Ohio Gaming Law: 2009 News

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December

Gaming at the Racetrack
December 16, 2009

It appears the issue of video lottery terminals (VLT's) will be going to the voters. December 20th is the deadline for gathering signatures, but LetOhioVote.org claims to already have the 241,365 needed to put the issue on the November 2010 ballot. If the signatures are approved, voters will have the opportunity to decide whether Ohio racetracks can install VLTs, which would boost the flagging horse racing industry.

A local racetrack, Beulah Park, took another hit. A lawsuit was filed this week alleging the Sweepstakes games that Beulah Park activated in November violated Ohio anti-gambling laws. Beulah Park has agreed to turn off their machines. Spinners Café is another establishment named in the lawsuit. Their Sweepstakes machines remained active as owner Steve Cline continued to negotiate with the Franklin County Prosecutor's office.

Place Your Bets- What Businesses Need to Know About the Passage of Issue 3
Michael E. Zatezalo, Kegler Brown Gaming Law Practice Area chair interviewed by Clare DeCapua. As seen in Smart Business Columbus, December 2009

Though Issue 3 passed in Ohio by a margin of 6 percent, the debate is far from over when it comes to how this amendment will change the face of the state and the cities in which the casinos are slated to be built.

According to Michael E. Zatezalo, the managing director of Kegler Brown Hill & Ritter, there is an immense amount of work to be done before anyone can reap the benefits of tax dollars or increased tourism.

“First, the state legislature will have to set up the gaming commission,” he says. “And then they’re going to have to figure out the laws that they need to implement Issue 3, and what they’re going to leave to the gaming commission to pass in the way of rules.”

And that’s if no further amendments are put forth in the spring of 2010 to repeal or change Issue 3, which may include increasing the tax rates, the auctioning of casino licenses to the highest bidder instead of the drafters of Issue 3, or the option for the four cities of Cleveland, Cincinnati, Columbus and Toledo to veto their respective casino.

When the casinos finally do come to fruition, making them as profitable as possible for the owners and the state and integrating them into the existing regional economies will be yet another hurdle.

“What they have to try to do is capture two markets: one is the local people that are going outside the state to gamble, and second is the tourists from out of town,” Zatezalo says.

Smart Business learned more from Zatezalo about the future of gambling in Ohio.

What will be the impact of the passing of Issue 3 on businesses?
It depends on the business, where it’s located and what it does. Some of the businesses that are going to be vendors to the casino, of course, are positive about what’s happened. I’ve already had a couple of suppliers — including a few from out of state — contact me about licensing, asking what the state is going to do. Most vendors will need to get licensed to work with casinos. But right now it’s too soon to tell. The legislature has six months to come up with a regulatory scheme.

The racetracks are clearly going to be adversely impacted, because even if they do get the right to have VLTs, having a casino nearby is really problematical for them.

Charities are definitely going to be hurt. In any state where casinos have been legalized, charities have been adversely impacted. People are a lot less likely to go to bingo halls when they can go to a casino. Indiana’s casinos have had an adverse impact on charitable gambling in Ohio, and Issue 3 will probably have a further impact.

What about the effect on businesses in the areas surrounding casinos?
It’s hard to say. I’ve talked about this with an economics professor at University of Nevada, Las Vegas (UNLV), and he indicates that if a casino can bring in tourists from out of state and it does it in connection with a hotel, that’s a net win. To the extent that you’re just bringing in local people and they’re spending their dollars at a casino as opposed to somewhere else, for example going to the casino restaurant as opposed to the local restaurant, then it’s just trading dollars, and it will hurt the local businesses. If you do it so there’s a synergistic kind of relationship between the casino and other events and venues in the city, I think casinos can be helpful.

Businesses would be well served to tie in the presence of a casino with their own attractions. For example, if you can bring in people for a football or baseball game, you can run packages where they stay in a hotel near the casino, and spend a whole weekend instead of just coming in for the game.

What will businesses that want to work with casinos need to know?
There’s going to have to be a whole regulatory scheme set up for licensing and background checks, investigations and other decisions concerning all of the rules and regulations that govern casinos. Nevada has been doing this for years and has pages and pages of regulations. It’s not something you can just do in a day. So the specifics are secondary right now to the legislature getting something done. Businesses will need to keep abreast of the regulatory requirements as the legislative process develops.

What lies in the near future for gaming in Ohio?
The legislature is already talking about putting another amendment on the ballot. They have the authority to put in another constitutional initiative and amend this one. Already, several legislators have recommended that an amendment be proposed that provides for the option of competitive bidding and an increase in the tax percentage. So that has to filter its way through the process before it becomes clear what’s going to happen. It’s pretty aggressive to think they can get all this done in six months — and do it the right way.

It’s interesting to note that the most successful gambling jurisdictions are New Jersey, Nevada and Mississippi and there have been studies by economists at UNLV that show that these states also have the lowest taxes on casino revenues. If you’re a casino operator and you have a decision to make about where to put your money, you’re going to put it in the jurisdiction where you can get the best return. This creates better properties and a better gaming experience, so the revenues go up.

Issue 3 Proponents Focus on Implementing Legislation
December 11, 2009

Now that casino gambling has been approved by the passage of Issue 3, attention turns towards implementation. Legislation must be drafted in the next six months. Penn National Gaming Inc. and Dan Gilbert have submitted a draft bill to the legislature, which must now determine how the mandate in Issue 3 will be enacted.

Columbus legislators are still reviewing possible modifications to Issue 3. Despite statewide passage, voters in Columbus and Franklin County voted a resounding No to Issue 3. One possible modification is the addition of a “local option” by which the county in which the casino was to be placed could change the location or veto the placement entirely.

Legislature Considers Second Constitutional Amendment to Change Impact of Issue 6
November 12, 2009

Issue 3 passed, bringing casinos to Cincinnati, Cleveland, Columbus and Toledo, to be up and running no later than 2012. But is the fight over? Governor Strickland has stated that he would be reluctant to tinker with the will of the people. Members of the Ohio Legislature do not necessarily share that sentiment.

There is talk of introducing another constitutional amendment that would change the casinos terms. There is also talk of mounting a judicial fight. But not all proposals seek to turn back Issue 3. House Joint Resolution 6 was introduced on November 5. It would amend the Ohio Constitution to allow casinos at locations the General assembly designates, award casino licenses through a competitive bidding process, require voter approval in the county or city where the casino would reside, levy a 60% tax on the casinos' gross, and use the tax proceeds for education instead of for distribution to all Ohio counties.

Casinos on the Horizon in Ohio: Issue 3 Passes
November 6, 2009

The 2009 election results are in, and Issue 3 passed with a margin of 53% to 47%. Issue 3 triumphed where four other issues proposing expanded gaming in Ohio have failed on ballot initiatives in the past 20 years. Passage of the issue is likely due to the tough economic times that Ohio citizens are facing.

Issue 3 will create four casinos in Cincinnati, Cleveland, Columbus and Toledo. Gaming proponents expect the passage of Issue 3 to create 34,000 jobs and prevent Ohio residents from taking their lucrative gambling to the neighboring states, each of which allows some form of casino gaming. A link to the full text of the constitutional amendment can be found here.

The success of Issue 3 at the polls has not decreased Issue 3's controversy. Naysayers have objected to the monopoly that Issue 3 grants to the casino developers, as well as to the 33% tax rate and the possibility that Ohio will not reap all the economic gains promised by gaming proponents. The Ohio Legislature is considering placing a second constitutional amendment ballot initiative on the May 2010 ballot. Such an initiative would have the power to repeal or change Issue 3 before the casinos are operative. Suggested changes to sweeten Issue 3’s reception are the auctioning of the casino licenses to the highest bidder instead of to the drafters of Issue 3; the imposition of a higher tax rate on the casino’s gross income; or the establishment of a local option whereby residents of Cincinnati, Cleveland, Columbus and Toledo could veto the casino in their respective city.

Strickland Announces Plan to Postpone Income Tax Rate Reduction
October 5, 2009

Governor Ted Strickland’s new plan for filling the $851 million gap in the current state budget left after his VLT plan hit a roadblock last week is to freeze the state income tax reduction that was expected to go into this year. Strickland, in a press conference this week, laid the groundwork for his new plan, saying that it was the best option over cutting education programming or increasing the state sales tax.

If the governor’s proposal is approved by the legislature, Ohioans would not see the 4.2% income tax reduction this year as outlined back in 2004 when the five-year phase in of a 21% income tax cut was originally approved. This delay would boost revenues by $844 million; the remaining difference in the gap would be achieved through cuts, if necessary, according to the governor.

Last week, the Ohio Supreme Court delivered a blow to Strickland’s video lottery terminals (VLTs) proposal when they ruled in favor of a conservative organization’s request to seek referendum on the proposal. It appears that the issue will not be on the ballot until November 2010, significantly delaying the expended revenue needed for this biennium. Strickland said in his press conference that it was a “practical impossibility” to rely on the slots revenue.

In addition, the governor plans to follow up with the Ohio Supreme Court and request a declaratory judgment on whether or not the state, through the Ohio Lottery Commission, can operate slots at Ohio’s racetracks. Even if the Court rules in the favor of the governor on this case, Strickland does not plan to move forward with the proposal. “Although it is impractical to assume any income from VLTs for this biennial budget, it would be my expectation as we move forward, depending upon the recovery of the economy and other factors, that the VLT initiative should be a tool for me or anyone else who would be governor going forward,” Strickland said.

Supreme Court Ruling Places VLT Implementation on Hold
September 30, 2009

The Ohio Supreme Court delivered a major blow to Governor Ted Strickland this week when, in a 6-1 opinion, the Court ruled his plan to install video lottery terminals (VLTs) in Ohio’s racetracks was subject to referendum. LetOhioVote.org, a ballot issue group who has spearheaded this fight, now has 90 days in order to collect enough signatures to place the issue before voters in November, 2010.

The Court made no ruling about whether Strickland has the authority to move forward on the VLT implementation without the companion legislation that was included in the budget bill passed by the General Assembly. “We confine our opinion here to only the narrower issue raised in this case regarding the rights of citizens to a referendum on the VLT provisions of (the budget),” Justice Maureen O’Connor said.

LetOhioVote.org filed referendum summary language to Attorney General Richard Cordray and delivered 77 petitions with 2,784 signatures to Secretary of State Jennifer Brunner just hours after the court delivered its ruling – the same delivery that was rejected by both offices in July that led to Monday’s ruling. The group now has 90 days to correct 241,366 valid signatures in at least 44 counties in order for the issue to appear on the ballot.

Only Two Racetracks Meet Deadline for VLT Fees
September 18, 2009

The state budget was put in jeopardy this week when only two of the state’s seven racetracks ponied up the first of five $13 million licensing fee installments. The Cleveland-area Northfield Park and Raceway Park in Toledo were the only two tracks to meet the Tuesday deadline. The state is counting on the estimated $933 million in revenue it will receive from video lottery terminals (VLTs) installed at racetracks across the state. Of that estimate, $455 million is expected to come from licensing fees each track is required to pay in order to install VLTs at the track.

Many of the tracks have reported some issues with financing from potential investors due to the pending lawsuits. Each track that failed to make the initial payment will be fined $100,000 per day each day they are late. The Ohio Lottery Commission has said the director has discretion to modify any late penalties, but not until after the initial payment is made.

In similar news, the Quinnipiac University Polling Institute released new data this week regarding State Issue 3, the casino gambling issue, and found 56% of Ohioans support the issue. However, 60% of respondents said they were unlikely to go to a casino if they were built here in Ohio. The new poll also showed only 9% of respondents were more likely to visit a state race track if VLTs were there, while 12% said they were less likely to go to the track.

Supreme Court Hears Arguments for Casino Referendum
September 8, 2009

In an effort to overturn the actions of Governor Ted Strickland and the Ohio General Assembly, LetOhioVote.org stated their case to the Ohio Supreme Court this week in opposition to video lottery terminals at Ohio's racetracks. LetOhioVote.org is asking the Supreme Court to allow 90 days in order to circulate a petition to have the VLT issue voted on by the people in November 2010.

LetOhioVote.org attorney, Michael Carvin, argued that the Court has made it clear that laws are subject to referendum unless they plainly fall within certain constitutional exceptions. Justice Judith Lanzinger appeared to sympathize with their argument, saying "here, there appears to be an end run around the rights of the people to decide."

On the other side of the case, State Solicitor Benjamin C. Mizer told justicesthe state constitution forbids referendums on "appropriations for current expenses of state government." Strickland has estimated the VLTs will generate $933 million during the next two years and was a critical piece of the recently enacted state budget.

The Court will not issue a decision in this case for several more months.

Ohio Roundtable Files Suit Against Governor for Expanded Lottery Proposal
September 8, 2009

On the heels of the arguments before the Ohio Supreme Court regarding the state's expanded gambling proposal, video lottery terminals, the Ohio Roundtable filed suit against Governor Ted Strickland this week,charging that he does not have the necessary authority to enact this type of expanded gambling without approval from the voters. The group is arguing that the governor's plan should be voided because slot machines go beyond the lottery games that Ohio voters authorized in setting up the lottery in 1973. U.S. Senator George Voinovich joined the Roundtable during the press conference citing that expanded gambling is not in the best interest of Ohio families.

Emergency VLT Rules Take Effect Immediately
August 25, 2009

Governor Ted Strickland issued an executive order (2009-17S) this week regarding emergency rules governing video lottery terminals at Ohio's seven racetracks, paving the way for up to 17,500 slot machines to be installed. The Governor's rule package, which will expire on November 16, is an exact copy of the permanent rules the Ohio Lottery Commission approved on Monday. The Commission's rules will be subject to a public hearing, likely to be scheduled on September 18, before final action from the commission expected on September 21. Once complete, the rules will go before the Joint Committee on Agency Rule Review, likely during their October 5 hearing, before taking effect permanently..

Casino Ballot Language Finalized
August 25, 2009

The Ohio Ballot Board finalized the language that will be used this November for Issue 3, the authorization of casinos in Ohio's four big cities. The final ballot language will include information about the tax disbursement breakdown, locations of the four casinos, and noting the casinos would be able to operate 24 hours a day. In addition, those who oppose the issue were able to convince members of the Ballot Board to include a notation on the ballot language that, should this issue pass, any game authorized in surrounding states would be automatically permitted in Ohio as well.

“Racino” Rules Proposed
August 19, 2009

The Ohio Lottery Commission has released proposed rules to regulate the new “racinos,” or combination racetrack and video lottery terminal, or VLT, casinos. The rules would allow 18 year olds to play the VLTs. Currently, the states adjacent to Ohio allow gambling only at age 21. The rules would also permit the racinos to operate 24 hours a day, 7 days a week.

In order to participate in the VLT program, each of Ohio’s racetracks must make a number of payments totaling $65 million per racino. The first payment of $13 million per racino is due September 15th. All of the racetracks have indicated that they intend to participate in the VLT program and make the payment.

Casino Ballot Initiative Under Debate
August 19, 2009

In addition to the gaming available at racinos, Ohioans will decide whether to allow four full-gaming casinos in Columbus, Cleveland, Cincinnati, and Toledo this November. The Supreme Court recently rejected a lawsuit seeking to prevent Issue 3, the proposed gaming initiative, from being placed on the November ballot. Issue 3 is now before the Ohio Ballot Board, which is considering the wording that will appear on November's ballot.

Gaming opponents have fought to exclude language indicating that each casino would require a minimum initial investment of $250 million and add language indicating that the casinos would not be regulated by local zoning laws. The ballot initiative is being financed by Cleveland Cavaliers owner Dan Gilbert and by Penn National Gaming, which also owns future racino Raceway Park in Toledo.

Strickland Appoints Cleveland Lawyer to Lottery Commission Job
August 17, 2009

Wasting no time, Governor Ted Strickland this week appointed Cleveland-based attorney Kathleen Burke as the next director of the Ohio Lottery Commission. Burke, who has been an attorney with Jones Day since 1973, will assume her new role on August 24, replacing Michael Dolan, who resigned the position last week.

"Kathy has established herself as an attorney with impeccable integrity and credentials through her work as a partner at one of the nation's largest law firms and as a leader in her community," Strickland said in a press release. "Kathy is accustomed to managing people, projects and organizations and achieving results. I am confident that Kathy's character, skills and commitment to service will be of great value to the Ohio Lottery Commission."

Lottery Commission Releases Proposed Rules for VLT Implementation
August 17, 2009

The Ohio Lottery Commission released the proposed rule package for implementation of the video lottery terminals in Ohio's seven race tracks this week. The emergency rules were developed in accordance with the governor's directive, authorizing language from the state budget, current lottery practices and review of other states' practices. Commission members will still need to approve the proposed rule package before they are filed with the Joint Committee on Agency Rule Review. The Lottery Commission has a meeting scheduled for Monday at 1:00 pm (agenda and rules).

In similar news, the Ohio Supreme Court scheduled oral arguments for Wednesday, September 2, in the lawsuit that seeks a referendum on the governor's plan to install VLTs at Ohio's racetracks. LetOhioVote.org is asking the court to clear the way for it to collect signatures on petitions that could place the slots plan before voters in a statewide election.

Ohio Supreme Court Rejects Casino Petition Challenge: Measure to Appear on November Ballot
August 3, 2009

In a unanimous decision on Friday, the Ohio Supreme Court ruled against MTR Gaming Group in its suit questioning the validity of petition signatures to get a constitutional amendment authorizing the building of four casinos in Ohio on the November ballot. The Court stated that MTR failed to prove that the disputed signatures were included in the total number of signatures certified by Secretary of State Jennifer Brunner as valid, and that they did not submit as evidence most of the disputed portions of the petitions being challenged. Due to the lack of evidence presented, the Court found that Brunner was not required to invalidate any additional signatures or conduct any further investigation. The casino measure will appear on the November ballot. MTR is expected to fund political advertising opposing the measure.

Casino Opponents File Suit in Ohio Supreme Court
August 3, 2009

MTR Gaming Group, owner of the Scioto Downs racetrack near Columbus, filed suit in the Supreme Court of Ohio, questioning the validity of signatures appearing on the petition to get the proposal to build four Ohio casinos on the November ballot. After many signatures were disqualified by Secretary of State Jennifer Brunner, 452,956 signatures remain. 402,275 valid signatures are required to certify the issue for the ballot. The suit filed by MTR alleges that signatures were obtained under false pretenses, and that some were collected by a convicted felon, by people listing false addresses, and by several people using the same name. The Ohio Supreme Court has charted an ambitious timeline in order to resolve the dispute by late summer, in time to get the issue on the November ballot.

Efforts to Halt Slots at Ohio’s Racetracks Continue
August 3, 2009

Advocacy group Let Ohio Vote’s suit challenging the validity of the executive order to place up to 1,750 video slot machines in each of Ohio’s seven racetracks is still pending before the Ohio Supreme Court. The Ohio Roundtable, another advocacy group supported by various religious organizations, is expected to file a similar suit. Opponents of the slot machine plan note that Ohio voters have rejected four past ballot measures to bring gambling to Ohio, including a 2006 effort to place slots at racetracks.

The first $13 million payment toward the $65 million license fee owed by the racetracks is due September 15, with four additional payments due in 2010, in order to meet the rapidly approaching timeline of May 2010 for the opening of the slots. This timing is critical for bringing in the revenue needed to balance the state’s budget. If Let Ohio Vote’s suit is successful and they are able to gather the necessary signatures, then a proposal to block the slot machine plan would appear on the November 2010 ballot. Alternatively, if the suit is successful, Governor Strickland could attempt to get the initiative on the May 2010 ballot, which will still be a significant delay from the original timeline, and would require deeper cuts in the state’s budget.

Ohio Expecting Significant Gambling Growth
August 3, 2009

Two recent initiatives, the proposal appearing on the November ballot to authorize four casinos in Ohio’s largest cities and the video slot machines ordered by Governor Strickland to be installed in Ohio’s seven racetracks, could make Ohio the third largest state for gambling revenue. Some analysts project that as much as $3 billion could be spent on gambling in Ohio in 2013. However, the rollout of the four casinos may be delayed or the scope of the projects altered to account for the increased competition from the racetrack slots, which could reduce this projection.

Although four of the five states surrounding Ohio have gambling, experts agree that there is still gambling money to be made in Ohio. Ohioans currently spend $1.4 billion annually on gambling in other states. And while the racetrack slots are not likely to draw tourists from other states, the casinos may attract out-of-state visitors, which could result in a net economic gain in the state.

Gambling at the casinos and racetrack slots will be a significant source of revenue for the state. Owners of the racetracks operating the video slot machines will each pay a $65 million licensing fee to the state and a 50% tax on revenue from the slots. The four proposed casinos would each pay $50 million licensing fees to the state as well as a 33% tax on casino revenues. Some analysts say the slot licenses are worth anywhere from $150 to $400 million each, and that the state could have received more money by auctioning the licenses to the highest bidder. But the governor and lawmakers who supported the slots found the fee to be reasonable in order to both generate income for the state while allowing the racetracks to thrive.

Casino Issue Certified for Ballot; Let Ohio Vote Looks to Supreme Court on VLT Issues
July 24, 2009

The Let Ohio Vote Committee took its first attempts this week to block the use of Video Lottery Terminals (VLTs) at Ohio's seven racetracks by attempting to file a referendum petition with the Ohio Secretary of State's Office and the Ohio Attorney General's Office, both declined to take the documents. The issue is currently being considered by the Ohio Supreme Court, which has recently set a month-long schedule for parties to file its written arguments regarding the VLT referendum case.

Separately, Ohio Secretary of State Jennifer Brunner's office has certified there are enough valid signatures in order for a casino ballot issue to be placed on the November 3 ballot. The Ohio Jobs and Growth Committee is backing the constitutional amendment that would allow for one casino to be placed in the state's four largest cities, Cincinnati, Cleveland, Columbus, and Toledo. However, Brunner has also said she will be investigating allegations of wrongdoing related to the validity of some signatures and qualifications of some circulators.

Legislative Deal Made for Video Slot Machines at Racetracks
July 22, 2009

WAfter a 10-day standoff, Governor Ted Strickland and legislative leaders reached a compromise on July 10, permitting up to 2,500 video lottery terminals, or VLTs, at each of Ohio's seven horse-racing tracks without a ballot vote. Legislators scrambled to finish the two-year $51 billion deal before the July 14 deadline when a second week-long budget extension would have expired. The slots, which are estimated to bring in $933 million in revenue for Ohio's public schools, are projected to debut in May 2010.

The budget legislation calls for each track to pay the state $65 million for a gaming license, beginning with $13 million on September 15. Another $80 to $100 million must be spent over the next few years on facility upgrades. However, Ohio's horse racing industry—including both racetrack owners and horsemen— are optimistic that the implementation of the slot machines will give the industry a much needed boost.

Not all Ohioans are pleased with the addition of VLTs to the horse-racing tracks. Several religious organizations are vowing legal action against the state in order to persuade the Ohio Supreme Court the machines are unconstitutional. The groups will argue that lotteries are the only kind of gambling permitted under the state constitution. Religious leaders argue that the VLTs will increase gambling addiction and prey on the poor. They believe that raising taxes would be preferable to implementing the racetrack slots.

Casino Petitions May Face Challenges
July 22, 2009

Petitions to bring casinos to Ohio's four largest cities could face legal challenges by opponents of the casino effort. Opponents have threatened to file suit alleging that the petition process was tainted by a number of irregularities such as petition circulators lying to obtain signtures, felons gathering signatures, and signatures submitted from deceased people.

The pro-casino campaign filed more than 850,000 signatures with Secretary of State Jennifer Brunner's office on June 25. If at least 402,275 of the signatures are certified as valid, Ohio voters will have the opportunity in November to decide whether to allow full-scale casinos in Cleveland, Columbus, Cincinnati and Toledo. However, even if the pro-casino campaign meets the signature minimum, there are still questions as to whether various signatures were acquired under false pretenses. Currently, prosecutors or sheriffs in at least 17 counties are investigating petition circulators. If the alleged irregularities are found to be true, some of the signatures could be thrown out.

Felony Charges Dropped Against Social Card-Game Organizer
July 22, 2009

All felony charges have been dropped against a 63-year-old man accused of operating an illegal euchre tournament at an Akron social club. Norman D. Metz, the card tournament organizer, was to stand trial in Summit County Common Pleas Court on two felony counts of operating a gambling house and two additional counts of gambling. The charges stemmed from a 2008 police raid on the social club. Metz was allegedly charging $20 per ticket to enter the tournament and additionally took $10 and $20 side bets. None of the 50 to 60 club patrons playing in the afternoon euchre tournament that day were arrested, but they were photographed and forced to give police their drivers licenses or social security numbers.

Summit County prosecutors have agreed to drop the felony charges in exchange for a guilty plea to a single misdemeanor gambling offense plus payment of a $1,000 fine and forfeiture of over $3,000. Retired Common Pleas Judge Marvin A. Shapiro, who handled the case as a visiting judge, approved the felony dismissal action and gave Metz six months jail time, suspended all of the jail time, and placed him on two years of probation with no reporting requirements.

Charitable Gaming May Be Vulnerable to Fraud
July 15, 2009

While Ohio lawmakers debate legalizing video slots at horse racetracks, other legal forms of gambling have been in place for quite some time. Charitable gaming in Ohio takes in big money, but is subject to very little regulation. In 2007, charitable gaming in Ohio grossed nearly $1.4 billion, more than half of the state's lottery sales. However, Ohio employs only sixteen full-time officers to ensure that charities comply with state regulations. In addition, Ohio issues licenses only for bingo, instant bingo, and pull-tabs; raffles and "special gaming events" are left unregulated. This lack of oversight results in a situation where charitable organizations can be easily exposed to fraud. The most common source of fraud are "professional volunteers" who approach charities and offer to run gaming events, then skim money off the top. In one such scam in 2004 to 2005, four people were charged with stealing more than $250,000 from bingo conducted at a veteran’s organization.

Budget Stalemate Continues as Legislators Debate Video Slots
July 15, 2009

On June 27, the Ohio Senate rejected Governor Ted Strickland's plan to put video lottery terminals (VLTs) at seven Ohio horse tracks. Strickland's plan would raise an estimated $933 million over the next two years, in an effort to help erase the state's $3.2 billion deficit. Senators who rejected the plan called for the Governor to use his executive power to expand the state lottery to include VLTs, just as he did with Keno. However, Strickland has stated that the legislature needs to authorize the plan in order to put it on firm legal ground. Recent polls have shown that while most Ohioans support a plan to bring in video slots, a significant majority would prefer the issue to be settled through a state-wide ballot initiative.

Strickland stated that if the Senate continues to oppose the VLT plan, it must come up with its own solution to the state deficit. With no solution in place, the legislature approved an interim budget for the state to operate on, which will be in place until July 14.

In hearings held on July 2 and 3, the Senate continued to question the viability of Governor Strickland's VLT plan. Much of the criticism was directed at a provision of the plan which gives VLT investor's the option of getting their money back if a November ballot issue legalizing casinos in four Ohio cities is approved. The provision will allow for the return of licensing fees, which could eliminate up to $455 million of the $933 million that the VLT plan is projected to generate.

Additionally, some supporters of the VLT proposal have voiced opposition to the November casino initiative. They argue that the casinos, which will feature roulette, card, and other table games, will drive the VLT racetracks out of business.

Busy Week for Gambling Interests
June 26, 2009

Amid the flurry of budget-related activity, proponents and opponents of an expansion of gaming in Ohio had a busy week. To help fill the deepening budget hole, Governor Strickland has proposed and expansion of gaming by allowing the Ohio Lottery Commission to place Video Lottery Terminals (VLTs) at Ohio's seven horse-racing tracks. On Thursday, a group of eight trade associations voiced their support for the plan and applauded the governor for utilizing revenue options that do not result in a tax increase. Not to be outdone, later in the day, the American Policy Roundtable blasted the governor's plan and pledged that, if the proposal moves forward, they will take legal action to stop it. Also on Thursday, the Ohio Jobs & Growth Plan delivered more than 850,000 signatures to the Secretary of State's Office in support of placing on the fall ballot a plan that would authorize the development of four casinos in Ohio. Backers need 402,275 valid signatures for the measure to be placed before voters.

Video Slot Machines, Answer to Budget Deficit?
June 26, 2009

Faced with a budget deficit amounting to $2.43 billion dollars, Ohio Governor Ted Strickland changed his stance on video slot machines. Until last week, Strickland had adamantly opposed slot machine placement in Ohio businesses. Realizing that a deficit cure comprised solely of budget cuts would force dangerous outcomes, his tone changed quickly. He indicated that the poor economy was the driving force behind his stark change in position.

If this proposal is accepted by the Ohio Legislature, video slot machines would soon be placed in the seven Ohio race tracks. The state would see revenues, projected to reach $933 million over two years, from licensing fees and a portion of profits from each of the games.

Many Ohio conservatives oppose this move, saying that the "action defies common sense and constitutional law." Opponents cite the fact that Ohio voters have rejected the legalization of gambling four times in the last twenty years. And, without a vote by the people, they say, any legislative action would be premature and improper.

Proponents of the legislative initiative argue that allowing slot machines would avoid raising taxes, closing prisons, and cutting state employment, pension contribution, and Medicaid funding. Owners of many Ohio bars, restaurants and bowling alleys also support the plan, but take issue with the proposal’s placement of slot machines only in the seven Ohio race tracks.

Casino Signature Drive Survives Legal Challenge
June 12, 2009

A Mahoning County judge declined to cut short a petition drive seeking to place a four casino measure on this November’s ballot. With less than a month left for petitioners to submit roughly 400,000 signatures, opponents of the four casino plan sought to end the campaign in court. The opponents brought with them video of signature-seekers making false claims about the effects and locations of the proposed casinos. Judge James Evans barred the petitioners “from misrepresenting the contents, purpose or effect” of the proposal, but he did not place any other restrictions on the group. If the petition drive is successful, Ohio voters will decide whether to amend the state’s Constitution to allow casinos to be built in Cincinnati, Cleveland, Columbus, an Toledo.

Ohioans Push Lawmakers to Expand Lottery to Include Slots
June 12, 2009

The Ohio Racing Commission has been front and center in recent weeks backing measures to allow slot machines in racetracks as an extension of the Ohio Lottery program. The Commission is looking for legislative backing to install up to 2,000 slot machine-like terminals at each of Ohio’s seven racetracks. The “video lottery terminals” would draw a $50 million dollar licensing fee from each racetrack. In addition, the state would receive half of the profit going forward to help fund Ohio’s schools. Because of the plan’s connection to the lottery, the racing commission insists that voter approval is not required.

The racetrack-only plan is not related to a proposed ballot issue that would permit as many as 83,300 slot machines at racetracks, bars, private clubs, and charitable establishments like Veteran's organizations. It is also separate from a recent proposal endorsed by The Bowling Centers Association of Ohio that would allow up to 10 slot machines to be installed at each of the state’s participating bowling alleys. Much like the racetrack plan, the bowling alley proposal would be an extension of the Ohio Lottery system and generate revenue for the lottery’s education fund.

Anticipated Budget Shortfall Fuels Gaming Proposals
May 26, 2009

Ohio's growing state budget deficit, projected to reach $3 billion by the 2010‑11 legislative session, has resulted in another gambling proposal as a possible solution to bridging the gap. An immediate stop-gap measure is the addition of 14,000 slot machines at the state's seven racetracks. The Ohio State Racing Commission endorsed the idea, claiming the action could bring in approximately $625 million a year by 2013 to direct towards public education. Governor Strickland, following his prior stance, remains opposed to this proposal. Various Ohio senators have expressed concerns as to whether authorization to add the slot machines should occur by legislation or be placed on a statewide ballot for public approval. The Ohio Senate President, Bill Harris, has opposed gambling initiatives in the general state budget, but remains open to the ballot initiative. Also, another gambling proposal has arisen through proponents of four additional casinos, who are actively collecting signature petitions for ballot access. If the requisite number of signatures are gathered, this upcoming November will be the third time in the last four years that Ohio voters have been asked to vote on a casino issue.

Ballot Initiative Language Approved
April 21, 2009

The Ohio ballot board, which reviews language submitted for constitutional ballot initiatives has approved the language submitted by gaming proponents who want to open casinos in Cleveland, Columbus, Cincinnati and Toledo. The approval allows proponents to move forward with gathering signatures in order to place the initiative on November's ballot. The proponents must gather over 400,000 signatures from registered voters in order to place the issue on this year's ballot.

Veto Threat Lurks For Expanded Race Track Gaming
April 21, 2009

Gaming proponents could shortcut the constitutional ballot initiative procedure by persuading the Ohio legislature to authorize slot machine games in horse race tracks. However, even if the legislature is won over, the gaming proponents face another challenge in the form of Governor Ted Strickland's veto power. Although he has not announced an intention to veto proposed measures that would expand gaming at racetracks or other venues, Strickland has indicated that expanded gaming is not the right direction for Ohio in spite of the dire economy.

Possible New Hope on the Horizon for the Horse Racing Industry
April 3, 2009

The Ohio State Racing Commission has drafted a plan to allow limited slot machine gaming in race tracks in order to support the struggling horse racing industry. According to the Commission, five of Ohio's seven racing tracks may close within the next year due to financial difficulties if no assistance is forthcoming. Closure of race tracks would adversely impact over 10,000 jobs associated with the tracks and related industries. The Commission plan would allow slot machines to operate at the tracks. The plight of the horse racing industry in Ohio has been highlighted recently, encouraging supporters to seek a way to help the industry survive.

Casino Petition Language Must Be Changed
April 3, 2009

In order to place a proposed constitutional amendment on November's ballot, gaming proponents must have their petition language approved by Ohio Attorney General Richard Cordray. Last week Cordray rejected the proposed wording of the ballot initiative that would allow casinos in Cleveland, Toledo, Columbus, and Cincinnati. The Attorney General objected to the language because the summary of the petition was too vague, and the language could exempt gaming winnings from taxation. Proponents of the ballot initiative are undaunted and have indicated that they will reword the petition and resubmit it to Cordray.

More Details About Latest Gaming Proposal
March 19, 2009

More details have emerged about the new gaming proposal backed by Dan Gilbert, the owner of the Cleveland Cavaliers. The proposal would authorize casinos in Columbus, Cleveland, Cincinnati and Toledo. Projections indicate that the casinos would raise $1.8 billion in revenue per year. The gaming proponents said that the casinos would raise around $600 million in taxes and create 20,000 jobs in Ohio's recession stricken economy. The taxes would be distributed to state, county and local governments as well as public schools and Ohio horse racing tracks. The horse racing industry would not otherwise benefit from the proposal.

Governor Strickland has said that the new proposal is too similar to the proposals that failed on Ohio's ballots in the years past. Representatives from the Governor's office indicate that expanding gaming is not the right approach to improve Ohio's faltering economy.

Another Proposal for Ohio Casinos
March 11, 2009

As Ohio continues to struggle with the economic downturn, another gaming proposal is vying for voter approval. A new coalition of gaming proponents, including Cleveland Cavalier's owner Dan Gilbert, has proposed a ballot initiative that would allow four casinos in Cleveland, Columbus, Cincinnati and Toledo.

The 2008 gaming initiative failed in large part due to funding to the opposition by Penn National Gaming. Under this proposal, Penn National Gaming would own one of the four authorized casinos. The details of the new initiative remain to be seen, and it is unclear whether voters are ready for another gaming initiative so soon after the failure in 2008.

Ohio Investigates Gaming Opportunities to Plug $7 Billion Hole in the State Budget
February 10, 2009

Given the poor economy, high unemployment, and expected budget shortfalls, it's no surprise that gaming opportunities are looking more attractive for the state. Although ballot initiatives have failed in the past, voters and legislators may give more consideration to a proposal that allows casinos in multiple cities and generates substantial income for the state. Gaming proposals are still likely to face stiff opposition from those concerned that the social costs of gaming outweigh the benefits. In addition, it's possible that casino gaming may not meet income projections. For example, Keno, which was added to the Ohio State Lottery in 2008, was projected to generate $73 million a year for the state budget. However, Keno sales were much lower than projected, generating only $25 million a year. Despite the drawbacks, gaming may be a viable alternative to shore up the faltering state budget as spending cuts become more urgent.

Proposal for State Lottery to Offer Slot Machines
February 10, 2009

Representatives of Ohio's racetracks are asking the State Lottery to enter the slot machine gaming business. Governor Ted Strickland has the power to direct the State Lottery to operate slot machines at racetracks. If the Governor authorized such a move, neither legislative nor voter approval would be required. The proposal would generate immediate revenues of over $1 billion from license fees. With the shortfall in the state budget, the prospect of immediate cash is attractive. However, Governor Strickland would almost certainly come under fire from those who oppose gaming as well others who believe that voters and legislators should have a say in any gaming proposal. In any event, the Governor's office appears unlikely to act on the proposal.

Fresh Gaming Proposals Jockey for Position
January 29, 2009

Gaming proponents continue undeterred after the defeat of Issue 6 on the November 2008 ballot. Penn National Gaming, which funded the opposition to Issue 6 that resulted in the initiative’s 62%-38% loss, is proposing a more inclusive initiative to appear on the November 2009 ballot. The proposal would allow up to four casinos in Ohio and authorize Ohio’s seven race tracks to offer full Las Vegas-style gaming. The new proposal would require license fees of $50 million to $100 million for each casino and race track.

Penn National Gaming is negotiating with the Ohio legislature to formulate a proposal that would appear on the ballot without requiring petition signatures. Since the legislature would be involved in drafting and voting on the proposal, the new proposal could be perceived as more even-handed and fair to taxpayers. With Ohio’s economy in dire straits, voters may be more inclined to approve a gaming initiative that would bring money and jobs to the state.

My Ohio Now, the organization that proposed Issue 6 last year, is also preparing a drive for another ballot initiative in 2009. Issue 6 drew criticism from voters in part because it would have authorized a virtual monopoly of a single casino in Wilmington, Ohio. Unlike Issue 6, My Ohio Now’s new proposal would allow casinos in Ohio's three largest cities.

Issue 6 - An Expensive Price Tag
January 5, 2009

Issue 6 proponents lost the election on a proposed constitutional amendment which would have authorized a casino in Wilmington, Ohio by a wide margin, but their expenses nearly matched the opponents. All told, Issue 6 was the priciest ballot initiative in Ohio's history, with funding in excess of $62 million. Casino supporters spent $12.97 for each "yes" vote, and casino opponents spent $10.90 for each "no" vote.

Most of the $26 million funding for “My Ohio Now” and others in favor of Issue 6 came from a Minnesota gaming company called Lake Entertainment Inc. Funding for the opposition came from a rival casino operator, Penn National Gaming, spent more than $36 million opposing Issue 6. Penn National Gaming owns the Argosy Casino in Indiana near Cincinnati. Since many of Argosy Casino’s patrons come from Ohio, Penn National Gaming would have suffered if a casino had opened in Wilmington.

Issue 6 proponents, including My Ohio Now’s Rick Lertzman, have already indicated that they will try to place a gaming issue on the ballot in 2009.