Ohio Gaming Law: News

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May

Cleveland Casino License Approved
May 3, 2012

The OCCC has approved the operator’s license for Rock Ohio Caesars, owner and operator of Cleveland’s Horseshoe Casino, set to open May 14. The OCCC also approved a license for Horseshoe Management LLC, a subsidiary of Rock Ohio, to run the Cleveland casino. This license is conditional on confirmation that the company wired $3 million for licensing and application fees.

The OCCC also heard from consultant Spectrum Gaming Group LLC regarding Penn National’s license application to operate the Toledo casino.

Despite concerns about Fortress Investment Group LLC, who has a small stake in Penn National, and their former CEO Daniel Mudd, who faces allegations of fraud from the U.S. Securities and Exchange Commission, Spectrum recommended that the OCCC grant Penn National their operator’s license.

During the OCCC meeting, Penn National also provided an update on the Toledo casino. The 290,000 square foot facility, hoping to open May 29, will house 2,002 slot machines and 80 table games. There will be 1,329 permanent jobs with an average compensation of $40,000. Penn stated that over 90% of the jobs were filled locally.

The OCCC is expected to approve Penn National’s license at its next meeting on May 9.

Gambling Statewide?
May 2, 2012

A provision in the Senate version of H.B. 386 could lead to gambling in all 88 counties that would benefit charity. Under the proposed legislation, each county could designate a ‘card room’ for charitable poker, blackjack and other card games. Slot machines would not be permitted and the location could not be at a site where slots are offered, such as casinos or racinos. Currently, only Cuyahoga County has a card room.

Unlike with the casinos and horse racing tracks, the state would not receive any revenues from these card rooms. 15% of the revenues from each card room would go to the owner of the location. After other expenses for security, management and dealers are deducted, all net proceeds would go to charity. The charities would vary, but each could sign up for up to 128 hours a year.

The legislation does require paid dealers be licensed by the OCCC, but not the companies that operate the rooms.

Supporters claim this just gives the rest of the state the opportunity to do what Cuyahoga County has been doing successfully for years. Opponents claim this will cut into casino revenues, thereby reducing revenue to the state.

A full Senate vote could come as early as next week.

OSHA Fines
May 2, 2012

As a result of the investigation into the collapse at the Cincinnati casino in January, the Occupational Safety & Health Administration had originally issued citations to six companies totaling $108,200. On Monday, OSHA withdrew its citations against two of the companies and reduced the total to the remaining four companies to $36,700. The violations were classified as ‘serious’. Final citations were issued for ‘failing to coordinate inspections’ and ‘failure to support the structural steel’.

Internet Cafe Lawsuits
April 30, 2012

The Columbus City Attorney has filed the first public nuisance lawsuits against two northside Internet cafes, claiming they are conducting illegal gambling. Since the state is currently gridlocked over how to treat these businesses, the City Attorney believes these lawsuits could establish precedent for how Columbus will deal with Internet cafes.

Meanwhile, a substitute gambling bill has been adopted by an Ohio Senate panel. If passed, a statewide moratorium on Internet cafes would prohibit any new businesses from opening before July 1, 2013. This would give legislators more time to hammer out the details on how to regulate these businesses.

This substitute bill would also make other changes to the gambling bill that began in the House (H.B. 386). Among those changes:

Eliminate the language in the House bill that calls for 1% of VLT revenues to be used for problem gambling and substance addiction. The chairman of the Senate committee stated that with anticipated revenues, this addiction fund would be five to eight times larger than other states who have casinos and similar funds;
Allow the Ohio Department of Job and Family Services and the Child Support Enforcement Agency to “intercept lottery winnings” of those in arrears on their child support payments;
Revise the minimum number of live racing days at the horse racing tracks. That number would be based upon VLT revenues at each track;
Permit county commissioners to designate one charity card room per county and prohibit the location from being at a horse racing track;
Require dealers in the card rooms to be licensed by the OCCC;
Require the charity to disclose which dealers are paid and which are not;
Allow owners or lessors of locations where charitable instant bingo takes place to keep 6% of the gross sales for operating costs;
Increase the racetrack relocation fund from $12 million to $19 million over two years and provide $1 million over two years for infrastructure improvements to communities with tracks moving within the same jurisdiction;
Require a portion of VLT sales commissions to go towards horse breeding programs and racing operations;
Prohibit anyone not regulated by the OCCC from advertising as a casino;
Eliminate a House provision that allowed casinos to write off bad debts that originated from lines of credit offered to patrons unable to repay the debt;
Definition of cheating does not include “using of one’s mental facilities”.

Scioto Downs
April 30, 2012

MTR Gaming is not waiting around for the outcome of the pending lawsuit in a Franklin County courthouse that challenges the constitutionality of VLT’s. Working at a feverish pace, MTR hopes to open part of Scioto Downs Casino & Racetrack in June. Once open, Scioto Downs will employ 800 people, have 2,100 VLT’s, a buffet, restaurant and bar. Horse racing begins May 10. Part of the casino, with some of the VLT’s, would open in early June and the remainder of the casino, including the buffet and remaining VLT’s would open in August. Of course, all could be for naught if the judge doesn’t rule favorably.

Austintown Racetrack
April 30, 2012

Penn National has purchased property in Austintown Township for $4.6 million. The 186 acre property near Youngstown at the Center Pointe Business Park is expected to be the new home of Raceway Park, a thoroughbred track that Penn National is relocating from Toledo. But nothing further will be done until the outcome of the Ohio Roundtable lawsuit is known, a decision that is expected before May 28.

Cleveland Casino One Step Closer to Opening
April 24, 2012

Spectrum Gaming Group, a consultant who performed background checks on Rock Ohio, has recommended the Ohio Casino Control Commission grant an operator’s license to Rock Ohio for Cleveland’s Horseshoe Casino.

There were a couple of concerns. According to the Spectrum report, Caesars, a 20% owner of the Cleveland casino, faces over $20 billion in debt, a point Caesars disputes. As a result, Spectrum recommends an annual review of Caesars finances. However, since Rock Ohio owns 80% of the casino and Caesars has other ‘deep pockets,' Spectrum did not feel there was any reason for this to prevent granting of an operator’s license.

Of greater concern was past incidents involving principals Dan Gilbert and Roger Dillard III. In 2009, Gilbert made a $60,000 loan to the former mayor of Detroit, who was convicted of corruption charges. Spectrum concluded that Gilbert probably used poor judgment, but the loan was nothing but a loan, not extortion or bribery. In 1981, while a student at Michigan State University, Gilbert was arrested for running a sports betting operation on campus. He went through a diversion program and was never convicted. Despite these concerns, Spectrum still recommended the OCCC grant Gilbert a license.

The concerns with Dillard, the vice president of finance for Rock Ohio, are a little more serious. Dillard’s CPA license in North Carolina was forfeited in 2006. It was later determined that the forfeiture was a result of Dillard misrepresenting his CLE compliance. Spectrum has recommended Dillard testify at a hearing on this issue before any further action is taken on his license application. Rock Ohio has a back-up. Jonathan Howard has applied for a license and would step into the roll Dillard currently occupies should Dillard not be granted a license.

A vote on Rock Ohio’s operator’s license is expected at the next OCCC meeting on May 2.

Moratorium Extended on Columbus Internet Cafes
April 23, 2012

The city of Columbus has extended its moratorium on new Internet cafes an additional 90 days. The existing 6-month moratorium was set to expire on April 24. City Attorney Richard Pfeiffer Jr. has also stated that his office will file nuisance abatement charges against existing businesses that he believes are operating outside Ohio’s gaming laws.

Background Checks Moving Along
April 19, 2012

It now appears background checks will not hold up the scheduled openings of the Cleveland and Toledo casinos. Over 1100 of the expected 1900 licenses have been approved.

Next on the agenda are hearings before the Casino Control Commission over the operator license applications. First up is Rock Ohio, developer of the Cleveland casino. Their hearing is this Wednesday and Thursday. Penn National, developer of the Toledo casino, will have their hearing in early May.

Meanwhile, Penn National has begun accepting applications for table-game dealers for their Columbus casino, set to open the last quarter of 2012.

Judge Hears Arguments in Slots Case
April 19, 2012

Franklin County Court of Common Pleas Judge Timothy Horton heard arguments last week on the lawsuit filed by Ohio Roundtable, challenging the constitutionality of slots at Ohio’s horse racing tracks.

Assistant attorney general Susan Choe argued that VLT’s are lotteries and therefore legal. Tom Connors, attorney for Ohio Roundtable, argued VLT’s are not what Ohio voters envisioned when lotteries were approved in 1973. Connors went on to say that lawmakers “had the chance to accept slot machines…and they specifically voted against it.”

Judge Horton is expected to rule before Memorial Day.

Green Racino
April 18, 2012

The mayor of Green, a wealthy city located between Akron and Canton and potential relocation site for the Thistledown racetrack, acknowledged that talks did take place last fall between his office and the owners of Rock Ohio. He indicated he wasn’t sure if Green was still under consideration. In fact, he thought it was a dead issue because he had heard nothing from Rock Ohio since those initial meetings.

If last week’s City Council meeting was any indicator, Green will not be getting a racino anytime soon. Those in attendance voiced strong opposition to the proposed relocation. The mayor did go on to say that if things did progress, residents and businesses would be given ample opportunity to express their opinion on the topic.

Northfield Park
April 17, 2012

Hard Rock International has announced a joint venture with Northfield Park to bring gambling to the horse racing track.

The $275 million project would include 2500 slot machines, a Hard Rock Café, steakhouse, buffet, bar, live music venue and conference facilities. The gambling facility would employ 1000 permanent workers.

As with all the proposed racinos, this project is contingent on the outcome of the Ohio Roundtable lawsuit.

Internet Cafes
April 16, 2012

Attorney General Mike DeWine reiterated his concern with the proliferation of Internet cafes throughout the state. Last month he had staffers conduct a statewide ‘count’ and discovered there were at least 280 such establishments. Last November, the lottery commission had estimated there were 200 establishments.

Legislation to regulate these cafes has been pending for nearly a year, stuck in a House committee with no vote scheduled. Last week, Senator Joe Schiavoni introduced S.B. 317, which is the Senate version of the regulation and licensure of Internet cafes. Among the provisions:

Require each owner to obtain an operator’s license;
Require gaming equipment be purchased from a specially licensed vendor;
Require each machine be tested and licensed;
Require owners to post the odds of winning each game;
Prohibit the cafes from being within 500 feet of a casino or racino, 1000 feet of a school, or within an area zoned residential;
Ban the sale and consumption of alcohol on the premises;
Give local governments the authority to ban such cafes from their municipality.

There would also be no cap on cash prizes or the number of licenses available.

Ohio townships are particularly interested in any guidance from the state. Currently, cities have home-rule authority and have banned or imposed moratoriums on Internet cafes. For the most part, townships have no such authority, thereby unable to stop such cafes from opening. One option that at least one township is considering is for the township to ask its voters to ban Internet cafes. They could adopt the language of the state proposal and reword it to be township specific.

Last year, Summit County began regulating Internet cafes in nine townships. These regulations require:

Each establishment to release the names of its owners and employees;
Machines must be independently tested and be compliant with state law;
The names of people winning jackpots of $600 or more must be released.
Since the regulations have gone into effect:
The number of establishments has dropped from 17 to 11;
Businesses have paid $80,050 in fees. This includes an annual license fee of $1000 and $250 per machine every 6 months;
There are a total of 64 employees in the 11 establishments;
There have been 285 jackpots of $600 or more, but 258 of them come from just two of the establishments;
The greatest number of machines at a single establishment is 54, but two others have 51 and 50 machines respectively.

Cleveland Casino Nearly Complete
April 4, 2012

Construction is nearly done, slot machines have been delivered and most employees have been hired. Yet the May 14 opening date may still be in jeopardy. The possible culprit is once again the background checks. As of last week, the Ohio Casino Control Commission had completed background checks on about a third of the more than 1,000 employees.

Security plans must be reviewed and background checks on all investors and employees must be completed before the casino can open. The commission’s executive director says that while the casino may not open on May 14, he still hopes for the opening to take place that week.

Thistledown Raceway
April 4, 2012

Governor Kasich is considering a deal with Rock Ohio to relocate its Thistledown operation from North Randall to the Akron area, perhaps to property owned by the Akron-Canton airport, in the city of Green. The deal would be similar to the one struck last month between Kasich and Penn National to move horse racing tracks from Grove City to Austintown and Toledo to Dayton.

The Akron Beacon Journal, through a public records request, discovered a confidentiality agreement signed last August by Akron-Canton airport officials and a real estate company. According to the Beacon Journal, the agreement contains no deals or negotiations. The real estate company had approached airport officials looking for a large tract of land. Airport officials later discovered it was for Rock Ohio Caesars and they were seeking a potential site for a racino.

The airport owns about 400 acres that do not figure into their future plans. An 80 acre, and potentially 160 acre, tract along Greensburg Road in the city of Green is the possible site. All parties involved have been somewhat mum on the topic so no one is certain whether this site is still even under consideration. Airport officials have stated they would approve a racino at this location only if the city of Green okayed it. The FAA would also have to sign off on any deal to make sure airport operations aren’t hindered.

If Thistledown were to relocate here, Summit County could potentially house two racinos. Northfield Park, a harness racing track, is also contemplating adding VLT’s.

Lebanon Raceway Sold to Delaware North and Churchill Downs
March 28, 2012

Delaware North Companies Gaming & Entertainment and Churchill Downs Incorporated have announced a joint venture to acquire Lebanon Raceway, which is presently located in Lebanon, Ohio. Lebanon Raceway is currently owned by the Lebanon Trotting Club Inc. and Miami Valley Trotting Inc., who will remain consultants to the new owners. The sale price is $60 million. The Lottery Commission and Racing Commission must approve the change in ownership.

Lebanon Raceway is also attempting to move its location from Lebanon to Monroe, Ohio, to be closer to I-75 and reach more customers based in Cincinnati and Dayton. The current owners had stated an intention to invest $175 million in the new facility, beyond the $50 million license to offer VLTs. That facility could open as soon as fall 2013. Penn has agreed to pay $75 million relocation fee for moving its two tracks, Beulah Park and Toledo Raceway. Lebanon Raceway’s relocation fee, if any, has not been determined.

No Horsing Around at Scioto Downs
March 27, 2012

Race tracks are moving toward implementing video lottery terminals as overseen by the Racing Commission. Columbus’s Scioto Downs is the only race track to apply for a VLT sales agent license thus far. Scioto Downs may have its VLT operations up and running by June 2012.

Fifth Casino?
March 27, 2012

The Mahoning Valley Development Group, which had previously announced their intentions to build an eighth horse racing facility with VLT’s in the Youngstown area, now wants a $450 million Vegas style casino and resort instead. State law permits only the existing seven horse racing tracks to have VLT’s.

Investors Rick Lertzman and Brad Pressman plan to submit a proposal to Ohio Attorney General Mike DeWine. If approved by DeWine, 370,000 signatures would be required to get the proposed constitutional amendment on the November ballot. Lertzman indicated if they failed to get on the November ballot, they would aim for the spring 2013 ballot.

Penn National-Kasich Agreement
March 20, 2012

Governor John Kasich and Penn National Gaming have reached a nonbinding memorandum of understanding. This agreement will allow Penn National to relocate its two horse racing facilities from Grove City and Toledo to Austintown and Dayton respectively. The agreement also allows for VLT’s at the two facilities.

Penn National will pay a $75 million relocation fee for each facility, to be paid within 180 days of opening. In addition, the state will receive 33.5% of the VLT revenue. Penn National will also pay a yet to be determined amount to the state’s horse racing industry.

The agreement restricts other gaming facilities from being located within 50 miles of the Columbus and Toledo casinos as well as the relocated horse racing tracks, with exceptions which include the potential move of the Lebanon Raceway from Warren County to Dayton and the potential move of Thistledown Raceway from Cleveland to Akron.

This agreement is contingent on a number of things. Lawmakers must still approve VLT’s at Ohio’s horse racing tracks and a pending lawsuit challenging the constitutionality of the VLT’s must be resolved. Agreement between Penn National and the horse racing industry must be reached and approved by the Racing Commission.

The pending lawsuit was scheduled to hear arguments to dismiss last week. The hearing was postponed and a status conference was held instead. Oral arguments on the motion to dismiss this lawsuit are now scheduled for April 5th.

Lebanon Racetrack
March 9, 2012

Delaware North Companies and Churchill Downs formed a joint venture to purchase Lebanon Raceway and build a racino with up to 2,500 VLT’s. The joint venture, Miami Valley Gaming & Racing LLC, plans to purchase the harness racing licenses and assets of the Lebanon Trotting Club and the Miami Valley Trotting Club. They will also apply for a 10-year VLT license, which will cost $50 million.

A new site is not yet confirmed, but the two trotting clubs did announce last month their intentions to purchase approximately 120 acres near the Lebanon Correctional Institution. Construction on a new facility is expected to begin this year and be completed in 2013. Until then, the Lebanon Raceway will continue to operate at the Warren County Fairgrounds.

Despite this announcement, Penn National still plans to proceed with its relocation of Raceway Park, a harness racing track, from Toledo to north Dayton. Preliminary site and design work are under way.

But still looming out there is the pending lawsuit filed last October by Ohio Roundtable in the Franklin County Court of Common Pleas challenging the constitutionality of VLT’s. Oral arguments on Attorney General Mike DeWine’s motion to dismiss will be heard March 13.

Slot Machines
March 9, 2012

The Toledo casino has received their first shipment of 554 slot machines. The remaining 1,448 machines are expected to be delivered by March 21.
The Cleveland casino has received 1,100 machines. The remaining 1,000 are expected this week.

Scioto Downs
March 8, 2012

Columbus City Council has approved annexation of Scioto Downs into the city. This means Scioto Downs can now begin receiving Columbus water and sewer services.

The VLT facility currently being built at Scioto Downs is expected to open the second quarter of this year. This too is dependent on the outcome of the aforementioned pending lawsuit in the Franklin County Court of Common Pleas.

Internet Cafes
March 8, 2012

The city of Hubbard, located near Youngstown, became the latest to address Internet cafes. Unlike other cities, this is more of a pre-emptive strike as there are currently no such cafes in Hubbard. The proposed zoning ordinance would limit the number of cafes to five within the city limits. These cafes would have to be greater than 2500 feet apart and would be limited to no more than 100 sweepstakes machines per building. The city would charge $100 per machine. Cafes with 6-49 machines would pay a $3,000 licensing fee and those cafes with 50 or more machines would pay a $5,000 licensing fee. The proposed ordinance must pass two more readings before becoming law.

Gambling Bill
February 17, 2012

While the OCCC was addressing casino opening dates, the Ohio House was voting on legislation dealing with a host of issues related to casinos, horse racing tracks, charitable gaming and gambling addiction.

By a 69-24 vote, HB 386, all 213 pages, was passed by the House and sent to the Senate for consideration. If the bill becomes law, VLT’s could be up and running in a few months. Of course, a pending lawsuit that challenges the constitutionality of VLT’s could muddle things.

Among the provisions of HB 386:

The Ohio Lottery Commission will be responsible for rules and licensing of VLT’s at horse racing tracks;
Any legal challenges to the Lottery Commission rules or actions will now be filed in Franklin County Court of Common Pleas, instead of the Ohio Supreme Court;
Horse racing tracks will give 1% of their slots revenue to a state fund for gambling addiction and substance abuse;
Minimum number of live horse racing days was raised. Currently, tracks are open as few as 45 days. This legislation increases the number to 75 in 2013 and 125 by 2015;
VLT licensees must establish guidelines for minority-owned businesses to compete for contracts;
A $4.5 million agreement to sell land next to the Lebanon Correctional Institution. This will become the new site of the Lebanon Raceway horse racing track. A $12 million fund will also be established to demolish or redevelop old racetracks no longer in use;
The Ohio Attorney General’s office will enforce casino laws;
Casinos will be permitted to borrow up to $10 million without OCCC approval. The current borrowing limit is $500,000;
A provision was removed that would have required counties to spend at least 50% of their casino revenues on police, fire and other safety services;
Bingo hours extended to 2am.

Casino Openings Set
February 16, 2012

The Ohio Casino Control Commission gave the go-ahead yesterday for the Cleveland and Toledo casinos to open in May. The Cleveland casino gets the honor of being the first to open the week of May 14th. The Toledo casino will follow two weeks later the week of May 28th. Dates are still tentative, dependent on whether any additional snafus arise.

The vote to open Cleveland first was a 5-1 vote, with Toledo attorney Peter Silverman casting the only ‘no’ vote. Silverman had suggested a coin toss to decide who would open first, but that idea was nixed. Disagreement over the background checks was the deterrent for the Toledo casino. Rock Ohio, owner of the Cleveland casino had their licensing and background check paperwork filed by mid-November of last year. Penn National, owner of the Toledo casino did not complete their paperwork until the end of January.

There is still much to be done before the casinos actually open their doors. Background checks still need to be completed, gaming rules and regulations need to be finished, licenses for casino workers need to be issued, security details need to be finalized and testing and installation of the slot machines needs to be completed.

Track Switch
February 11, 2012

Penn National has announced a change in their proposal to relocate horse racing tracks from Toledo and Columbus.

Originally Penn National proposed moving Raceway Park, a harness racing track, from Toledo to the Youngstown area and Beulah Park, a thoroughbred track, from Columbus to Dayton. The reason for the relocation is to avoid competition with the casinos.

Now Penn National has proposed moving Raceway Park to Dayton and Beulah Park to the Youngstown area. The change may be for a better fit. The Dayton site, another former Delphi plant, is about 125 acres. The Youngstown site is 186 acres. Thoroughbred tracks are typically one mile in length while harness racing tracks are one half to five eighths of a mile (in Ohio).

The location switch could receive flak from the other tracks. Lebanon Raceway, also a harness racing track, is about 40 miles from the Dayton site.

The Ohio State Racing Commission must approve any relocation. To date, according to the commission’s chairman, no one has applied for relocation. That is probably due to the fact that Penn National is awaiting a final decision on VLT’s. Eric Shippers, senior vice president for Penn National, has stated that no relocation plan has been finalized and that any relocation is dependent on the authorization of VLT’s. There is still a pending lawsuit in Franklin County that challenges the constitutionality of the VLT’s.

Advisory Opinions
February 10, 2012

The Ohio Ethics Commission has issued two advisory opinions addressing the conduct of OCCC members and staff. The first states that members or employees of the OCCC can’t participate in “casino gaming and any other amusement or activity.” Concerts, sporting events, dining, or golf at casinos or casino-owned facilities would be off limits. However, members and employees would be permitted to partake in casino events as part of their job, such as conducting an investigation.

The other advisory opinion states that OCCC members can’t have a “direct or indirect interest in a contractual or service relationship with a casino facility or operator, a casino management company, holding company or a gaming-related vendor.” For example, an OCCC member’s law firm can’t provide services to a casino or related industry.

Smokers Need Not Apply
February 10, 2012

Penn National has indicated that anyone who smokes, chews tobacco or uses nicotine patches will not be hired for any of the 3,200 jobs at the Columbus or Toledo casinos. Rock Gaming will not prohibit smokers from working at the Cleveland or Cincinnati casinos, but will offer cash incentives to quit.

Twenty nine states have laws on the books that prohibit companies from refusing to hire smokers. Ohio is not one of those states. The statewide indoor smoking ban also means that customers will have to step outside if they wish to smoke.

Cincinnati Mishap
February 9, 2012

A second story floor collapsed at the site of the Cincinnati casino, injuring more than a dozen workers, none life threatening. Five days after the collapse, the Occupational Safety & Health Administration, who is investigating the cause of the collapse, gave the okay to resume construction. The investigation is looking at the steel beams and whether they were securely fastened.

Casino Police
February 9, 2012

Legislators did not initially agree with the OCCC’s selection of the Bureau of Criminal Identification (BCI) to police the casinos. When HB 386 was introduced, that authority went to the Ohio State Highway Patrol. However, a House committee has recommended the adoption of a substitute version of HB 386 which removes the authority from the Highway Patrol and agrees with the commission’s decision to give BCI the authority.

Opening Day
February 8, 2012

The Cleveland and Toledo casinos may know as soon as February 15, the next scheduled meeting of the OCCC, when they will open. What is known is that the two casinos will open two weeks apart. It is uncertain which will open first. Penn National and Rock Gaming are both pressing to be the first to open.

The background checks hurdle seems to have been cleared. Daniel Mudd has resigned as CEO of Fortress Investment Group, holding company for Penn National. As reported in our last update, Mudd has been indicted by the SEC for misleading investors while he was head of Fannie Mae. Testing and delivery of the slot machines has now become the most time consuming issue.

Other Casino News
January 24, 2012

The background checks are just one of several procedures that must be performed before any casino can open. The Cleveland casino is further along with their background checks, so they have begun the next process. The slot machines must be tested. The process begins with each casino selecting the machines. A certified lab then tests the machines, which are then shipped to the casino where the machines are inspected and tested again. Once that is complete, the gaming software is installed.

The Ohio Casino Control Commission is rumored to perhaps announce the new opening dates for the Toledo and Cleveland casinos by February 1. It is believed they will announce a date range, rather than an exact date.

The commission did give preliminary approval to 43 new rules dealing with game play at the casinos. Among the rules approved:

A casino director, officer, employee, agent or vendor may not play table games at the casino they are associated with;
Cheating, cheating devices and the use of electronics are all prohibited while playing. Interestingly, card counting is not banned. Each casino will decide how to handle card counting;
Color and denomination of the chips are determined. A white chip is worth $1, red is worth $5, all the way up to a blue chip that is worth $25,000;
Casino advertising and how to handle unclaimed winnings were also addressed.

Toledo Casino
January 24, 2012

Construction is nearly complete, but quite a bit of regulatory work remains before an opening date will be determined. Penn National did, however, clear its biggest hurdle to date: background checks. In an agreement reached with the Ohio Casino Control Commission, the number of individuals from Fortress Investment Group that would be subject to background checks was decreased. As reported in earlier updates, Fortress is a holding company for Penn National whose board of directors refused to submit to the background checks required by Ohio law. Under the agreement with the commission, a limited liability corporation would be established whereby shareholders would be allowed to grant irrevocable proxies to two individuals to vote their Penn shares. This would eliminate the direct control element that is a trigger for a background check.

Penn National must also convince the commission that the former CEO of Fortress, Daniel Mudd, no longer has a role with either company. Mudd, who is on an indefinite leave of absence, is accused by the SEC of misleading investors while he was head of Fannie Mae. Until the commission has such assurance, Mudd is on the background check list.

Internet Cafes
January 23, 2012

Cincinnati is the latest city to propose a moratorium on Internet sweepstakes cafes. As with most other moratoriums that have been passed, no new Internet café would be allowed to open within the city for at least 180 days.

Meanwhile, the city of New Carlisle, located near Springfield, would like to extend their moratorium. Originally passed in February 2011 and extended in August. City officials would like another six months, in the hope that the state will decide something.

Ohio Attorney General Mike DeWine reiterated his stance that these cafes need to be regulated. HB 195, which would offer such regulation, was introduced in April, 2011, but remains in the State Government and Election Committee of the Ohio House of Representatives.

Cleveland, Toledo Casino Openings Delayed
January 9, 2012

Because required background checks on gaming operators and vendors are behind schedule, the openings of casinos in Cleveland and Toledo will be delayed at least eight weeks. The Cleveland casino was scheduled to open March 26 and the Toledo casino April 2. But these were dates set by the casinos themselves, not by the Ohio Casino Control Commission, who has final say on the matter. May or June is now the earliest either casino will open. Columbus and Cincinnati casinos openings, in late 2012 and 2013, are not affected. The commission has also recommended the Cleveland and Toledo casinos open at least two weeks apart.

The holdup: background checks. Casino operators objected to some of the background checks. As a result, applications for the Cleveland casino weren’t complete until December. They were due in September. With the Toledo casino, it is even worse. The application for Fortress Investment Group, a holding company for Penn National, has yet to be submitted. Filings for inside directors and stakeholders are expected by the end of the month. Once the background checks are complete, then the licensing process, which will take several weeks, must take place.

The impact to the bottom line is potentially significant, perhaps as much as $1.4 million per day, according to a Plain Dealer analysis. Then there are the 2800 prospective employees who have been undergoing training at their own expense and now whose hiring is on indefinite hold.

Video Slots
January 9, 2012

MTR Gaming became the first company to submit a formal application for VLT’s at Scioto Downs in Columbus. The Ohio Lottery Commission has been accepting applications since November, but track owners have shied away because of the pending lawsuit filed by the Ohio Roundtable, challenging the constitutionality of VLT’s at horse racing tracks. The Lottery Commission will review the application in the next 30 days.