Ohio State Senator Bill Coley has introduced a bill that would require that taxes be collected on the promotional credits that the state’s four casinos and seven racinos use to attract customers and reward loyal customers.
Coley wants the 33 percent taxation rate to apply to free play, saying that since the casinos have failed to live up to their claims of profitability that the additional money for local government and education should come from somewhere.
Coley said, “We think that the effect of this bill will be to increase revenues to schools and local governments. We think it’s high time that the people that made promises to the citizens of the state of Ohio live up to those promises and start delivering the revenues that were promised.”
In 2009 proponents of a constitutional amendment that allowed four casinos to open in the state’s four largest cities projected revenues that are about half of what ultimately resulted.
The supporters of the amendment said that the casinos would contribute $500 million annually in state taxes and create 34,000 jobs. They have failed to make good on those projections, said Coley. He claims that the free play have cost the state $165 million since the casinos opened. His bill would allow the promotional credits to be non-taxed once casinos begin to live up to their promised revenues.
The non-taxed promotional credits were not included in the original constitutional amendment, but were adopted in 2011 after Governor John Kasich reached an agreement with casino operators for more taxes.
State data shows that the four casinos have given about $252 million in free play since 2012 and the seven racinos have given away $253 million.
Penn National Gaming, which operates two of the four casinos, slammed the proposal last week. Penn spokesman Eric Schippers declared “This proposal is ill-conceived and misguided,” adding, “Eliminating or reducing the discount on promotional credits would nullify one of the very weapons the state needs to help keep Ohio competitive in the ongoing regional gaming arms race. Ironically, the legislatures in both Indiana and Pennsylvania are currently crafting casino incentive legislation primarily to help their gaming industries compete with Ohio.”
In addition to not reaching profitability projections, none of the four casinos have come near to deploying their allowed 5,000 slots. Hollywood Casino, based in Columbus, has the most, at about 2,300.
This is generally attributed to the advent of racinos, each of which is allowed 2,500 slots. They were legalized after the 2009 election.
