Last week, the state announced the distribution of $10 million in casino profits to Ohio’s 88 counties and eight largest cities, the take for the second quarter from two of the four casinos authorized by voters in 2009. Another $6.7 million went directly to public schools from the casinos opened in May in Cleveland and Toledo.
Meanwhile, the Ohio Lottery Commission reported that the first of seven “racinos,” horse tracks with video lottery terminals, turned over $3.7 million to the state in its first month of operation. By law, lottery profits go into the state budget to support public education.
So is this the beginning of a windfall? That’s not a sure bet. A number of factors must be weighed when looking at the winnings.
First, legalized gambling is largely a failure as an economic development strategy. In other words, much of the money wagered in Ohio will be money not spent at local entertainment and dining venues. The costs of increased crime and gambling addiction also must be considered.
Next, some gambling experts are beginning to think the market is becoming saturated and may decline as younger gamblers drift to online poker or Internet cafes. There are now 667 Internet cafes in Ohio, more than twice the previous estimate from the attorney general’s office.
If all that’s so, projections of steadily rising gambling revenues could be overly optimistic. The Cincinnati Enquirer recently looked at tax revenue projections by casino developers in Ohio compared to estimates in 2009. The revised figures show a 40 percent to 50 percent drop.
Local governments and schools must balance their new revenue against cuts from the state. Akron, for example, received about $236,000 in casino profits for the quarter. But the city expects to lose about $4 million in local government funds for the year. School funding was cut in the past two-year state budget by $1.8 billion. And what about lottery profits? Lawmakers have played a shell game, adjusting appropriations accordingly.
Strip away the glitz, glitter and early buzz of expanded gambling, and Ohio must look elsewhere for solutions to its budget problems.