LOOKING A GIFT HORSE IN THE MOUTH IN OHIO AND KENTUCKY

Talk about looking a gift horse in the mouth…consider what is transpiring in Ohio and its next-door neighbor Kentucky.

Daniel Gilbert is one of the two sponsors of Issue 3 in Ohio that would change the state constitution to allow for four full-scale casinos. They would be located in Cincinnati, Cleveland, Columbus, and Toledo. The Cincinnati and Cleveland licenses would be controlled by Gilbert and the Columbus and Toledo casinos would be owned by Penn National Gaming. The most recent poll, conducted by the Institute of Policy Research at the University of Cincinnati, found that 57% of voters are in favor of authorizing the four casinos, 39% are in opposition, and 4% are undecided. Ohio voters have turned down expanded gambling four times since the early 1990s, but this time they appear likely to approve, in spite of the fact that Ohio’s governor and both U. S. Senators are on record as being against Issue 3. The public opinion polls have never been this in favor of expanded gaming this late in the election process. The vote takes place on November 3rd.

Gilbert, age 44, is the founder of Quicken Loans, Inc. in Detroit. He is ranked number 354 on the Forbes 400 list of richest Americans with a net worth of $1.1 billion. This self-made entrepreneur became active in Ohio business when in 2005 he became majority owner of the Cleveland Cavaliers National Basketball League franchise. He also operates the Quicken Loans Arena in which the Cavaliers play and owns a minor league hockey team that uses the facility.

Since 2005, Gilbert, through his various companies, has created or moved several thousand jobs to Cleveland. Moreover, if Issue 3 passes, Gilbert must spend (per the ballot language) at least $250 million on building a casino in Cleveland and the same amount in Cincinnati. He has pledged $600 million for the downtown Cleveland casino,  plus he will pay the state a $50 million license fee in each city and his casinos will contribute 33% of their revenues to the state of Ohio; this is reportedly the fourth highest state takeout for commercial casinos in the United States.

Three percent of casino revenues would go to the Ohio State Racing Commission, although Ohio racing interests are strongly campaigning against Issue 3. The main exception is Penn National, which owns a racetrack in Toledo. Unfortunately, passage of Issue 3 could be the death knell for any number of Ohio’s seven racetracks unless voters soon approve racetrack slots. The earliest that could happen is likely November of 2010.

To say that Michigan resident Gilbert has been a provider of jobs and tax revenues to Ohio is an understatement. He has been one of the few bright spots in the economic downturn. Part of his reward is that opponents of Issue 3 (funded mostly by MTR Gaming Group, which tried to join the Gilbert/Penn National partnership, but was turned down) have been running advertisements portraying Gilbert as an unsavory character. His supposed sin: when he was a 19-year-old student at Michigan State University, he was convicted of bookmaking. A state senator in Ohio piled on by raising questions about Gilbert’s character, so far as his suitability to own casino licenses  is concerned.

PuH..leeze!  As John McEnroe might say, “You cannot be serious.”  Gilbert was 19 years old.  Since then, he  has built a major company employing thousands of people and passed the background checks necessary to own a bank as well as an NBA team. Gilbert has done more for economic development in Ohio than all its current elected officials combined, as evidenced by the fact that he has been bringing jobs to the Buckeye state while the Ohio unemployment rate has been rising.

Meanwhile, to the south, the leader of the Kentucky senate and his allies continue to do everything in their power (which is considerable) to make sure that Kentucky’s flagship industry—Thoroughbred breeding/racing and bluegrass tourism—shrinks. They have posed one roadblock after another in legalizing video lottery terminals at racetracks while the industry is downsizing…and doing so in a hurry. Talk about fiddling while Rome burns…or while the horse vans head from central Kentucky to Pennsylvania and greener purses if not greener pastures. Owners and trainers are dancing to the Pennsylvania Polka rather than singing My Old Kentucky Home and following a different type of Phillies than the equine Kentucky variety.

Like all states, Kentucky cannot afford to lose jobs for its citizens and tax revenues for its coffers, or so it would seem. In addition, if Issue 3 passes in Ohio, video lottery terminals in Kentucky would be tame fare, to say the least, as compared to the table games that will operate across the Ohio River from Kentucky in Cincinnati. Is it bye-bye Turfway Park? 

Pitting video lottery terminals against full-scale casino offerings is like taking a knife to a gun fight. Just ask the executives at Churchill Downs about the futility of trying to compete against a commercial casino–offering a full complement of gaming products and located only miles way on the banks of the Ohio River in Indiana–with one product.

This past week, the University of Kentucky announced that some donors who made their fortunes in the state’s coal fields have put up $7 million to finance a new residence for the University of Kentucky men’s basketball team, provided that the word “coal” is part of the building’s official name. In no time whatsoever, some dissenters complained that putting coal in the name implied that the University had a partnership with coal interests and, worse yet, coal is so yesterday in this age of renewables. You know, how to say it…coal is so filthy and embarrassing.  A Kentucky-based sports and turf writer joined the fray by calling members of the University of Kentucky Board of Trustees “whores” for accepting the deal with the coal barons. Never mind that coal is a leading industry in Kentucky and that coal supplies over half of the electricity in the United States.  Never mind that colleges and universities have all kinds of things named after ethically-challenged individuals and unfashionable companies and products.

Folks, you can’t make this stuff up.

Undermining incumbent industries and/or disparaging local entrepreneurs seem to be de rigueur in Ohio and Kentucky. Maybe this is the start of a trend. The next thing we hear about could be a protest and corrective legislation in Wisconsin concerning the state’s polluting cow population.  Or, how about reining in those irresponsible people in cheesehead costumes at Green Bay Packer’s games, who glorify an artery-clogging food?

Copyright © 2009 Horse Racing Business

Comments

  1. God First Always says

    Dan Gilbert became wealthy LYING about his past, and he is flat-out lying to us in Ohio now, too. If he explained his dangerous bookie operation – as we know it was, now, from the HEAD OF MICHIGAN’S ORGANIZED CRIME UNIT WHO WORE THE WIRE AND ARRESTED HIM – just like he lied to us in Ohio, then perhaps he’ll start losing those businesses, too.

    Every single horse industry-related organization opposes Issue 3 because it will KILL our businesses. The job loss from closing family-run horse farms will wash out any job gain from the bookies’ casinos.

    Rethink it, Bill. This is not the kind of lying and cheating Gift Horse we want in Ohio – ever.

  2. Bill Shanklin says

    I agree that casinos will damage the horse industry in Ohio. You also make a valid point about the loss of jobs from family-run farms. My point is that the arrest of a 19-year-0ld Dan Gilbert, a quarter of a century ago, should have no bearing on Issue 3. The way to counter Issue 3 is with facts not character assassination. We need to be able to debate and disagree without personally disparaging the people on the other side of the argument. An advertisement showing what casinos would do to small stables, family farms, blacksmiths, feed suppliers, etc. would be more compelling than attack ads on a man who owns the winningest pro sports team in Ohio. Also, it does not help the case of those opposed to Issue 3 that the former chairman of the Ohio State Racing Commission is supporting the case of Dan Gilbert and Penn National.

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