Ohio has a dilemma. Current costs exceed the state budget by $850 million. Gov. Ted Strickland is faced with two options: a) raise taxes, or, b) support an executive order permitting video lottery terminals at racetracks to address the economic shortfall.
The governor, an ordained minister, previously did not support expanded gaming. However, when faced with the budget crisis, he adopted a pragmatic approach by backing racetrack VLTs. The logic is simple—shrink the budget gap and work within existing Ohio law.
However, the Ohio Supreme Court recently delayed the governor’s order spearheading 10-year licensure of VLTs at racetracks. This decision occurred despite the General Assembly’s view that Strickland’s approach is legal. Some say blocking racetrack VLTs is a partisan move to discredit Strickland because 2010 is an election year. Without VLT revenue, he may be forced to raise taxes.
Yet, the governor’s proactive VLT proposal is still viable. So much so that Republican Senate president Bill Harris wants to remove racetrack VLT wording from the approved biennial budget that Harris helped craft and voted for.
These events are an embarrassing setback for Ohio, its equine community, and the 20,000 jobs associated with racing. What are the remaining options?
Strickland’s executive order limits VLTs to the seven Ohio racetracks. Each facility would implement 2,500 machines and report to the lottery commission. The Ohio Lottery has an infrastructure to manage VLT gaming such as performing background checks, managing law enforcement staff, and contracting with the state auditor.
The racetracks would ante-up $455 million in licensing fees ($65 million each) with 50% of VLT revenues going to the state education fund. Each track would invest $80 million to create a casino-style environment.
Imagine Ohio racetracks supplying the horsepower needed to generate vast revenues? VLT proponents said this will reposition Ohio’s racing industry and positively impact agriculture. Hay, straw, and feed are big businesses. As VLTs increase purse structures, Ohio will stem the export of money, jobs, and horses to other states.
A competing matter is Issue 3. This November ballot item pertains to unidentified gambling concerns erecting and running four stand-alone casinos in downtown locations. In order to implement Issue 3, the Ohio Constitution must be amended. Alarmingly, it’s reported that casino concerns are spending more money advertising for Issue 3 than Senators McCain and Obama did while campaigning for the presidency in Ohio.
An Issue 3 amendment stipulates the casinos pay a 33% tax on revenue. The largest piece, 17% of gross, will be distributed to the counties. Section 3(b) of the amendment allocates only 11% of wagers toward county education. Each of the four casinos is required to pay $50 million in licensing fees. In the midst of this, religious groups express concern that easy access to gaming and additional locations may prey upon the poor and those with addictive behaviors.
So what is the best option for Ohio? The math indicates that Strickland’s racetrack VLT proposal will generate $255 million more in licensing fees and allocate a greater percentage of revenue. VLT supporters note that a racetrack VLT strategy would restrict gaming to established locations, which may better address religious advocacy group concerns.
Also, a Maryland economic study suggests casino gaming could shrink lottery revenues. This is serious because Ohio retains 40% of lottery revenues, with three-quarters of that earmarked for education. A dollar diverted from the lottery to a casino under Issue 3 could cost Ohio dearly.
Sadly, these options do not address core issues and rely on short-term fixes. All states, like their citizens, must be fiscally responsible. Similarly, racing should promote its product so it can exist without life support. Otherwise this scenario is destined to repeat itself.
The governor’s racetrack VLT plan is supported by horse groups, with the Racing Commission voting 5-0 in favor of it. Therefore, Ohioans are urged to support racing and vote “NO” on Issue 3 in November.
It’s high time for horse people to work together. Ohioans are letting the politicians know how the process is jeopardizing our heritage and livelihoods. Approximately 15% of Ohio families are living in poverty and the unemployment rate is estimated at 11%.
Kentucky and Ohio have vast equine identities and commerce at stake. It’s critical to contact your senators, governor, and congressmen now. Remember them during the next election. Between our states, the equine industry represents more than 150,000 votes strong.
