Third quarter casino tax revenues decline

By Peter H. Milliken


Third-quarter casino tax revenues for Ohio’s counties and major cities, including Youngstown, continued their steady decline this year, according to the Ohio Department of Taxation.

The peak year for third-quarter activity was 2013, the first year all four casinos were open; and the third-quarter revenues have declined ever since then.

For the third quarter, Mahoning County and the city of Youngstown each got $364,856 in 2013, $356,532 in 2014, $341,680 in 2015 and $333,397 this year.

In counties with a major city, the major city and the county government share equally in the county’s casino tax revenue.

Over the same period, third-quarter revenues for Trumbull County slid from $643,631 in 2013, to $629,439 in 2014, $601,226 last year and $585,857 this year.

Third-quarter numbers for Columbiana County were $330,517, $322,866, $309,693 and $301,355, respectively.

The Cleveland and Toledo casinos opened in May 2012, with the Columbus casino opening in October of that year and the Cincinnati casino opening in March 2013.

“It leads me to believe that the saturation point has been achieved, and we probably will not see those numbers peaking beyond that October ’13 high,” Kyle Miasek, deputy Youngstown finance director, said of the downward third-quarter casino tax revenue trend.

He said the city’s future financial projections assume a continued slow decline in casino tax revenues.

“Eventually, you flat line. You get to the point where no more growth occurs, and you start to see year-over-year small declines” as the novelty wears off, Miasek said based on his experience with Connecticut casinos.

In Connecticut, Miasek worked for the governor’s budget team as a forecaster of state tax revenues.

The initiation of the Ohio casinos occurred while competing Ohio racinos opened.

The first racino, Scioto Downs in Columbus, made its debut June 1, 2012, and the seventh and last one, Hollywood Gaming at Mahoning Valley Race Course in Austintown, opened Sept. 17, 2014.

One explanation for the casino tax revenue decline may be competition from the racinos, said Miasek and Jessica Franks, communications director for the Ohio Casino Control Commission, which regulates the state’s casinos.

“Every time that you introduce something new, there’s more competition” for entertainment dollars, Miasek said.

Another factor that could affect third-quarter casino performance is that the quarter includes the summer months, when casinos compete with outdoor recreational activities for customer spending, Miasek and Franks agreed.

“The market hasn’t stabilized for an extended period of time,” Franks said of gambling in Ohio.

The Cleveland and Cincinnati casinos changed their names from Horseshoe to Jack in May and June, respectively, of this year, with changes in their customer rewards programs accompanying the name change, she noted.

“We’re still in this period where they’re figuring everything out,” she added.

Ohio’s casinos pay a 33 percent tax on gross revenues.

Tax distributions from that collection go quarterly to Ohio’s 88 counties and eight major cities, including Youngstown.

Ohio’s four casinos feature slot machines and table games, but no horse racing.

The state’s seven racinos have slot machines and horse racing, but no table games.

Statewide voter approval would be required for a change to the state’s constitution to permit the racinos to get table games, Franks said.

Casino tax revenue might further decline if racinos were to get table games, she said.

If the racinos were to get table games, casino tax revenue likely would decline further, Miasek said.

“Why would someone drive all the way up to Cleveland when they could just drive over to Austintown and do the same thing?” Miasek said of the scenario of the racinos’ getting table games.