Ante being upped on gambling

Kay Gonet of Parma has a big smile on her face. She'd fed $2 into a slot machine at The Mountaineer Race Track & Gaming Resort, and 300 nickels dropped noisily into the metal tray.

"I enjoy it. It’s so much fun when you win," said Gonet, who came on a bus last week with her husband and 10 friends from the Parma Polish American League for a day trip to the casino in Chester, W.Va., in the state's northern panhandle.

People like the Gonets, retirees from Ohio, are The Mountaineer's bread and butter.

The gambling resort — slot machines, racetrack, 18-hole golf course, health spa and new 258-room glitzy hotel — draws 1.5 million people a year, about 65 percent from Ohio.

By noon Wednesday, The Mountaineer was bustling with cars and buses pulling in from Ohio, waiters scurrying to serve hungry patrons, security guards ferrying cash and gamblers dropping coin after coin into the slots.

Opponents — and in Ohio, they're quite strong — say gambling is an unstable source of state revenue collected on the backs of addicts, and it spurs other social problems.

But the scene at The Mountaineer illustrates the point gambling proponents like to make — Ohioans spend their money at casinos, riverboats and other legal gambling venues across state borders. Kay and Larry Gonet and their friends have taken bus trips to Detroit and Indiana, and to Windsor and Niagara Falls in Canada, to gamble.

It’s time Ohio got a piece of the action, proponents say.

"It’s an added source of revenue that is not a form of taxation," said state Sen. Mark Mallory, D-Cincinnati, who supports proposals to put video lottery terminals, or slot machines, at Ohio racetracks. Gamblers are adults who can choose to bet or not, Mallory said.

Gambling adds up to serious money for state budgets.

In West Virginia, state and local governments received $166.8 million in 2001 from racetrack casinos, according to the American Gaming Association, a trade group that represents casinos in 11 states.

In Michigan, according to the association, three casinos in Detroit paid $219.3 million in tax revenues; in Indiana, the state received $492.6 million in gaming taxes; and in Illinois, where gaming revenues are taxed at 50 percent, the state received $555 million from nine casinos — more than 40 percent of what Ohio would get by adding 1 percent to its sales tax rate.

Right now, Ohio is losing gambling revenue to other states, gambling proponents say.

"There are literally billions of dollars that are spent at nearby jurisdictions — whether it be Indiana, or Michigan or Ontario or soon to be Pennsylvania, or existing West Virginia — that goes for purposes other than school kids in Ohio," said J. Gregg Haught, a lawyer and lobbyist for Thistledown racetrack in Cleveland. Haught helped write the amendment in the House version of the state budget that could put slot machines at Ohio's racetracks.

"It’s (money) spent by the folks next door that should be spent to benefit your kids and mine," he said.

While other states embraced casinos and slot machines at racetracks during an expansion of gambling in the 1990s, Ohioans twice defeated proposals to allow casinos here.


States use gambling

to raise money

Now, as states across the nation face staggering budget gaps, there is a renewed push to expand gambling as a way to raise money without having to raise taxes.

In the past three years, nearly every state has seen severe budget shortfalls, and cumulatively states have had to close gaps nearing $200 billion, according to the National Conference of State Legislatures.

Ohio is one of at least 14 states considering proposals to expand gaming or increase gaming taxes — that’s 14 out of 20 states that so far have responded to a survey, the conference said.

Just last week in Michigan — which already has three casinos in Detroit, 21 Indian casinos, charity gaming and a state lottery — the state House passed a bill to place up to 2,000 video lottery terminals at each of the state's racetracks. The state would own and regulate the machines and collect 40 percent of the profits. The bill now goes to the Michigan Senate.

Some Ohio lawmakers want to ask voters this fall if the state should allow up to 2,500 VLTs at each of Ohio’s seven horse racing tracks. If approved, Ohio’s racetracks could someday resemble The Mountaineer.

As proposed, Ohio would receive 51.5 percent of the take, providing an estimated $500 million a year for the state’s education budget.

Of the rest, one-half of a percent would go to local governments of areas where the tracks are located; 8 percent to 10 percent to horse owners and breeders; and 38 percent to 40 percent to track owners.

The House budget plan would temporarily increase the state sales tax from 5 percent to 6 percent and ask voters in November to approve slot machines at racetracks.

If voters agreed, the state sales tax would return to its current 5 percent in July 2004, after one year. If voters reject slots, the penny-on-the-dollar tax increase would continue for a second year.

The Senate, however, plans to remove video lottery terminals from the budget bill and deal with that proposal as a separate issue, said Senate Finance Committee Chairman Bill Harris, R-Ashland. That means VLTs would not be linked with the sales tax.

Gov. Bob Taft supports this move, but is still against bringing slot machines to Ohio.

"I’ll be opposed to the ballot issue, but our goal right now is to make sure that it’s a separate issue, that it’s not part of the budget," Taft said Thursday. "We don’t think that’s the responsible way to balance the budget."

There is a lot at stake.

People spent $61.4 billion on gambling nationwide in 2000, and taxes on gambling poured $26.8 billion into state budgets, the National Conference of State Legislatures said. All states except Hawaii and Utah have authorized at least one form of gaming, from charity games and horse racing to lotteries and casinos.

States across the country and in the Midwest are upping the ante as their neighbors get deeper into gambling and the competition gets more fierce. When one state expands, its neighbor feels pressure to do so as well.

"It’s just a competition thing, because there’s too much money at stake," said John Busam, editor of Midwest Gaming & Travel magazine.