NEWS

Will Ohio tax comped betting?

Alexander Coolidge, and Chrissie Thompson
Cincinnati
The new Lawrenceburg Event Center, operated by the Hollywood Casino, sits along the Ohio river.

COLUMBUS -- State Sen. Bill Coley is proposing to tax comped betting by Ohio's casinos and racinos – a move strongly opposed by industry leaders.

Currently, when a casino offers free betting as a promotion – for instance, "Get $20 in comps!" or "Receive $20 in free play!" – the casino doesn't have to pay taxes on that amount.

But casinos have brought in far less tax revenue than projected when Ohio voters legalized them in 2009, said Coley, R-Liberty Township. Taxing promotional betting would raise money that could go to schools and local police, fire and road-maintenance crews, he said.

Ohio's gambling industry has performed better when both casinos and racinos are considered. Including money the state makes off racinos, gambling proceeds have nearly kept pace with projections. But racino money goes to the Ohio Department of Education, while the casino money goes directly to county and city governments and local schools.

As of last month, casinos and racinos have given away $500 million worth of free play to gambling customers – money which could have brought in $165 million in taxes, Coley said.

"This is about looking at a situation and saying, 'Hey, you're not bringing in the amount you said you would bring in. You're not employing the number of people you said you'd employ,' " Coley told reporters Tuesday. "We have too much pressure on schools and local governments not to require (casinos) to do what they said they'd do."

An Enquirer review of state data shows Ohio's four casinos have given away about $252 million of free play since 2012, while racinos have given away about $253 million.

Casino operators said the proposal will actually backfire because it would discourage the use of free play, which the industry uses to woo customers.

"This proposal is ill-conceived and misguided. In fact the proposal, if implemented, could wind up producing the opposite of what Sen. Coley indicates he's trying to achieve," said Eric Schippers, spokesman for Hollywood Casinos' parent, Penn National Gaming, Inc. "Eliminating or reducing the discount on promotional credits would nullify one of the very weapons the state needs to help keep Ohio competitive in the ongoing regional gaming arms race."

Indiana and Pennsylvania treat promotional betting more strictly for tax purposes, but lawmakers in those states are considering changing those rules "to help their gaming industries compete with Ohio," Schippers said in a statement.

Casinos were supposed to generate more than $500 million a year in tax revenue for the state once they were up and running.

Instead, the state approved racinos – video slots at Ohio's seven race tracks – which became competitors for the casinos.

The four casinos alone were expected in 2009 to generate about $2 billion in gambling revenue each year. But last year gamblers spent $809 million in Ohio casinos, down 1.9 percent from 2013, as more racinos became operational.

Still, with the racinos, Ohio has become a nearly $1.5 billion gambling state that generates about $500 million for Ohio governments. Gamblers spent $648 million in Ohio's racinos last year.

State or local governments receive about a third of the money gamblers spend at both casinos and racinos.