Ohio governor retreats on slots

The state of Ohio cannot plan to use revenue from slot machines at racetracks to close a $900 million deficit in the state's two-year budget, Gov. Ted Strickland said on Wednesday.

Strickland's position, outlined in a statement he made in support of freezing income-tax reduction to close the deficit, indicates that the state will not aggressively seek to overturn a recent Ohio Supreme Court decision stating that the approval of slot machines is subject to referendum. Strickland and the legislature had earlier approved 2,500 slot machines at each of Ohio's seven racetracks as part of the state's biennial budget.

The earliest a referendum could be held would be November 2010, although some groups contend that a vote could be placed on a special ballot in May. Even if voters approved the measure, both of those dates would be too late for the state to generate any revenue from the machines, Strickland said.

The budget measure approving slot machines was challenged by three groups on various grounds, and only one group has had its case heard. That case resulted in the Supreme Court ruling last week.

The Ohio legislature had estimated that the slot machines would raise $900 million for education funding if the machines were up and running by May. Ohio racetracks were also counting on the machines to revive their fortunes.

One week before the Supreme Court ruling, Harrah's Entertainment reached a deal to purchase Thistledown racetrack outside of Cleveland from Magna Entertainment, the bankrupt racetrack company. The price, $89.5 million, includes $47.5 million in payments that are contingent on Thistledown's ability to operate slot machines.