After hearing concerns from local governments and school districts, the state Office of Budget and Management recently issued an appropriately blunt warning: Donít bet on revenue from Ohioís tax on casinos. What once looked like a windfall, based on state and private projections, is coming in far below estimates amid signs that gambling here and across the country has reached the saturation point.
Estimates of tax revenue were once as high as $643 million a year, that from the state Department of Taxation. For 2013, with three casinos running and a fourth up for 10 months, tax revenue tallied around $271 million.
Ironically, the stateís own policies partly are to blame, as the OBM report to county governments makes clear. The same year voters approved a constitutional amendment authorizing four casinos, the legislature approved the use of video lottery terminals at horse racing tracks, building in competition. The racetrack VLTs now are outperforming casino slot machines.
Although most (90 percent) of a 33 percent tax on gross casino revenue goes to local governments and schools, all lottery profits go to a state education fund. And the lottery recently gained approval to expand by putting terminals in fraternal lodges and veterans posts.
The dismaying thing is, the state never performed a thorough review of the gambling situation. The OBM report covers a variety of factors undermining casino tax revenue, all of which could have been weighed in a comprehensive analysis, once promised by Gov. John Kasich.
What comes to light is a brutally competitive gambling market, Ohio casinos battling existing casinos in other states, the Ohio Lottery and illegal gambling venues (such as the now-closed Internet cafes). By 2008, the impact of the recession was clear, too, reducing consumer discretionary spending, mature gambling markets seeing sharp declines. No wonder local governments and school districts are worried. Their concerns deserved attention years ago.