Despite the longtime insistence by Horseshoe Casino Cleveland owner Dan Gilbert that phase II of the casino includes an expansion onto the land adjacent to the Cuyahoga River, there remain many skeptics.
Many of those skeptics are those who fought the 2009 constitutional amendment that authorized the four casino resorts and are now anxious to say, “Told ya’ so!” They always maintained that revenue projections were inflated.
The casino opened in the historic Higbee building, and it was always planned to be a riverfront facility.
For one thing, revenue for the casino has not met projections. Recently the Ohio Casino Commission released numbers that showed monthly revenue ranging from $16.6 million in January to $21.3 million in March, which are much lower than last year’s figures and significantly lower than what the state initially projected.
Most gaming industry experts say it is too early to judge whether the casino is making enough money to justify the riverfront “permanent” casino.
According to former casino executive Alan Silver, who is a professor of restaurant, hotel and tourism at Ohio University, interviewed by Crain’s Cleveland Business, “The industry is still relatively new in the state, something is opening almost every other month.” He added, “Until everything opens around the state, then we’ll get a good indication.” Even then, he says, the racinos are likely to push hard to be allowed to add table games to their mix of gaming options.
The Cleveland casino opened more than two years ago. It is a joint venture of Gilbert and Caesars Entertainment who partnered to create Rock Ohio Caesars LLC. Its profit margin was hit every time a racino opened nearby, including the ThistleDown Racino in North Randall and the Hard Rock Rocksino in Summit County.
Racinos appeal more to the 55 and over crowd, who find them easier to get to than some of the casino resorts that are located in Ohio’s four largest cities.
Gilbert’s original plan was to build a casino next to the river. Complications caused the casino to open instead at the Higbee Building, where it has so far remained. Rock Ohio Caesars continues to insist that the permanent casino is in the offing, but has so far not offered a timetable.
One critic, writer Brent Larkin, calls the Cleveland casino “a cramped casino, shoehorned into four floors of a former department store. It’s tastefully done, but located in a building designed to sell things to customers, not soak them.”
Cleveland’s casino is not the only one that has failed to live up to the promises. Five years ago proponents promised 17,000 jobs, which is 3,000 short of the actual number. However, since the four casino resorts opened with more employees than they have now, that would suggest that they have been the victims of the racinos.
John Payne, president of the Caesars division that encompasses Ohio, told the Cincinnati Enquirer, “Our revenues are not as high as projected due to racino competition. Ohio has become a very large gambling state in a short period of time.”
Bob Tenenbaum, spokesman for Hollywood casinos, added, “The bottom line is casinos statewide delivered reasonably close to what the estimates were – even with racinos,” said Hollywood spokesman Bob Tenenbaum. “And the industry produced those jobs when Ohio and the economy were just starting to recover.”
Jeff Rexhausen, who helped write the economic impact study that promised all those jobs, agrees, “Racinos came along and … the market changed. When casinos were first proposed, they were to be the one place to gamble.”
Gilbert and Penn National Gaming used that study when they spent $47 million to persuade Ohio’s voters to approve of the constitutional amendment.
