Racino needs a gimmick

The state of Ohio hasn’t yet hit the jackpot with its foray into casino gambling, which does not bode well for the proposed racino — thoroughbred horse racing and slots machine casino — in Austintown. The $125 million Hollywood Gaming at Mahoning Valley Race Course off Route 46 (on the former Centerpointe business park property) is scheduled to open next fall. The developer, Penn National Gaming, currently operates Hollywood Casino Columbus, Hollywood Casino Toledo, Hollywood Gaming at Dayton Raceway, Beulah Park and Raceway Park.

Penn National is in competition with Rock Ohio, a partnership between Dan Gilbert, owner of the Cleveland Cavaliers and founder of Quicken Loans, and Caesars Entertainment. Rock Ohio operates Horseshoe Cleveland, Horseshoe Cincinnati and ThistleDown Racino in North Randall.

With so much competition for the limited entertainment dollars, and the saturation of gambling establishments — the Ohio Lottery is also upping its game to ensure that it does not lose players to the casinos — the Austintown racino will have to find a way of luring Mahoning Valley residents who now travel to Cleveland and have long supported Mountaineer Casino Racetrack and Resort in Chester, W. Va.

To be sure, the novelty of having a legal gambling house in a region that has had a love affair with Mafia-run joints will bring in the crowds — at the beginning. But, whether Hollywood Gaming at Mahoning Valley Race Course will be able to sustain the business depends on the gimmick Penn National comes up with to keep gamblers coming back.

Even then, meeting revenue projections won’t be easy.

Falling revenues

Earlier this month, The Columbus Dispatch published a story with this eye-opening lead: “Revenue has fallen short at Columbus’ Hollywood Casino and other casinos across the state.”

The story noted that the four casinos — in Cleveland, Columbus, Cincinnati and Toledo — were on pace to gross about $868 million this fiscal year, $90 million less than what Gov. John Kasich’s proposed budget anticipated in the spring.

Gross casino revenue is taxed at 33 percent, and almost all of the revenue is allocated to cities, counties and school districts.

Spectrum Gaming Group of Atlantic City, N.J., was hired by the state in 2011 to predict casino revenue, and the company determined it would be about $1.1 billion, the Dispatch reported.

“Kasich’s finance staff said ... that the state’s approved budget predicted about $940 million in taxable gross casino revenue this fiscal year, which ends in June 2014,” the newspaper article said. “But taxable casino revenue will be well below that figure, based on the past six months of casino revenue data.”

Ohio is not alone in reporting a less-than-stellar performance in its Vegas-style gambling industry.

New Jersey, which got its first casino more than 30 years ago in Atlantic City, has succumbed to the competition from other states that have jumped on the gambling bandwagon.

As a result, New Jersey under Republican Gov. Chris Christie, touted as a candidate for the GOP nomination for president in 2016, has upped the ante.

Last month, the state began allowing Internet gambling that will offer all the games found in a casino, including poker.

New Jersey officials believe that Internet gambling will generate $1 billion in the first year. About $150 million in tax revenue will go into the state’s coffers.

Playing catch up

Other states are also considering online gaming. Given that Ohio is playing catch up with its gambling industry and that its first year revenue projections will not be met, state officials may be forced to explore Internet gambling.

On the local level, the Austintown racino will have to face the reality of competition within driving distance of the Mahoning Valley.

The facility does have a drawing card that could be used to attract gamblers from beyond the 50-mile radius that is Penn National’s market: The thoroughbred horse-racing track, which will be the first new track in Ohio in 50 years.

But, Penn National isn’t going to make its money on horse racing. It will have to find a way to build its slots-playing customer base.

The company may want to have a competition to find the most creative gimmick for its new gambling joint.