Vote No on Issue 3
Today, we are once again being forced to defend against an attack against Ohio’s families and the people who live in our neighborhood. I am especially concerned this time around because I know our state is struggling and many leaders are desperate for what they view as a quick economic fix, which the promoters of Issue 3 are exploiting with their multi-million dollar advertising campaigns.
Even if you think casinos are a good idea for Ohio, as Brent Larkin – former Editorial Page Editor of the Cleveland Plain Dealer – does, Ballot Issue 3 is simply a bad amendment that bilks Ohioans and lines the pockets of Casino owners.
Larkin recently wrote “Downtown Cleveland has so many problems that building a luxury casino somewhere near the center of town is a risk worth taking -- but only if the price is right. But the price Cavaliers owner Dan Gilbert wants to pay in fees and taxes to build a casino behind the Terminal Tower doesn't meet that standard.”
Here are the facts: Issue 3 will alter Ohio’s Constitution and create a monopoly for two entities – Cleveland Cavaliers’ Owner Dan Gilbert and Penn National Gaming – for four casinos in the state that would have both table games and slot machines. When other states like Pennsylvania made the choice to bring casinos into their borders, they used a competitive bidding process, and got a far better deal from its casino operators than Gilbert is offering Ohio.
Additionally, the one-time licensing fee to be paid to Ohio for the right to operate casinos by this proposal is $50 million per casino – significantly less than the licenses are worth on the open market. Jeffrey Hooke, a Maryland-based casino expert, said a fair price for each casino license should be in the $300 million to $500 million range. Ohio would miss out on at least $800 million in additional revenue if Issue 3 passes.
Finally, the casinos proposed by Issue 3 would pay only a 33 percent tax on gross revenue, with the other 67 percent going to casino owners! That is far below the average paid by casinos in our neighboring state of Pennsylvania which has a gross revenue tax rate of more than 55 percent. Ohioans would be getting denied $434 million in tax revenue under Issue 3 annually due to the low 33 percent tax rate.
But the most important reason to vote “No” is really quite simple: Casinos bring devastation to families. Statistics show that: violent crime, embezzlement, bankruptcy and fraud rates spike dramatically in casino counties; divorce rates are nearly three times higher among addicted gamblers than non-gamblers; and suicide rates are highest among addicted gamblers.
Casinos also do not draw the large numbers of out-of-state gamblers typically promised. 80 to 90 percent of a casino’s patrons come from surrounding counties – and a casino located within a 10-mile radius of a home yields a 90 percent increased risk of a citizen becoming a pathological gambler.
Can you imagine the number of people who would go downtown to just “experience the casino” and, once hooked, become addicted to gambling?
And there is no question that our neighborhood businesses and restaurants will be impacted. Don’t kid yourself – casinos won’t help out. They are specifically designed not to partner with other businesses in the immediate vicinity – they provide food, lodging and entertainment under one roof so patrons never have to leave the casino. When casinos move in, other businesses are often forced out.
By any statistical measure, Ballot Issue 3 is simply a bad amendment – but casino gambling in general is a lousy deal for the local communities and states that embrace it. The larger question, though, is this: What human price are we in Ohio willing to pay if we open our doors to casinos? Are we prepared to accept responsibility for the painful realities of ruined lives and broken families that casinos leave in their wake?
Please vote “No” on Issue 3 so Ohio will not be forced to answer that question.
FACT: Issue 3 will alter Ohio’s Constitution and create a monopoly for two entities – Cleveland Cavaliers’ Owner Dan Gilbert and Penn National Gaming – for four casinos in the state that would have both table games and slot machines. Why should Ohio’s constitution be amended to grant monopolies? When other states like Pennsylvania made the choice to bring casinos into their borders, they used a competitive bidding process, the results of which are always better for taxpayers.
Randall Fine, who is managing director of Las Vegas-based Fine Point Group – a gaming consultant for MGM MIRAGE, Station Casinos, and Harrahs’ Entertainment – addressed Ballot Issue 3 saying,“…the structure they have proposed is not in the best interest of Ohioans.”
FACT: The one-time licensing fee to be paid to Ohio by Dan Gilbert and Penn National Gaming for the right to operate casinos by this proposal is significantly less than the licenses are worth on the open market. Jeffrey Hooke, a Maryland-based casino expert and investment banker, said a fair price for each casino license would be in the $300 million to $500 million range. Issue 3 calls for a measly fee of $50 million per casino, while other states are making out like bandits.
· A casino planned for Illinois will bring a fee of more than $400 million;
· State officials in Massachusetts may ask $500 million each for two casinos being discussed there; and
· In 2007, two Indiana racetracks coughed up licensing fees of $250 million each for just slot machines.
Taking just the fees the Indiana racetracks put up for slots – $250 million – Ohio would miss out on at least $800 million in additional revenue if Issue 3 passes.
FACT: There is nothing in the Petition Language of Ballot Issue 3 that requires Dan Gilbert and Penn National Gaming to actually build the casinos after obtaining the deeply-discounted $50 million licenses from Ohio’s government.
FACT: There is also nothing in the Petition Language of Ballot Issue 3 that prohibits Dan Gilbert and Penn National Gaming from simply selling their licenses on the open-market for big-profit. As mentioned before, Issue 3 calls for a measly fee of $50 million per casino, while the fair price for a casino license would typically be in the $300 million to $500 million range. This is Penn National’s business, and they know a windfall money-making opportunity when they see it. Would the state benefit in any way from this resale? The issue of sale is not addressed in the Constitutional Amendment.
FACT: The casinos proposed by Issue 3, if built, would pay only a 33 percent tax on gross revenue, with the other 67 percent of Ohioans’ hard-earned money going to casino owners! That is far below the average paid by casinos in our neighboring states of West Virginia and Pennsylvania, each of which have gross revenue tax rates of more than 55 percent.
According to Ohio Jobs and Growth Committee, taxes levied on the four Ohio casinos would bring in $651 million in revenue. To do this, the four casinos would have to bring in gross revenue totaling $1.97 billion. If you apply the Pennsylvania or West Virginia tax rate to this gross revenue, it is estimated that Ohio would stand to bring in $1.09 billion. Ohioans would be getting denied $434 million in tax revenue under Issue 3 annually due to the 33 percent tax rate!
FACT: When the out-of-state casino developers wrote Issue 3, they gave themselves a bonus. A loophole in Issue 3 means casino developers may not pay taxes on cash betting. Under Issue 3, cash bets will cheat Ohioans out of their rightful tax revenues. Now the casino developers say cash isn't used to gamble – but they are not telling Ohioans the truth. The definitions in Ballot Issue 3 would make cash wagers in slot machines and other games exempt from taxation.
FACT: Passage of Issue 3 will mean inevitable job losses from competing hospitality businesses. According to the Public Policy Research Group at Hiram College, hundreds of restaurants, taverns and other hospitality businesses will go out of business, nullifying any economic benefits the casinos could provide.
The crowd out effect: Casinos are specifically designed not to partner with other businesses in the immediate vicinity – they provide food, lodging and entertainment under one roof. When casinos move in, other businesses are often forced out.
FACT: “Tourism” is a losing bet: 80 to 90 percent of a casino's patrons come from surrounding counties. Proponents will tell you that Ohio casinos will be destination points for out-of-state gamblers and attract tourism. What they will not tell you about is a conclusion reached by a survey conducted regarding the city of Detroit: 80 to 90 percent of a casino's patrons come from surrounding counties. (Source: The Detroit News; "Detroit casinos lose tourism bet," July 6, 2003)
FACT: While only a few areas in the state will actually see some pittance of funding once the owners take the majority of the profits tax free, the rest of the state will have to pay for all of the social costs, including: the effects of local businesses losing revenue to slot machines; welfare rolls growing larger once gambling parents lose their jobs or, even worse, leave their spouses and children to fend for themselves.
FACT: The United States International Gambling Report Series, a 3,000-page compilation of decades of academic research on gambling concludes that casinos are most destructive to those citizens least able to cope with financial loss.
*National statistics underscore that every tax dollar that comes from casino gambling results in $3 of social welfare costs.
· New crime in a community increases 8 to 10 percent on average each year after a gambling facility opens; and
· The costs of gambling addiction are greater than drug addiction.
· A broad array of additional studies detail the social costs of gambling:
§ Bankruptcies increase significantly among casino gamblers;
§ Gambling addiction rates double within 50 miles of a casino;
§ A casino within ten miles of a home yields a 90 percent increased risk of becoming a pathological or problem gambler;
§ The frequency of gambling in the 10 percent most disadvantaged neighborhoods (72 times/year) is more than twice the frequency of the least disadvantaged neighborhoods (29 times/year);
§ Violent crime rates "spike" in casino counties, as do embezzlement and fraud rates. In just three years after the casinos arrived, Atlantic City rocketed from 50th to 1st place in the nation in per-capita crime.
§ Among groups of people who admit to being addicted to something, suicide rates are highest among addicted gamblers.
§ In a 1999 interview, Reverend Jesse Jackson called legalized gambling “the new chains of slavery.’’