John Kasich, casino killer

Aw, isn’t this great? After Gov. John Kasich (R-OH) made the ludicrous claim that Ohio voters didn’t know what they were getting into when they approved a casino initiative in 2008, his legislative allies are trying to up the ante. They wanted the state’s casinos taxed on gross receipts, which Gaming Today erroneously blamed on Kasich himself. He’s professing neutrality on the issue (much as he was exquisitely vague on racinos during the 2010 campaign) but he’s made no secret that he wants more money — a lot more — from casinos. At least he’s finally come out as not being opposed to casinos per se … which is a different critter from being in favor of them, however. By the way, if Kasich finds the terms of that ’08 ballot question confusing, he’s plainly mislaid his thinking cap. They were perfectly clear both to S&G and, much more to the point, Buckeye State voters, who’d earlier shot down a casino monopoly pushed by Lakes Entertainment.

House Republicans “clarified” the Commercial Activities Tax to say that it applies to casino receipts prior to payouts. As Penn National Gaming spokesman Eric Schippers boils the proposal down, it would basically tax theoretical earnings. The way Schippers explains it, if I ran put a modest amount of dough into, say, a Reel ‘Em In machine, racked up $1K worth or credits, eventually lost it all and just recovered my initial “investment,” Penn gets taxed on the one grand, to the tune of $2.60, on money that never entered or left the machine.

Somebody had to pay for the elimination of Ohio’s estate tax and casinos are It. (You might say it’s robbing the rich to give to the rich.) And if casino hiring is put on indefinite ‘hold,’ well, who cares about a bunch of unemployed people, right? That’ll show ’em who’s The Man, by golly!

Kasich may wring his hands about poor school kiddies but he’s the one gutting the budget on the assumption he can rip off Big Gaming to get some of that money back. One Republican legislator contends that casino developers were willing to negotiate a compromise but got stiff-armed by the governor’s office. It’s Kasich’s way or the highway … which could eventually lead to Kentucky, which has had at least one serious flirtation with casino gambling in recent years.

Penn is already “reviewing” its half-built Toledo casino and barely begun Columbus facility. Caesars Entertainment/Rock Gaming quickly followed suit. (Only Caesars’ Cleveland casino is proceeding on schedule.) That must have got lawmakers’ attention. They re-amended the budget to take their money grab out.

Do not take this to mean that sanity has prevailed. Speaker of the House William G. Batchelder (R-Medina) is invoking the specter of litigation, saying the Legislative Service Commission agrees with his liberal interpretation of CAT, regardless of what the budget specifies. “Attorneys will be required, I’m sure,” he declared balefully. He allowed that his CAT interpretation was “not practical” for casino operators, which was mighty white of him.

Batchelder and Kasich’s jawboning has been music to the ears of casino opponents, who hope this is the beginning of the end of gambling in Ohio. (S0meone needs to teach the Canton Suppository Repository the difference between a monopoly and a duopoly.) When the House Speaker shrugs off the impracticalities of pushing CAT to the max, he sure sounds like he doesn’t give a damn whether those casinos get built or not. Ohio Roundtable President Robert Zanotti goes so far as to claim that Penn’s activities in Columbus (above) and Toledo are just a diversionary tactic. If so, it’s mighty expensive ploy and I don’t believe CEO Peter Carlino is both Machiavellian and fiscally masochistic.

Meanwhile, Kasich plots from the sidelines as his pricey consultants brainstorm ways to shake down the casinos, adding another 6-24 months to the development timeline. The guv has already floated the idea that the two developers pony up an aggregrate $100 million more, out of the goodness of their hearts. That’s preposterous and I wouldn’t give a hoot in Hell for any businessman who agreed to it. A deal’s a deal.

Ditto the 33% gaming-tax rate, which can’t be changed without another constitutional amendment — and does Kasich want to reopen that barrel of monkeys? He’s come off the fence on the racino question, but three of the Buckeye State’s tracks are owned by either Penn or Caesars (whose Thistledown Racetrack is seen at right), so if Kasich thinks that’s going to scare casino developers, he’d better think again. He’s also darkly hinted at wanting as much as $1 billion more for those four casino licenses. Kasich’s claim that anybody building a casino can just “get a loan” exposes him as laughably uninformed as to the financial straits the gaming sector is in (and which make it so imperative for them to build in Ohio). When he said he “doesn’t want to impede their ability to open,” his nose must have grown several inches.

An emptier threat is the invocation of tribal gaming for the simple reason there are no tribes in Ohio. The state would have to recruit some and “reservation shop”: a circuitous exercise of such manifest absurdity even Ken Salazar‘s Interior Department would probably balk at the charade. As for the much-ballyhooed “comprehensive” solution to gambling in Ohio, that’s fancy talk for deliberate gridlock and foot-dragging, presumably in hopes of exhausting Penn’s, Rock’s and Caesars’ patience.

Perhaps Penn & Co. deserve some of the blame. They highballed revenue expectations, then drastically revised them downward as reality drew closer. Legislators with delusional dollar signs dancing in their heads understandably want to recapture that phantom money: They mentally spent it long ago, I’m sure. Even so, we’re witnessing the bizarre spectacle of supposedly “pro-business” lobbyists and elected officials holding jobs and investment hostage and potentially stunting real estate values in their avaricious desire for a do-over on the enabling legislation. That’s allowing gambling opponents to sup on Schadenfreude. Kasich may ooze faux sympathy with the developers he’s thwarted but he’s sending the S&G Bullshit Detector into overdrive.

Memory Lane. For light relief, check out this photo stream of the Las Vegas Strip in 1997, when New York-New York was the new kid on the block. Thanks to Ian Sutton for the link.