Ohio casino operators cry foul over tax

Associated Press

COLUMBUS

Developers of four casinos in Ohio say that House budget changes would cost them tens of millions of dollars in additional taxes and that they’re considering fighting it in court.

The Republican-led House proposed Thursday to tax casinos’ gross receipts without deducting winnings and payouts. The adjustment to Gov. John Kasich’s $55 billion, two-year budget plan followed the governor’s concerns that the state got a raw deal when voters approved legalizing casinos in Columbus, Cleveland, Cincinnati and Toledo in 2009.

Eric Schippers, senior vice president for Wyomissing, Pa.,-based Penn National Gaming Inc., called the House language “unique and discriminatory” treatment under Ohio’s commercial-activity tax. Another provision of the House budget exempts certain businesses that perform public services under contract from the same tax.

Schippers said receipts that include winnings aren’t a fair reflection of what a casino makes.

“For example, let’s assume a customer puts $10 in a machine and eventually gets the original $10 up to $1,000 in winnings before ultimately cashing out his or her original $10,” he said in a statement. “Under this scheme, we would be forced to pay the [commercial activity tax] on the $1,000 — money that never existed in any rational person’s definition.”

The 2009 constitutional amendment requires casinos to pay 33 percent of gross earnings, which are defined as total amount wagered, minus winnings.

Penn may consider scaling back its investment in the state to smaller casinos if the House language isn’t removed, he said. The deadline for passing the budget is June 30. It will cover the two years beginning July 1.

Penn broke ground Monday on its Columbus casino, and its casino in Toledo is about 45 percent complete, spokesman Bob Tenenbaum said. Rock Gaming LLC of Cleveland has begun renovating an old downtown department store as the site of its Cleveland casino. Its Cincinnati casino has been delayed.

Rock Gaming principal Steve Rosenthal told the Cincinnati Enquirer this week that the company had pushed back the opening of its Cincinnati casino because of the disagreement with Kasich over casino taxes and fees. Opening of the $400 million project has been pushed back to 2013. A message left with Rock Gaming on Friday was not returned immediately.

The two companies are slated to spend a combined $1 billion and create 34,000 jobs, Schippers said.

“This type of delay, which could result in construction workers being called off the job, would benefit no one but the neighboring gaming states who will continue to benefit from Ohioans crossing the border to gamble,” he said.

Gambling opponent David Zanotti, president of the conservative public- policy group Ohio Roundtable, said he’s not convinced that casino companies are hurt by the proposal crafted by the House and backed by Kasich.

“They [gambling companies] wrote the amendment and they wrote it to prohibit additional taxation,” Zanotti said. “The courts are open, and they certainly have the power and the lawyers to win this. Let the governor try to stop them. The idea that the governor has suddenly come up with an idea that paralyzes them actually is laughable.”