Gambling interests behind the constitutional amendment that brought casinos to Ohio sold voters on the idea that beyond the glitz lay a sound economic development strategy. To add to the allure, the companies proposed dividing the proceeds from a 33 percent tax on gross revenue (the amount left after paying winners) among local governments and school districts.
Before passage of the amendment in 2009, the state Department of Taxation issued a rosy projection, casinos in Cleveland, Toledo, Cincinnati and Columbus estimated eventually to produce $1.9 billion a year in revenue. The reality is turning out to be far different, creating planning difficulties for local governments and schools, plus raising serious doubts about a financial windfall for anyone other than casino owners, for whom the odds always are favorable.
As reported recently in the Plain Dealer, experts have set revenue projections far lower, at around $1.2 billion a year. What’s worse is that the record from the first two casinos, the Horseshoe Cleveland and the Hollywood in Toledo, have decreased by a combined 20 percent since June, their first full month of operation. Some revenue falloff was inevitable as the allure surrounding the opening of the first two casinos faded, but the decline continued through the summer, usually a busy season.
Competition from Internet gambling and state-authorized racinos, horse tracks allowed to have electronic slot machines, also must be factored into Ohio’s saturated gambling market. It appears that casinos will not come close to generating enough tax revenue to make up for steep budget cuts to education and local governments.
Local governments and school districts are thus left to wonder: How low will gambling revenue go? For now, they are being counseled by the County Commissioners Association of Ohio and others to wait until all four casinos are up and running and a reliable track record can be established.
What’s just as bad are studies that show gambling is also an unreliable engine for economic development, absorbing a limited amount of disposable income that would otherwise go to local bars, restaurants and entertainment venues. The experience of Atlantic City and other cities shows the effect. Talk about a losing proposition.