Check, Bet, or Fold
By David Lewis |
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As the economic landscape darkens, Ohioans, traditionally opposed to gambling, will have to examine a casino plan on a scale larger than anything yet proposed, and one that could have a massive impact on Columbus' financial struggles, as well.
Penn National, the third largest gaming company in the country, and Michigan's Dan Gilbert, owner of the Cleveland Cavaliers and Quicken Loans, are backing the Ohio Jobs and Growth Campaign. The ambitious proposal calls for an amendment to the state's constitution authorizing the development of four land-based, first-class casinos, to be located in the very hearts of downtown Columbus, Cleveland, Cincinnati, and Toledo.
Each casino would be required to pay $50 million in licensing fees up front. The $200 million of licensing fees would go toward job training and workforce development statewide.
The amendment also requires that developers spend at least $250 million on each casino, for a minimum private investment of $1 billion.
If passed by voters, the tax on gross gambling revenues would be a guaranteed and permanent 33-percent. Spokespeople for the company say their estimate of $1.8 billion in annual revenues for the four casinos is "conservative." If accurate, that would mean $600 million would be distributed across the state annually. Around half would go to Ohio's 88 counties, with a third apportioned to school districts, according to county and student population. The remainder is earmarked for such things as establishing a gaming commission, investing in the state's horseracing tracks, and training police.
The four hosting counties would split their earnings with their respective host cities. Columbus and Franklin County would then receive approximately $15 million apiece. The school money, destined to supplement (and not replace) existing sources of income, would total $21 million for school districts in Franklin County, all for primary and secondary education.
Penn National representatives also say that the proposal would create over 20,000 jobs in Ohio, about 7,500 of which would be full-time positions in the casinos. The casino slated for Columbus would be located in the Arena District near the new Huntington Stadium on Nationwide Boulevard. Although it is unclear whether there would be a hotel component to the Columbus facility, Penn National claims the project would create between 1,000 and 1,500 new permanent jobs in the casino itself, as well as boosting tourism jobs and non-casino positions at peripheral businesses like hotels and restaurants.
Viability
Some speculate, however, that four full-scale casinos could saturate the market, especially in consideration of the current financial duress being felt across the state.
"Penn [National] is one of the most successful casino operators in the country, and at the moment, they are practically the only company doing well financially," said Eric Schippers, Senior Vice President for Public Affairs for Penn National. "They are smart, and they know this business, so I don't think they would be behind this proposal if they thought it could fail.
"And, to substantiate our analysis, we hired an independent consulting company, the Innovation Group," he said.
The Innovation Group, a consulting firm for the leisure and gaming industry, can boast of high-profile gaming clients such as Harrah's of New Orleans, Trump Casinos, Caesars, and the Mandalay Bay Group, to name a few. Specializing in viability studies, its website claims to have serviced developers for over $30 billion worth of investments.
"We have commissioned a study by the group to independently look at market impact and viability," said Schippers, adding that, while the study was not yet complete, Penn National hoped to release it soon.
Playing the Field
Pro-casino activists groan at the sheer logistics involved in pushing through an amendment, but the state's shattered economy caused the governor, once a staunch and unflinching foe of all gambling, to indicate in January a willingness to listen to gaming proposals, which has the anti-casino crowd tensing up.
As the incumbent force, opponents already have a good idea just how hard it is to amend that document - those difficult logistics are likely what has allowed them to keep casinos out of Ohio for so long. If an amendment is passed, repealing it would be next to impossible, especially if the casinos are as successful in Ohio as they have been in neighboring states.
Those against it argue that most casino amendment proposals act as portals for out-of-state casino developers to insinuate themselves into our state's constitution, not only sanctioning the flow of cash to another state, but codifying it.
(The current proposal does the same thing, but in a roundabout way: four specific sites are identified in the amendment proposal for casino development, Penn National and Gilbert have already acquired the option on all four parcels. If you are going to throw down the cash for a campaign of this scale, you probably should cover your ass.)
Opponents also complain that increases in crime and gambling addiction would offset any potential benefits a casino could bring.
Everyone's gloves are off. No quarter shall be asked, and none shall be given.
In the Real World
Impacts on crime and addiction
Casino proponents claim that, between the more family-friendly style casinos being built these days, and the increased security and policing provided by a new casino, crime is not really an issue. In fact, some even suggest casinos cause an overall reduction in crime, especially when one is built to revitalize a decaying neighborhood with high unemployment. They say bringing jobs to an area reduces crime.
Those opposed to gambling complain that a casino will attract drug addicts, prostitutes, gangs, the Mafia, space invaders, and Godzilla. They also claim that newborn gambling addicts will gamble away everything they have, and then be forced to steal.
Studies show that both camps are right, kind of. Earl Grinols, of Baylor University, and David B. Mustard, of the Terry College of Business, conducted a study to determine the actual impact of casinos on crime in the area.
According to the study, published in 2005, a new casino is not likely to create a dramatic increase in crime for the first year or so. In fact, crime will often diminish in the months before and shortly after the casino is opened - but it will increase, over time, ultimately arriving at a higher overall number of arrests than was found in the area before the casino was built. A major cause is problem gambling, which takes time to manifest, according to the study. The study also concludes that much of that crime is white collar: teachers, lawyers, doctors, developing gambling addictions and stealing mostly from people they know. Other unattractive effects include increases in the number pawnshops over time, as well as payday loaning companies.*
The study looked at all counties with casinos and compared them to counties without casinos; Indian casinos, riverboat casinos, and land-based casinos were all averaged into the study. There exists considerable variation on these trends from casino to casino; it mostly depends on the social conditions of the area in which it is built, and the amount of money spent by the developer.
*Correction: Both in the online and print edition of this story, Gilbert's Quicken Loans company is referred to as a "payday lending" company. Quicken Loans is a mortgage company, NOT a pay day lender. The error has been deleted from the online article.
Originally Published: May 1, 2009
