposal?
BT: No. But you could make an argument either way. My own opinion is that the slot discussion may have helped us a bit. But our job is to sell this particular issue. The issue that’s been taken away is that Ohio is not and shouldn’t be a gambling state. That boat as sailed. The legislature and the governor authorizing electronic slot machines at the race tracks made Ohio a gambling state. We are now a gambling state.
There is some opposition to this issue, including some very significant church organizations, United Methodist Church and the Ohio Roundtable in the Cleveland area. Their opposition is based on moral and religious grounds. We expect that and respect that. We don’t think the majority of voters in Ohio agree, but we respect that. The big money opposition is coming from something calling itself TruthPac. It’s funded by MGR Gaming, a West Virgina based gaming company. It owns Scioto Downs and Mountaineer Racetrack and Casino in West Virgina. 70% of their customers there come from Ohio. They are protecting their own interests.
WE: You mentioned the amount of money that would be kept in the State. Have their been any studies on wealth redistribution within the state?
BT: I don’t have any studies that indicate that. You tend to hear poor people tend to gamble more. I haven’t seen any studies that state that. I think the problem is overstated.
WE: For me personally, something that has kept me opposed to casinos in the past is the worry that what we would get would not be what you see in Las Vegas – upscale, state of the art, glamorous venues. But you said earlier in the conversation that we would be getting something like that. The proposal for Columbus has it being planned for the Arena District, which has developed into a fairly significant entertainment district. Is it too early to say what sorts of other amenities we could expect to complement it? Convention center meeting space? Performance space?
BT: The people doing the development are probably the most successful regional casino operator in the country. It is a little different here because most of their casinos are not in urban areas. They are trying hard to provide lots of amenities. First class amenities for sure… but not hurting the businesses that already exist. We currently have no plans for a hotel connected to the casino. The developer wants to help the existing Downtown hotels. There will be restaurants in the casino, and performance spaces, but nothing to compete with Nationwide Arena. The idea is to become complementary. In my mind the Arena District is exactly where the casino should be placed.
WE: Thanks for taking the time to answer some of our questions, Bob.
BT: No problem. Thank you, everyone.