Gambling On Gambling

Ohio regulators recently released a report about revenues earned by Ohio casinos.  Coming less than a month before the fourth and final casino, in Cincinnati, is to open, the report indicates that the casino takes may be slowing.

IMG_2928The question for now is whether the Ohio gaming market is saturated.  Ohio used to have no casinos, but it was surrounded by casinos in Michigan, West Virginia, Pennsylvania, and Indiana.  Now four full-blown Ohio casinos have been added to the mix, as well as “racinos” — horsetracks that have slot machines.  In the Columbus area, Scioto Downs features more than 2,000 machines and is packing in people who just want to play the slots.  Some Columbus gamblers apparently think the slots are “looser” at Scioto Downs than at the Hollywood Casino, and they’d rather play where they have a better chance of getting a jackpot.

Ohio regulators seemingly recognize that the market for gambling isn’t as robust as was forecast when Ohio voters first approved casinos.  The Ohio Department of Taxation originally estimated $1.9 billion in annual tax revenues from the casinos, but this year’s state budget anticipates less than $1 billion in tax revenues from the casinos.  With new casinos coming on line, racinos providing competition, and casinos in surrounding states trying to hold on to their Ohio clientele, who knows whether that number is realistic or just another gamble?

I’ve always questioned the credibility of casino revenue and job forecasts, because I believe there are only a limited number of people who are interested in gambling.  People who don’t want to gamble aren’t going to start just because a casino opens nearby, and people who do like to gamble can only go to so many places on so many occasions.  If the Ohio gambling market isn’t growing, then all of the casinos, racinos and other competitors are just going to be tussling over the size of their pieces of an unchanging pie.

At The Hollywood Casino In Columbus

IMG_2925On Sunday, Russell, UJ, and I visited the Hollywood Casino, one of four casinos built in Ohio after the passage of a constitutional amendment in 2009.  It’s far out on Columbus’ west side, off Broad Street, near the intersection of I-70 and I-270.  We wanted to check out the place and watch one of the NFL playoff games.

My expectations were low; I’m not sure why.  I envisioned a dim interior packed with slot machines and grim-faced people, but instead we found a vast, brightly lit space that risks putting patrons into sensory overload.  Every slot machine, of course, has neon lights and colorful themes (how much do the artists who design the pirates, genies, and other characters on slot machines get paid, anyway?)  but the decor itself was interesting, with attractive light fixtures far overhead, tall round pillars with changing video presentations, enormous TV screens everywhere you look, and huge movie billboards covering the walls.

IMG_2930We landed in o.h., one of four restaurants inside the casino, to eat and watch the first half of the 49ers-Falcons game. (o.h. is an apt name, because every true Buckeye will be tempted to add “i.o.” — and after a few hours gambling, they may be right.)  It’s a great place to watch a game.  There are dozens of large flat screen TVs circling the dining area tuned to every imaginable sporting event, including professional bowling.  The bar next door features a much more immense main screen and would be a fine venue for a beer or two and some serious football viewing.

We tried the philly steak egg rolls and twisted nachos made over crinkle-cut potatoes, followed by a pepperoni pizza.  All were tasty and served hot by very friendly wait staff.  More surprising to me was that the prices were reasonable and in line with what you would expect to pay at a regular bar or restaurant.

After we ate our food and watched the first half of the game, Jim and Russell tried their hands at games of chance.  I’m too cheap to be a gambler, so I strolled around taking in the table games areas, the high roller enclave, and the other parts of the casino.  The place was crowded, and people seemed to be having a good time on a cold and windy Sunday afternoon.  The casino is open 24 hours a day, 7 days a week.  We’ll see how it looks after a year or two of wear and tear, but for now it looks like the Hollywood casino is off to a profitable start.

How Are Those Ohio Casinos Doing?

Earlier this month, the Hollywood Casino opened on the outskirts of Columbus.  About 25,000 gamblers showed up for the opening day festivities.

In 2009, Ohio voters approved a constitutional amendment authorizing the construction of four casinos — one each in Cleveland, Toledo, Columbus, and Cincinnati.  When the constitutional amendment was considered in 2009, state officials estimated that the 33 percent tax on gross casino revenues from the four casinos, plus approved video lottery terminals, would produce $470 million annually in tax revenue.  The promise of that kind of tax contribution, plus the jobs the casinos would create, caused Ohio voters to end their long-standing opposition to casino gambling in the state.

The Columbus casino is the third to open, following casinos in Cleveland and Toledo.  It’s early yet, but the trend lines in Cleveland and Toledo aren’t knocking anyone’s socks off.  For both of those casinos, June was the first full month of operation — and also was the high point for revenue, which has declined every month since June.  In Cleveland, revenue has declined from $26.1 million in June to $21.1 million in September; in Toledo, revenue has dropped from $20.4 million in June to $15.9 million in September.  The casino operators and experts say that the novelty of a new casino wears off and it takes a while for standard gambling patterns to get settled, and that the Ohio casinos might not follow the patterns seen in other locations.  The casinos also are tweaking their operations as they learn their markets; in Cleveland, for example, the Horseshoe Casino is now formally welcoming bus tours and providing some slots credits to entice bus visitors.

A few months won’t tell the tale, of course, but you have to wonder if we’ve reached the casino saturation point in this country, and there just isn’t that large of a market for more casino gambling.

The Casino Rolls Ahead

Slowly, but surely, the casino on the west side of Columbus is moving toward completion.  Recently the developer unveiled plans and architect drawings for the Hollywood Casino, which is what the casino will be called.  Nearby residents apparently were impressed.  The casino will be a 300,000 square foot, one-story structure that will have thousands of slot machines, dozens of table games, a poker room, and restaurants.  From the architect renderings, it looks about what you would expect a casino to look like, both inside and outside.  It is currently slated to open in mid-2012.

In the meantime, City of Columbus officials and the casino developers are scrapping about whether the city made certain promises when the casino moved from the Arena District to the west side of town — a move that city leaders desperately wanted.  Each side thinks it has leverage.  The casino developer’s west side land is in Franklin Township, not the city of Columbus, and if the casino developer doesn’t seek annexation Columbus would lose $24 million a year in casino taxes.  On the other hand, Columbus says it won’t provide water to the site unless it is annexed.  The areas in dispute seem to revolve around tax breaks and some form of compensation for the losses the casino developer apparently incurred when it agreed to move the casino location.

Another issue to be resolved is the membership of the state commission that is supposed to regulate the casinos.  The members nominated by outgoing Governor Ted Strickland have not been confirmed, and Governor-elect John Kasich wants to make his own appointments to the body.  The individuals appointed by Strickland, however, say that if they don’t move forward deadlines will be missed and the construction of the casinos could be delayed.

There are always going to be some snags when you are starting up a new, heavily regulated business in a place like Columbus, Ohio — and casinos are no different.