the Beacon Journal editorial board
Ohio plunged deeply into the gambling business in 2009, voters approving a constitutional amendment establishing four regional casinos, in Cleveland, Columbus, Cincinnati and Toledo. It didn’t stop there. In 2014, the last of seven racinos opened, their slot machines (or video lottery terminals) operating under the control of the Ohio Lottery Commission.
Evidence of an oversaturated market already was apparent, casinos rapidly expanding across the Northeast section of the country. A recent analysis by Moody’s Investors Service adds what amounts to a double whammy. In a report titled “The Walls are Closing in on Regional Casinos,” Moody’s makes plain that large-scale population shifts are working against the industry in Ohio and other states.
First, Moody’s notes the rising number of Americans age 65 or over, which already exceeds a declining number of those age 16 years to 64 years. Here’s the problem: Those 65 and older aren’t likely to have enough discretionary income available to sustain a gambling boom.
At the same time, the younger generation is squeezed as it covers the cost of entitlements going to retirees, and it doesn’t have the same interest in gambling as older generations. Moody’s sees the younger generation accessing new forms of entertainment through technology, leaving bricks and mortar gaming establishments competing for a limited amount of time and money.
The study reminds that expanding gambling opportunities, either online or within existing facilities, will be difficult, requiring regulatory approval. Moody’s also includes important details about how difficult it will be for regional casinos to change their mix of revenues. While Las Vegas is a destination, its big resorts generating much of their revenue from rooms, restaurants and nightclubs, regional casinos still gain 65 percent to 85 percent of their money from slots and table games.
The saturated gambling market in Northeast Ohio features three racinos and a casino, with more than 6,000 slot machines and 119 table games. Not too long ago, there were none.
The Moody’s report is yet another indicator that the promises about additional tax revenue for local governments and schools made by gambling interests will likely never be realized. Meanwhile, state budget decisions in recent years have left public schools and local governments struggling, with little choice but to ask voters through local tax levies to help offset the cumulative effect of cuts at the state level.
In the next two-year state budget, now in the works at the Statehouse, local governments likely will see a funding increase. Still, the sum almost surely won’t make up for previous reductions.
The governor and state lawmakers embraced gimmicks such as state-sanctioned gambling, not to mention ever-deeper income tax cuts, which also have failed to fulfill promises. What would serve Ohio better is a tax system that adequately funds what does work — education, infrastructure, research and targeted support for the working poor. These aren’t long shots, but proven ways of moving a state forward.