11/04/2009 12:00AM

Ohio casino vote raises slots questions


Ohio's racing industry has been thrown into deeper disarray by a vote on Tuesday to allow full-blown casinos in Cincinnati, Cleveland, Columbus, and Toledo.

The vote, approved in a referendum by 53 percent of Ohio's voters, will likely introduce casino competition to Ohio's battered racing industry by late 2011. At the same time, some racing officials contended that the vote raised new questions about an earlier budget measure allowing slot machines at Ohio's seven racetracks that was shot down by the state's Supreme Court in September.

With the vote, Ohio becomes the latest domino to fall in the effort by casino interests to gain approval for casino gambling in the Midwest. As a result, the vote will likely lead to greater pressure on the state of Kentucky to authorize slot machines at racetracks late this year or in 2010, a measure heavily supported by Kentucky's racing industry. Casinos are now legal in a deep semicircle around Kentucky, stretching from Missouri through Iowa, Illinois, Indiana, Michigan, Ohio, Pennsylvania, and West Virginia.

Under the language approved by voters in the referendum, the Ohio State Racing Commission will receive 3 percent of the state's 33 percent take from the net win at the four casinos. Although projections for the net proceeds for the four casinos can be considered unreliable because of the recession and the number of casinos already in the area, Charles Ruma, the owner of Beulah Park, a Thoroughbred track in Columbus, said that he expects the state's seven tracks to split approximately $10 million a year - if all seven tracks are still operating by the time the casinos are up and running.

"It's not what you might call a subsidy, but anything we can get right now helps," Ruma said.

The ballot measure gave Penn National Gaming Inc., a casino company with operations in Missouri, Illinois, Iowa, Indiana, Pennsylvania, West Virginia, and other states, the right to open casinos in Columbus and Toledo. Dan Gilbert, the owner of the Cleveland Cavaliers NBA franchise and the online mortgage lender Quicken Loans, will receive the right to own casinos in Cincinnati and Cleveland.

Earlier this year, Ohio's governor, Ted Strickland, approved a budget measure that would have allowed slot machines at state tracks. The state Supreme Court, however, ruled that a group had the right to challenge the provision by petitioning for a referendum, a ruling that scuttled the state's plan to enact the plan while opponents gathered signatures for the petition drive.

John Englehardt, a spokesman for River Downs, said that the vote on Tuesday "answered the Supreme Court's question about whether Ohioans want casinos," and he said that the governor may view support for the ballot as giving the government authorization to put slot machines at racetracks.

"Quite frankly, we look [at the Tuesday vote] as a positive, because now you don't have the hurdle of the argument that this is something Ohioans don't want," Englehardt said. "They obviously want it."

Strickland's office did not respond to a request for comment Wednesday.

The vote will likely also affect a plan by Magna Entertainment to sell its Thistledown racetrack outside of Cleveland to Harrah's Entertainment for a price that could have reached as high as $89.5 million. Though officials for the companies did not return calls on Wednesday, the deal allowed Harrah's to pay $42 million if the slot-machine plan for tracks did not go forward.