HELP WANTED IN OHIO…SORT OF

OHIO NO HELP WANTED.

Ohio has three Thoroughbred racetracks that are located in the Cincinnati, Cleveland, and Columbus metropolitan areas.  Four Standardbred racetracks are in or near Cleveland, Columbus, Toledo, and Lebanon. 

Thistledown, home of the Grade II Ohio Derby, in Cleveland is owned by Magna Entertainment, but is for sale as the parent corporation is desperate for cash.  The Standardbred racetrack in Toledo, Raceway Park, is also owned by a publicly-traded company, Penn National Gaming, as is the harness track in Columbus, Scioto Downs, which is part of Mountaineer Gaming Group.

These seven racetracks are all having hard times, so much so that the Ohio State Racing Commission hired a consulting firm to make recommendations in the final quarter of 2008 because the Commissioners candidly admitted that they were bereft of ideas about what to do.  Ohio’s agribusiness breeding industry is fading along with the racetracks.  The cause is not due solely to competition from gaming in states contiguous to Ohio, but that is the lion’s share of the problem.

Full-scale casinos operate in Indiana, Michigan, and West Virginia, and Pennsylvania has slot machines.  Only Kentucky, across the Ohio River to the south, does not have some type of alternative gaming.  River Downs in Cincinnati is impacted by a nearby Indiana casino; Raceway Park in Toledo is close to Detroit; and the Cleveland-area racetracks have been badly damaged by the slot machines and racing at Presque Isle Downs in Erie, Pennsylvania (Thoroughbreds) and The Meadows Racetrack and Casino south of Pittsburgh (Standardbreds).   They also must contend with the full-fledged casino at Mountaineer Casino and Racetrack in Chester, West Virginia (Thoroughbreds). 

Ohio held statewide plebescites on casinos in 1990, 1996, 2006, and 2008.  The votes in favor of casinos were 38%, 38%, 43%, and 37%, respectively.   These initiatives all made the fatal mistake of restricting the locations where the casinos would be built, so, as a consequence, the areas of the state left out voted no.  In three of the four failed ballot initiatives, the county or counties for which a casino was proposed voted affirmatively.  This indicates that were all regions of the state to be cut in on the action, especially the population centers, a casino referendum might well pass.

In the 1990 referendum, only Lorain (near Cleveland on Lake Erie) was to get a casino with the vague possibility of later expansion to other parts of Ohio.  In 1996, riverboat casinos were proposed for four counties, three in Northeastern Ohio and the other in Hamilton County (Cincinnati).  In 2006, the ballot language permitted two casinos in Cuyahoga County (Cleveland) and at the State’s seven racetracks.  Most recently, in 2008, the proposal was for a single casino resort in one of Ohio’s poorest counties.   Penn National Gaming spent $36 million to defeat this measure in order to protect its properties–the Argosy Casino in Lawrenceburg, Indiana, and Raceway Park in Toledo.  Moreover, the Ohio State Racing Commission urged a no vote.

A ballot initiative would have a far stronger chance of approval if it were to specify casino permits for Cincinnati, Cleveland, Columbus, and Toledo, and, perhaps, for the Lake Erie Islands, near Sandusky, and Youngstown.  The likelihood is that cash-starved big city mayors and county commissioners would rally support.   

In the past, the major political movers and shakers of both political parties have weighed in against expanded gambling–most notably, onetime Republican governor and now U. S. Senator George Voinovich–who is retiring in 2010-and the most recent past governor, Republican Bob Taft, and the current governor, Democrat Ted Strickland.   Strickland is a former Congressman and Methodist pastor with an earned doctorate in psychology from the University of Kentucky.  He has the reputation of being fair-minded and honest. 

To Voinovich’s credit, while he has campaigned against alternative gaming and casinos, he has supported pari-mutuel wagering on horse racing because of the agribusiness supply chain behind it.  The significant economic impact of the horse industry and horse racing in Ohio is substantiated in the American Horse Council Foundation report by Deloitte and posted at Ohio Thoroughbred Breeders and Owners.

In the midst of the current Ohio budget crisis of mammoth proportions (around $7 billion), Strickland is wavering on his opposition to expanded gambling.  In 2008, he lent his support to letting the Ohio Lottery install Keno in bars, restaurants, and racetracks.  In early January 2009, Strickland said:  “I think it is impossible to know how deep this recession is going to be or how long it is going to last.  I am therefore willing to keep an open mind and listen to whatever argument that may be brought to me regarding gambling.”   

The Governor has already met with Penn National Gaming officials.   Penn National’s proposal, which has not yet been formalized, would be on the November 2009 ballot and would put casinos at all seven racetracks and maybe at other venues.  My Ohio Entertainment, the organization behind the failed 2008 casino ballot initiative, is proposing another referendum for November 2009 that would allow casinos in Cincinnati, Cleveland, and Columbus, plus the possibility of two additional locations.

The President of the Republican-controlled Senate says that he personally opposes gambling but would at least consider supporting a ballot proposal for the sake of assisting Ohio’s economy.  The new Speaker of the House, a Democrat, is an outright advocate of expanded gambling for the Buckeye state as a means to create jobs and bring in revenue.  Ohio’s largest newspaper, The Plain Dealer, on January 11, 2009, ran an editorial titled “It’s time to get casinos and their taxes and jobs.”  The co-authors were the president and the CEO of the Greater Cleveland Partnership.

Two days prior to the Obama inauguration, Ohio’s Democrats celebrated at a plush dinner and ball at the Renaissance Mayflower Hotel in Washington, DC, complete with music by the 235-member marching band from Ohio State University.  The cost was partially underwritten by sponsors, who paid anywhere between $10,000 to $75,000 each.  One of the sponsors was none other than Penn National Gaming.

As with previous casino proposals, there will be plenty of opposition from assorted organizations and individuals.  For instance, a Plain Dealer columnist wrote on January 18, 2009:  “Circulating in Columbus is a scheme to install video lottery terminals (‘VLTs,’ a sanitized term for slot machines) at Ohio’s horse-racing tracks and in a couple of downtowns…Except for the Bushes and the Clintons, no one has made a greater sense of entitlement than Ohio’s horse-track owners…The real object of VLTs will be, by Statehouse fiat, to further enrich people who are plenty rich already…”   (An objective observer who reads this columnist regularly quickly discerns that he often advances ad hominem arguments like this one and is resentful towards anyone who might make a profit that, in his view as a self-appointed moral arbiter, is excessive.)

Whether the racing agribusiness in Ohio receives help or not depends on four key eventualities.  First, the Governor will evaluate his re-election chances for 2010 by weighing the pros and cons of his offering tacit support for expanded gambling.  The deepening budget crisis will have a lot to do with his decision; if Ohio gets sufficient federal bailout funds from the Obama administration, then the gaming revenues will not look as attractive, given the Governor’s re-election risks of alienating important constituencies.  Second, if two or more competing casino proposals make the November 2009 ballot, the likelihood is that they will fail.  A focused effort is required.  Third, even if a casino initiative passes in a statewide vote, Ohio’s seven racetracks may or may not be included as sites.  Lastly, the odds of passage are increased if all of the major population centers are allowed to have their own casinos.

A perfect storm will have to occur for Ohio racing to be extended a lifeline in the sea of competition it finds itself drowning in from surrounding states.  Otherwise, the prognosis is grim.

In a battered state economy that is so dependent on the shaky “Big Three” automobile manufacturers, Ohio needs every job source it can get.  The unemployment rate is 7.8% and rising. 

Ohio’s racetracks employ many people and account for considerable local and state tax revenues, as do the independent contractors like trainers, veterinarians, and feed suppliers, whose businesses depend on the racetracks and the farms.  Horse racing is a sizeable agribusiness in Ohio and should be cultivated by elected officials.   One sure way to do that is to allow the racetracks to be more competitive so that their customers are not so easily lured to the racinos and casinos in nearby states.

 Copyright © 2009 Horse Racing Business

Comments

  1. D. Schultz says:

    Unfortunately, by the time Ohio does receive help in the form of Casinos the majority of the horsemen will be gone. Hopefully they can find a way to supplement purses in the meantime to keep our tracks viable.

  2. Horse owners and trainers pay the expenses that support the agribusiness associated with horseracing. Revenue from VLTs at the race track must be directed to the purses that horsemen receive in order to stimulate the Ohio economy. The fear is that the State will take so much off the top of VLT revenues due to the budget deficit, little will be left for the part of the industry you are trying to stimulate! Horsemen in Ohio need help now before an industry with a rich Ohio history disappears .

  3. A. Lanzone says:

    Everyone seems to be worried about everything except what the people want. Look at Indiana casinos and see how many cars have Ohio plates.
    The money and jobs are leaving Ohio by the 1,000’s
    and nothing coming in. Can 38 states be wrong about slots?? They are making money and making jobs available. Look at Mississippi.. Tunica was a
    low income cotton plantation… now people are working in Casinos and building homes and living a comfortable life. The Legislature must take charge as the people who vote are being led by uninformed
    rabble rousers who are trying to frighten them into believing crime and destitution will engulf them.

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