evenue projections from video slots at racetracks approved by Ohio legislators combined with a ballot proposal to legalize four casinos – including one in Cincinnati – forecast a combined us$ 3 billion could be spent by Buckeye State gamblers in 2013.
Greater Cincinnati, Northern Kentucky and Southeast Indiana – already the nation’s 13th biggest gambling market with us$ 731 million spent annually at local riverboat casinos – could see that revenue figure more than double and become the second largest in the Midwest, surpassing Detroit and St. Louis, but behind Chicago.
But analysts are highly skeptical that Ohio could sustain $3 billion worth of casinos and slots within a few years. “Slots at racetracks will clearly cannibalize the casinos,” said Steve Galloway, principal of Gaming Market Advisors in Denver.
In addition, Galloway said, casino developers, “knowing (they) have seven additional competitors,” definitely would reduce how much they spend on the four casinos. The competition would likely delay the ultimate construction of all four locations, if a referendum goes onto the ballot and voters approve it in November.
As a gambling market, Ohio is “underserved,” industry observers say. The state’s residents already spend an estimated us$ 1.4 billion a year gambling in other states. However, trying to transform Ohio into a us$ 3 billion market within a few years is too “aggressive,” Galloway said.
Yet Bob Tenenbaum, a spokesman for the casino referendum campaign, the Ohio Jobs and Growth Plan, said the racetrack slots wouldn’t stop the campaign’s bid to put casinos before Ohio voters. Still, he acknowledged that casino supporters would order another market study to figure out what the casino business would look like with slots at racetracks siphoning away some customers.
The casino proponents’ market analysis was conducted by New Orleans-based The Innovation Group, which has also studied the viability of slots at racetracks for other groups. The analysis didn’t calculate racetrack slots into its analysis for the four casinos.
The study also correctly assumed Kentucky legislators would not pass any plan to legalize slot operations at Bluegrass State racetracks. While the racetracks have a head start, the casino proposal has competitive advantages over slot operations at horse tracks.
Jason Pawlina, an analyst with Christiansen Capital Advisors in New York, estimated Ohio could accommodate between us$ 2.3 billion to us$ 2.5 billion in gambling at casinos and racetracks within a few years. But he noted horse tracks won’t necessarily get the us$ 1 billion in revenue projected, because the hefty us$ 65 million one-time license fees and the high 50 % state tax rate on gambling revenues might slow development. “The taxes and the licenses sound high – that makes them riskier businesses,” he said.
The casino proposal says operators of the four proposed venues – in Cincinnati, Cleveland, Columbus and Toledo – would pay us$ 50 million one-time license fees and a 33 % tax rate on gambling revenues.
Joseph Weinert, a Senor VP with Spectrum Gaming Group in Atlantic City, said gambling operators typically invest less in their properties if they’re subject to higher taxes and fees. If the casinos were approved with relatively lower taxes and fees, they would build a bigger, plusher complex that would in turn draw more business.
New capacity has the potential to radically grow the Greater Cincinnati and Northern Kentucky gambling market, even if competition intensifies. Southeast Indiana’s three riverboat casinos made the region the nation’s 13th largest gambling market with us$ 731.7 million in total revenues in 2008.
With a newly expanded Hollywood Casino Lawrenceburg and slots approved for both River Downs and Lebanon Raceway, the region could easily grow into a us$ 1 billion market, analysts say.
If casinos were approved by Ohio voters, Weinert believes the additional Cincinnati casino would be enough for the region to challenge Detroit – home to us$ 1.4 billion in casino gambling – as the nation’s Number 5 gambling market. “With potentially six casinos or racinos in the market, Cincinnati could become a major player in the national market,” he said.