John Kasich’s proposed budget makes a substantial adjustment in projected revenue from casino gambling. Instead of the $2.84 billion expected when voters approved four casinos in 2009, the governor’s two-year budget assumes about $1.94 billion, a decrease of almost one-third.
That’s more bad budget news, mainly for schools and local governments. Under the casino amendment, 51 percent of the proceeds from a 33 percent tax on gross revenue goes to local governments, with most of the rest, 34 percent, going to education. (The remainder goes to host cities, the state casino and racing commissions, law enforcement training and a gambling addiction fund.)
From the beginning, gambling experts worried about Ohio reaching a saturation point — the amount of money available for wagering stretched among too many outlets. School districts and local governments have been wary, too, their financial officials taking care not to count on casino revenue that might never materialize.
There is strong evidence that the rapid expansion of sweepstakes parlors has aggravated the problem, siphoning money away from casino gambling. More than 800 parlors, which don’t pay the gambling tax and aren’t subject to state regulations on payouts and accountability, have more sweepstakes machines in operation than the approximately 8,000 approved for the casinos.
Patrons buy phone cards or Internet time to play sweepstakes games on devices that look like slot machines. No wonder, then, that revenue from casino slots is down. An analysis by the Ohio Casino Control Commission found that casinos in Ohio get less of their revenue from slot machines than those in surrounding states (70 percent rather than 85 percent). Experts estimate $1 billion of the $4 billion wagered in Ohio is on sweepstakes games.
The governor’s budget projections provide even more evidence of the need to regulate heavily and tax the sweepstakes parlors, beyond addressing the potential for money laundering and other criminal activities. Lawmakers have debated bills for some two years. It is past time to take action.