The Observer

Issue date: 11/13/09 Section: News

Ohioans voted to amend the Ohio constitution to legalize the construction and operation of four casinos in Cleveland, Toledo, Cincinnati, and Columbus. With the passage of the amendment, some hope this Detroit casino will be less frequented by Ohioans. [Click to enlarge]

An artist's rendition of Cleveland Cavaliers owner Dan Gilbert's proposed Cleveland casino, which will be located in the Flats district in downtown Cleveland. [Click to enlarge]

Issue 3, which was proposed through an initiative petition in March of this year, was passed by Ohio voters by a 53 to 47 percent margin on Nov. 3. The issue, which garnered roughly 1.7 million votes in its favor, will amend the Ohio constitution to authorize a single casino to be built within each of four Ohio cities: Cleveland, Columbus, Cincinnati, and Toledo.

The fifth time proved to be the charm, as four previous gambling measures over twenty years had been voted down by Ohio voters. The issue certainly brought out strong supporters and opponents, with Cleveland Cavaliers majority owner Dan Gilbert, the Fraternal Order of Police, and former Cincinnati mayor Charlie Luken coming out in support of the issue, while Governor Strickland, the Ohio Council of Churches, Progress Ohio, and Citizens for Community Values stood in opposition.

The passage of the proposed amendment establishes certain guidelines for the four new casinos and the revenue they will bring in. For one, a fixed tax of 33 percent of gross casino revenue will go to the State of Ohio, revenue that will provide funding to support local communities and school districts across the state, job training for Ohio's workforce, and law enforcement and funding for gaming oversight and regulation. Furthermore, each initial licensed casino operator is required to pay a single $50 million fee for state job training purposes, while making a minimum $250 million investment in its facility. Casinos are also authorized to operate 24 hours a day, 7 days a week if they so choose.

Yet while supporters touted the 34,000 jobs the casinos will create and the $650 million a year generated for cities, counties and schools it will generate, there were certainly facts and figures against the proposal. For one, according to a study by the Public Policy Research Group at Hiram College, the measure would hurt Ohio jobs because the casinos "would hurt other businesses in the state and would likely lead to a net job loss in certain communities. A casino is a closed community. It doesn't want to have windows open and people looking out. It doesn't want to have a whole lot of interchange with the community around it. It wants to keep people in the casino," says Dr. Joseph White, political science department chair and director of the Center for Policy Studies. "I don't think in general [casinos] build thriving retails around them," he adds. This stands in direct contrast to supporters claiming that businesses would sprout up around locations - leading to $1 billion in extra investment.

So will the jobs and the money really come? "I think [jobs and money] hinge on how successful the casinos end up being," says Dr. Mark Votruba, an economics professor in the Weatherhead School of Management. "I still think it's a good idea that it passed," he adds, "but it might not produce the kinds of jobs and the kind of tax revenues that we imagined because it might not end up being a huge success. But still, even if its half as good as they thought it was going to be, it seems like a worthwhile thing to do, just because prohibiting casinos in the state isn't prohibiting people from gambling." There are certainly opinions that support that claim, as a Cincinnati Enquirer article said, "a casino on 20 acres of Broadway Commons downtown, Greater Cincinnati and Southeast Indiana could combine to become one of the Top 10 gambling markets in the country."

Is the 33 percent tax enough? Ohio's 33 percent tax rate is lower than Pennsylvania, New York, Maryland and Rhode Island, gambling states which have tax rates on casino revenue ranging from 55 percent all the way up to 71 percent. Also, nowhere in the amendment is there a requirement that the casinos must actually be built. Issue 3 authorizes four casinos, but does not require any of the four to be started or completed at a specified time. Most discussion of casino construction does not forecast casinos opening until 2012 at the earliest.

Both Dr. White and Dr. Votruba cited the destructive potential of gambling to families and individuals. Also, when isolating the effects of the casinos on life here at Case Western Reserve University, both also didn't see much of anything changing. "Whenever you hear about something like this [casinos], that's always in the back of our mind, that this might turn into a study, but it's not going to generate a lot of excitement in the short-term, with things not happening until 2012, plus two or three years of lag time," said Dr. Votruba.

Probably the biggest proponent of the casino measure was Cleveland Cavaliers majority owner Dan Gilbert, who was among the lead investors, given that he would control and operate the casinos in Cleveland and Cincinnati. With a powerful NBA, NFL and MLB team in collusion, Gilbert figures to build an entertainment conglomerate around the Cleveland area. "They will certainly pose healthy competition to Ohio casinos and make for an even more robust entertainment, nightlife, and retail product throughout the Great Lakes region," he said in a statement to the Detroit Free Press.

Arguments and support are now moot, the casinos are coming. Whether they truly are a positive or negative is yet to be seen.

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