Ohio lawmakers, as part of the year’s budgeting, are considering authorizing video poker at the state’s seven racinos as a way of raising an estimated .5 million for schools.
The addition was passed by the House Finance Committee, adopted by the House, and sent to the Senate.
The state’s four casinos, in Toledo, Cincinnati, Cleveland and Columbus, already have video poker, as well as table games. They were authorized in 2009 by a constitutional amendment passed by the voters. Voters authorized the state lottery—under which the racinos operate—in 1974.
The boost to revenues is needed to try to make up an $800 million gap in funding in the two-year budget that lawmakers hope to send soon to Governor John Kasich. They are hoping to prevent cutbacks to education.
As a collateral effect, the legislation would also mean that the horse racing industry would get as much as $2.5 million more per year. Profits from slot machines at the horse racing facilities already benefit horse racing and schools.
The change would not require adding to the 2,500 slot machines that each racetrack is allowed. It would allow the poker games to be programmed into the existing machines. The machines are actually video lottery terminals, and the slot machines are an extension of the state lottery.
Opponents of gaming in the Buckeye state, led by Citizens for Community Values, have promised to challenge the video poker machines in court. They argue that making such a change requires amending the state constitution, again by a vote of the people, and can’t be done by a simple act of the legislature. They urge legislative leaders to put such an amendment before the House.
Aaron Baer, president of CCV told the Toledo Blade that some legislators were trying to “sneak one by their constituents,” who have, he said, voted down other attempts to expanding gaming in the state. His group claims that the changes being proposed will make the racinos no different from actual casinos.
Previous challenges by the group to expansions of the lottery have been thrown out of court.
The whole budgetary process must be completed—and the final version sent to the governor—before the end of the fiscal year on June 30.
Although the measure would increase the amount that racinos take in, it also would decrease the commission paid to each racino from 66.5 percent to 65.5 percent.
It would also allow customers to purchase lottery tickets with debit cards, a change that could increase sales by $5.6 million annually, says the lottery.
The lottery had its most profitable year ever last year: $3 billion in sales for the fiscal year that ended on June 30, 2016. That was $167.1 million higher than the year before.
Also warning about unintended consequences was Jack Entertainment, which operates casinos in Cleveland and Cincinnati as well as the Jack Thistledown Racino in northeast Ohio.
“JACK Entertainment opposes the expansion of Ohio casino gaming to racinos,” said Dan Reinhard, senior vice president of government relations and general counsel for Jack Entertainment.
“This illegal, unconstitutional expansion will result in nearly $30 million annually in lost revenues at Ohio’s four casinos, thereby reducing casino tax contributions and putting jobs at risk,” Reinhard said in a statement
“It also will eliminate $140 million in casino payments to the state under the 2011 Memorandum of Understanding signed between the four casinos and the state. The net effect will be a reduction in casino-funded support to the state’s 88 counties, eight largest cities and school districts around the state. Any perceived gains in education funding from increased lottery revenue will be more than offset by decreases in casino revenue, an important reality not considered in the drafting of the legislation,” Reinhard said.
Legalizing DFS?
In a related development, two House members, Jonathan Dever and Robert McColley, have introduced a bill that would declare daily fantasy sports betting legal and put the Ohio Casino Control Commission in charge of overseeing it.
Their bill would prevent minors from playing and ban wagering on college or high school sports. It would require operators to have state licenses and protect the privacy and security of players.
Dever calls his legislation a “consumer protection piece.” He estimates that as many as 2 million residents in the state play the games. The Fantasy Sports Trade Association estimates that number is 57.4 million for the nation.
It argues that its games are not a form of gambling, but are games of skill because team managers must consider statistics, facts and game theory to be successful.
DFS team so-called “owners” create teams from the rosters of actual sports teams. How the actual players perform in real games determines how they do in the fantasy season. Players can either pay a fee, with the possibility of winning cash if their teams perform well, or play for free—but without the chance to win money prizes.
The games fit in with the lifestyles of the younger generations because team managers can use mobile devices and phones, as well as computers, to operate their teams. Two thirds of players are males, two-thirds have college degrees and more than half make a yearly income in excess of $75,000. The average player spends $556 on the games annually, according to the Association.
The lawmakers are acting in response to an opinion issued in 2016 by Attorney General Mike DeWine that state law is ambiguous on DFS.
Ohio’s General Assembly has tried twice before to regulate DFS, but those bills died before they could be voted on.
Dever thinks this year will change that. He told the Dayton Daily News: “Everyone is coming together and saying we should have some structure and oversight and guidance on this to make sure nothing bad happens.”
