Report: Columbus casino would be lucrative

June 15, 2011 at 12:00a.m.

By Joe Vardon

Columbus Dispatch

As the Kasich administration tries to pry more millions from Penn National Gaming, the governor can point to a consultant’s report showing that Penn’s Columbus casino could be nearly its most profitable in the nation.

The study by state gambling adviser Moelis & Co. says Penn National’s profitability margin for its revenue from the West Side facility could be higher than all but one of Penn’s 16 current casinos, the Argosy in Sioux City, Iowa.

The report also quotes various Wall Street firms praising the gambling revenue climate in Ohio, including FBR, which said, “Ohio is the largest growth opportunity for regional gaming currently ... and will generate impressive revenue and solid returns.”

The report indicates that Penn’s Hollywood Columbus casino will do well because there are no competitors nearby. If racetracks are allowed to install slots, Penn would need to move its Beulah Park track to maximize profit at both venues.

Gov. John Kasich and Rock Ohio Caesars, which will operate casinos in Cleveland and Cincinnati, reached an agreement Saturday for the company to give “substantially” more money to the state over the next 10 years. But Penn National, which will run casinos in Columbus and Toledo, backed out of the deal at the last minute.

Although Kasich and Penn National had not come to an agreement by press time Tuesday night, sources said the two sides had conversations yesterday and both held out some hope that an agreement could be reached as early as today.

Officially, both the Kasich administration and Penn National declined to comment.

Among the issues that remain between Kasich and Penn National is the implementation of electronic slot machines at race tracks. Kasich is open to the idea, and as an owner of two Ohio racetracks, Penn National is eager to install slots at its tracks.

But the two sides were at odds over the financial terms related to licensing for the video terminals and Penn’s desire to relocate its two tracks. Penn owns Beulah Park in Grove City and Raceway Park in Toledo and likely would move both tracks elsewhere in Ohio to get the properties away from its casinos.

Sources say Penn is resisting Kasich’s proposals for fees related to the track slots.

The agreement with Rock Ohio Caesars might be so big that the two sides need separate events to disclose the financial terms of the deal.

Kasich and Cleveland Cavaliers owner Dan Gilbert, who runs Rock Ohio Caesars, are scheduled to spill the beans at news conferences in both Cleveland and Cincinnati today.