Three of the four casinos approved under a 2009 referendum are under construction, but it is still unclear whether new Governor John Kasich will allow VLTs to be installed at the state’s seven racetracks.

Penn National Gaming is working on its Toledo casino, but is still working on details in Columbus and has yet to break ground. Rock Ohio Caesars started construction two weeks ago on its two casinos in Cleveland and Cincinnati.

In Cleveland, the $350 million Horseshoe Casino will open in downtown in early 2012. Dan Gilbert, CEO of Rock Gaming and Gary Loveman, CEO and president of Caesars Entertainment Corp made the announcement jointly two weeks ago.

The two executives unveiled Phase 1 of the casino development, a temporary casino that will be located in the four-story historic Higbee Building, near Cleveland’s entertainment district. The call for bids will go out beginning now, with work to begin soon.

Gilbert, along with Penn National Gaming, won the right to build two casinos apiece, for a total of four in a statewide referendum (Issue 3) in November 2009. Gilbert selected Caesars Entertainment as development partner. They formed the joint venture Rock Ohio Caesars to develop both the Cleveland casino and the casino in Cincinnati. Caesars will manage both casinos and has a minority share of equity.

Gilbert told the gathered dignitaries, “I am bullish on Cleveland's future. This tremendous opportunity for economic development grew out of our passion to help revitalize this great city. We are confident that the economic activity our project will generate will make a strong impact on Cleveland, the region and the entire state of Ohio.” Gilbert is majority owner of the Cleveland Cavaliers, and founder of Quicken Loans Inc.

Loveman added, “It's one of the defining brands of the gambling industry. It's built around this notion of doing right for the gambler, making the experience intimate, making it exhilarating," he said. He added, "When it's finished there will be everyday thousands of people visiting this building coming to the casino, coming to the restaurants in the neighborhood, coming to shop, coming to park, coming to do banking, to do all sorts of things.”

Cleveland Mayor Frank G. Jackson enthused, “Cleveland is well on its way to becoming a 24-hour city.” Developers project that the casino will attract 5 million visitors a year to the city.

The casino, which will have the Horseshoe brand, will have 2,000 slot machines, 65 gaming tables, some dining featuring regional fare, a VIP player’s lounge and a World Series of Poker room spread over 300,000 square feet. There won’t be a large selection of restaurants in keeping with Gilbert’s earlier promise not to compete with local businesses, but rather to enhance them.

The developers project employing 2,000 construction workers and 1,600 permanent employees, with 90 percent hired locally. Marcus Grover, who was most recently assistant general manager and vice president of operations at Harrah’s St. Louis, will manage the new casino.

Phase II, the main casino, which is in the predevelopment stage, will be on 16-acres that the developer recently purchased for $88 million overlooking the Cuyahoga River. It will include, besides the main casino, restaurants and retail outlets.

Gilbert explained why a temporary casino would be built until the more permanent site is developed. "It's a very challenging site and it's going to take time," he said. "We want to promote two-way traffic, not just people coming into the casino with a big hug kind of like stay here don't go anywhere.”

Meanwhile Penn National Gaming went to the Ohio State Racing Commission seeking permission to relocate its two Ohio racetracks. Beulah Park would be moved 70 miles west to Dayton; Raceway Park in Toledo would be moved 175 miles east to Youngstown, in the Mahoning Valley. This was a preliminary meeting with the commission and no action was asked or expected.

If the commission approved its request, this would allow Penn to open four new casinos in four different markets, without competition.

Penn says that if it is allowed to operate a racino in Dayton, that it will spend $200 million for a new racetrack. This would employ 1,500 permanent workers and 1,000 building trades jobs, says the company.

A city councilwoman in Toledo, Lindsay Webb, last week warned Mahoning Valley to be cautious in dealing with Penn National Gaming Inc., since, she said, the company promised the residents of Toledo in 2009 that it would never relocate the racetrack.

''When they were championing Issue 3 across the state, they came to Toledo council and the members of council had questions, and we had the opportunity to talk. When pressed, they said 'unequivocally, we will not shut down Raceway Park,’ ” said Webb.

Issue 3—aka the Four Casinos Initiative—was the constitutional amendment that authorized casinos in Cincinnati, Cleveland, Toledo and Columbus. “My caution to the people of Youngstown-Warren-Canton-Akron is just be skeptical. The promises they are talking about are subject to change without notice,” said Webb.

Bob Tenenbaum, a spokesman for Penn, said that wasn’t exactly the way the conversation went down.

“What was said to Toledo City Council was that Penn National did not have any plans to move Raceway Park. That was a year and a half ago, and we didn't have any plans to move Raceway Park at that time,” he said.

Penn is not the only company interested in racetracks near Youngstown. Recently Mahoning Valley Development Group LLC formed to champion a $300 million project, the Mahoning Valley Downs & Resort. Unlike Penn, which has been lubricating the skids for months by talking to state legislators, the group has yet to make an official proposal to the racing commission.

Both groups are interested in installing slot machines at their racetracks should Governor John Kasich decide to go forward with the plan first launched by his predecessor, Ted Strickland, in 2009, to allow up to 14,000 slot machines at the state’s seven racetracks. The industry has seen a 57 percent decline in the last decade. Kasich says he is still studying the issue.

Meanwhile, Rick Lerzman, the CEO of Mahoning Valley Development Group, wants to take the two licenses owned by Penn, claiming that by moving the licenses the company is effectively surrendering them.

“Penn will be required to proceed through a process with the Ohio Racing Commission to create two new licenses,” contends Lerzman. “We fully believe that the Ohio racing laws do not allow for racing licenses to be moved to brand new geographic regions of our state. There is much ambiguity and lack of clarity in many of the regulations. It has been over 50 years since there has even been an application for a new racetrack. I'm certain that we are going to need clarity both legislatively and through our court system.”

The issue is still under a legal cloud because the courts have yet to settle whether it is legal for the Ohio Lottery to operate the slots at racetracks without undergoing a constitutional referendum.

However, allowing racinos would have an effect on the four casinos. At Cleveland, for example, revenues could be less by nearly a third, according to one study.

According to state Senator Joe Schiavoni, quoted by the Tribune Chronicle, “They want to move Toledo to the Mahoning Valley because Toledo is getting a casino and the raceway can't compete in that market. It's definitely positive, but it's not like it's a done deal by any means.”

Gilbert told a reporter for the Vindicator that he was unconcerned about Penn National’s plans to relocate its Toledo racetrack, despite its moving closer to his Cleveland casino. Gilbert said he is not connected with the Mahoning Valley Development Group, but didn’t close the door on becoming financially involved in the future.

At the same time Caesars Entertainment Corp. says it won’t be moving its Thistledown racetrack away from the Cleveland casino, whether or not Kasich goes forward with VLTs at racetracks. "Not at all. We love that location,” said John Payne, the head of Caesars Midwest operations, who added, "We believe that the market is substantially large enough to handle these two facilities and both do very well.” He said the company might spend money to renovate the racetrack if slots are approved.

In a related development the Business Courier reported last that Rock Gaming LLC principal Steve Rosenthal got some heated criticism from the Cincinnati Urban Design Review Board, which called the design work for the Horseshoe Casino Cincinnati, “jarring,” “ghostly” and a “hodgepodge.” Rosenthal conceded that the designers have a lot more work to do before they are done. The company is not required to submit its work to the board.

At the same time, the Ohio Casino Control Commission probably won’t be able to get gaming licensing rules passed by the March 10 deadline that was established by the constitutional amendment, but which a lawmaker calls, “more like a guideline.”

Governor Kasich hasn’t yet appointed the seven-person panel. Members had been named by the outgoing Strickland, and had started work on the regulations, but Kasich asked the Senate not to approve their appointments. A spokesman says that Kasich’s appointments to the commission “are imminent.”

Casino operators don’t appear to be worried about the delay. Rock Ohio Caesars says that it will open its two casinos on schedule, even if the rules are delayed a little.

By Staff