Sunday, June 29, 2003

Tracks want voters to get say on slots

By Robert Anglen
The Cincinnati Enquirer

Desperate to keep billions of dollars from bolting to Indiana, Ohio racetrack owners are reviving a plan left for dead in the Statehouse last week to install slot machines at the state's seven tracks.

But this time, they want to bypass Ohio legislators with a petition drive that could place before voters a plan to bring "racinos" to the state on the March 2004 ballot.

That's a scary thought for Indiana's 10 riverboat casinos, which depend on the Buckeye State for more than 60 percent of their $2 billion revenues. Casino officials who thought Ohio had failed in its latest try for legalized gambling say slots at racetracks here would definitely affect the pile of winnings there.

"It doesn't matter that we have all the amenities," said Bob Stewart, assistant general manager of the Grand Victoria in Rising Sun. "What matters is convenience. It's like real estate. What matters is location, location, location."

And if racinos do open in Ohio, video slots would be as close as River Downs. That means Cincinnati gamblers looking for a slot-machine quick fix just have to drive 10 minutes to the edge of town instead of traveling to the Argosy Casino in Lawrenceburg, the nearest gambling boat to the Queen City.

"People in Ohio spend $20 billion gambling somewhere every year: Vegas, Atlantic City, Indiana, somewhere," said Sen. Mark Mallory, D-Cincinnati. "We can continue to watch revenue leave the state or we can take advantage of the revenue stream."

Put another way: "The sooner we do it, the sooner money stays in Ohio," said lobbyist Neil Clark, who represents Beulah Park racetrack near Columbus and is organizing the petition. "If you build it, they will come."

Clark, a Republican, is a prominent and visible lobbying force in Columbus. He is a partner in one of the state's most influential lobbying groups and is quite visible in the Statehouse. For instance, his firm hosts monthly gatherings for lawmakers when the Ohio General Assembly is in session.

He contends the proposal that died in a Senate committee last week is still viable - as long as the state Legislature is left out of it.

"It's been three or four years of frustration. It is time for us to cut that whole angle off and proceed with a vote of the people," adding that he doesn't see a lot of changes to the proposal. "It's just like what we tried to do in the general assembly."

That proposal called for using video-slot machines revenues to bankroll a prescription drug discount program for seniors, to help pay for new school construction and to provide scholarships for college high-achievers. But Republican and Democratic lawmakers split over where the money should go. Instead of ending up on November's ballot, the proposal went the way of several other legislative attempts to put slot machines at racetracks: nowhere.

Now Clark wants voters to decide the issue during the March primary. Despite the difficulty - and expense - of getting the signatures needed for a successful petition, Clark said he is optimistic.

A successful petition requires 322,899 signatures from 44 of Ohio's 88 counties; that is 10 percent of the total votes cast for governor in the last election. A rule requiring that 5 percent of the signatures come from people who actually cast votes in the last election further complicates a referendum. The petition deadline is Dec. 3.

Clark said he is confident Ohio Democrats and independents would support the prescription drug, schools and tuition programs that the initiative would fund.

Possible Ohio take: $1.3 billion

If the plan wins approval, the state will keep about 52 percent of the revenues generated by the video slots. With each machine taking in about $210 a day, Clark estimated the state's win to be about $1.3 billion a year.

Slot machines are the casino workhorses. Table games such as blackjack, roulette and poker don't come close to raising the kind of cash that slots do.

Although the racino machines are called video lottery machines, Sen. Mallory said they are no different than slot machines. He acknowledged that the machines won't pay out coins and will be video-based instead of the old bar lines and reels, but "it is a slot machine."

In Indiana, slots machines ranging from 2 cents to $100 a pull "won" casinos about $1.8 billion last year compared with $374.8 million of all the table games combined. Win is the amount customers lost and accounts for gross gambling revenues - the money a casino takes in before it pays salaries, taxes and other expenses.

Indiana officials acknowledge that slots in Ohio could pinch Indiana revenues, although no hard numbers are available.

"Clearly that would have a negative impact. ... A high percentage of revenue comes from slots," said Joe Koenig, executive director of the state's newly created Department of Gaming Research. "I can't give a specific number. I can tell you that tax revenue from the 10 casinos in Indiana was $544.7 million in 2002."

But River Downs' general manager and co-owner Jack Hanessian said he has been suffering from lost revenues since Indiana legalized riverboat gambling. Horse racing, he says, is a natural companion to casinos because wagering is an integral part of both.

"We have gambling here already," he said. "We're not rolling over. There is a lot of public support for this. ... You have two political parties fighting over where to spend the money, not whether it is right or wrong."

He said racinos in other states have made tracks better with larger purses that draw the sport's top jockeys and horses. One example is Mountaineer Park in West Virginia, Hanessian said.

"Because of (slot machines), it has become a big player in the horse racing industry," he said. "This can help restore the racing industry."

Argosy Casino, the state's most profitable riverboat, acknowledged the competition that Ohio poses to casinos.

"It's impossible to precisely predict what increased competition would mean," said Larry Kinser, general manager. "Obviously, any expansion of gaming in Indiana, Ohio or Kentucky would mean more competition for the existing gaming industries."

Officials with Belterra Casino in Vevay, about halfway between Louisville and Cincinnati, are marketing the hotel in a way that they hope isolates it from threats posed by legalized gambling in Ohio or Kentucky.

"Obviously we would prefer that Ohio not have it. We do get a fair number of our customers from Ohio," said Wade Hundley, executive vice president of Pinnacle Entertainment, which owns Belterra. "But we have a different type of property."

Hundley said the casino, with an expansion of a hotel tower and meeting facilities, hopes to become a destination for overnight gamblers and conventions. He said Belterra's customers are "higher end" and are looking for more out of their gaming experience than simply playing a slot machine.

The casino has joined with other casinos to oppose efforts to legalize slot machines at Kentucky racetracks. But they have not hired lobbyists in Ohio.

"We're continuing to track it," Hundley said. "We'd rather maintain the status quo."

Slot machines big winners for riverboats

Indiana's 10 riverboats posted about $1.8 billion in revenues from slot machines in 2002. Ohio racetrack owners say Ohio is losing revenue to Indiana, and they are pushing for a referendum to legalize slot machines at horse tracks. Here's a breakdown of revenue generated by Indiana's slot machines:

Argosy Casino & Hotel in Lawrenceburg: $313.2 million

Belterra Casino Resort in Vevay: $96.9 million

Blue Chip Casino in Michigan City: $179.2 million

Caesars Indiana in Elizabeth: $203 million

Casino Aztar in Evansville: $87.4 million

Grand Victoria Casino and Resort in Rising Sun: $119 million

Harrah's East Chicago on Lake Michigan: $230.1 million

Horseshoe Casino in Hammond: $250.6 million

Majestic Star Casino in Gary: $113 million

Trump Casino in Gary: $107.9 million

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