The Magazine

Keeping Up with the Hoosiers

Ohio comes down with a case of casino envy.

Nov 2, 2009, Vol. 15, No. 07 • By DAVID WOLFFORD
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Ohio voters have defeated four gambling proposals in two decades and recently saw their governor jam a slot machine provision into the state budget. Now, facing a casino issue on November's ballot, they feel as though they're being pressed into a game of three-card monte.

Governor Ted Strickland--a Democrat, a psychologist, and an ordained Methodist minister--has a record of opposing gambling on moral grounds. He has called it "an insidious condition that can ruin lives." In June he declared, "I do not believe that this is the right way for Ohio to deal with our budget or to try and fund education."

Then Strickland suddenly called for the Lottery Commission to install slot machines at Ohio's seven horse tracks. The hope was to bring $933 million into the treasury. After struggling to persuade the legislature and threatening a go-it-alone executive order, the governor worked language into his 2009 budget request to accomplish this end.

Before the state could install the one-armed bandits (actually, video lottery terminals or VLTs), a group of conservatives formed LetOhioVote to stop Strickland. The group is not opposed to gambling per se, says founding member Gene Pierce, "We're just saying people have the right to vote on it." Pierce and two other plaintiffs filed suit against the state.

On September 21, the Ohio Supreme Court ruled 6-1 in their favor, temporarily stopping the governor. The ruling will delay LetOhioVote's ballot measure until November 2010. Strickland's Plan B: rescind scheduled tax cuts.

The governor's about-face, his stretching of executive authority, and his delaying of a tax cut have not helped his image. The Columbus Dispatch called his administration "one of the most dysfunctional in Ohio history." Franklin County GOP chairman Doug Preisse remains puzzled: "He crusaded against gambling in the past. When it's expedient for his budget, we see him flip flopping." Strickland's job approval has dropped from 63 percent to 48 percent.

While Strickland, LetOhioVote, and the supreme court were working through the matter of the VLTs, casino operators prepared to roll the dice with voters for the fifth time. Issue 3, if passed this November, will entitle two casino operators--Penn National Gaming and Cleveland Cavaliers owner Dan Gilbert--to open four casinos in Cleveland, Columbus, Cincinnati, and Toledo and enshrine their monopoly in the state constitution. If successful, the proposal will also impose a one-time licensing fee of $50 million per casino, create a fixed 33 percent tax on gross casino revenues, and distribute those revenues to local governments, public schools, regulatory agencies, law enforcement, and remediation for gambling addiction.

Proponents promise a windfall in taxes and economic stimulus. The casinos' PAC, the Ohio Jobs and Growth Committee, commissioned a University of Cincinnati study that estimated the scheme would produce 19,000 construction jobs and 15,000 permanent casino positions, with an average annual salary of $26,300. Charlie Luken, who chairs the PAC, is a former mayor of Cincinnati. "As mayor," he said, "I was always an advocate to bring casinos. I'd see money going from our area to Indiana, just 30 minutes from the mayor's office." Three other states bordering Ohio--Michigan, Pennsylvania, and West Virginia--also offer some form of casino gambling. And even the fifth neighbor, Kentucky, has tried to add slots at its sacred race tracks. Pro-Issue 3 commercials show Buckeye gamblers departing on tour buses to cross state lines.

Penn National Gaming, Gilbert, and their allies also suggest new casinos will increase sales at nearby restaurants, bars, and hotels. Skeptics acknowledge that the big new employers will create temporary construction and long-term casino jobs, but they question the ripple effect. You can bet the proposed facilities will resemble typical casinos: no clocks, no windows, climate controls set for comfort, bargain buffets, and cocktail waitresses serving complimentary drinks. This is not a scheme for sending gamblers across town to spend elsewhere. Issue 3 would even bar local governments from preventing casinos from staying open 24 hours.

Many question the economic forecasts. "This proposal looks like an economic lifeboat, but it is a sinking Titanic," says Democratic state representative Tyrone Yates. Several Democratic officials have endorsed Issue 3; Yates notes that pressure to fund local programs in a time of economic crisis makes gambling an easier sell.

Yates is a member of TruthPAC, which is leading the charge against Issue 3. TruthPAC objects to enacting a proposal drafted by, and overly beneficial to, casino owners. Spokeswoman Sandy Theis accuses the "gambling cartel" of buying support, saying, "They're passing out more cash prizes than Monty Hall." Issue 3 includes money for law enforcement--and voilà, the Ohio Fraternal Order of Police endorsed it. The casinos hired former state GOP chairman Bob Bennett, and according to the Cleveland Plain Dealer, Bennett pressured Republican county chairs and held a fundraiser for Cleveland's Democratic mayor, Frank Jackson, a casino supporter who's up for reelection.

"As soon as the issue went on the ballot, we started looking for natural allies and unnatural allies to defeat it," said Theis. She's right that antigambling conservatives and gambling interests make strange bedfellows. Both out-of-state casinos and Ohio race tracks oppose Issue 3. MTR Gaming--which runs a resort in Chester, West Virginia, and a Columbus horse track--doesn't want to be boxed out of the cartel, nor does it want to lose its Ohio customers. Horse track operators hope that Strickland's VLTs will eventually arrive--and they don't want to compete with full-scale casinos.

"No one with a financial interest in the casino debate is wearing a white hat," says Yates. "They're all gangsters in this one." In last year's general election, a Minnesota casino company, Lakes Entertainment, fought for exclusive rights to a planned casino resort in Wilmington, Ohio, and Penn National donated over $37 million to defeat it. Penn, which owns Argosy Casino just across the state line in Indiana, feared the Wilmington facility would steal its customers. Now Penn is pushing for Issue 3, while MTR Gaming helps bankroll TruthPAC.

MTR refused to comment on its involvement. According to the most recent campaign finance reports, which include donations and expenses through October 12, Ohio Jobs and Growth has raked in about $35 million, while TruthPAC has received nearly $6 million. The difference is telling, but considering last year Penn kicked in over $10 million in the final days of the campaign to defeat its competitor, MTR may raise the stakes during the final hand. In Ohio, there is no limit on contributions for ballot issues.

Proponents of Issue 3 avoid any discussion of social costs, and those opponents who raise them tend to be the less well funded and less able to command air time. But Citizens for Community Values, a 25-year-old group based in Cincinnati that "exists to promote Judeo-Christian moral values," is on the case. They cite studies projecting that the costs of crime, bankruptcy, suicide, and damage to families brought in gambling's wake will more than outweigh any benefit to the state from the proceeds of casinos.

In the past, such arguments have resonated in Ohio. Indeed, the state has shown consistent and widespread opposition to casino gambling. But this new offer comes at a difficult time. Unemployment is 10.8 percent statewide, up four points from last year. Polls in recent months show voters favoring gambling. County GOP chairmen report less vigorous opposition than usual among Republicans. Past attempts have won majorities only in the counties slated to host gambling or those next door. This time the casinos have played their cards carefully, making economic promises to the four most populous metropolitan areas. Several leaders in these cities have endorsed Issue 3, as has the AFL-CIO. Unless TruthPAC can hammer home its long list of concerns, the casinos just might hit the jackpot in Ohio.

David Wolfford teaches government and politics in Cincinnati.