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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2011 > May > 09 > Entry
Editorial: Kasich not letting casinos win easily
Gov. John Kasich thinks he has found a way to squeeze more money out of the casinos that are coming to Ohio.
Buried in his budget is a requirement that the casinos should have to pay Ohio’s main business tax on the total amount that gamblers wager — not the amount that the casinos have left after the winners are paid.
The casinos are apoplectic. They agree that they have to pay the Commercial Activity Tax (which runs 26 cents per $100 of proceeds) on their take after winnings are subtracted. But they say it’s absurd to suggest that they should be taxed on the total amount people bet.
That’s akin, Penn National Gaming says, to taxing a real estate agent on the sale price of a house, not the agent’s commission.
Penn wants the public to know that casinos also are subject to a 33 percent casino tax, over and above the CAT tax. The governor and the casinos agree that that tax only applies to what’s left after winners are paid.
Here’s what’s really happening:
The governor thinks the gaming businesses pulled a fast one on Ohioans when they got voters to approve a constitutional amendment in 2009 allowing four casinos in the state. Under the amendment — which, of course, was written by the companies that would benefit — most of the taxes casinos pay go to local communities.
Gov. Kasich wants a piece of the pie for the state. Because of an ambiguity, a loophole, an oversight or a theory cooked up by aggressive lawyers, he thinks he has leverage to make that demand.
Penn, which is building casinos in Columbus and Toledo, thinks not. It’s threatening a lawsuit if the legislation passes, and presumably Rock Ohio Caesars, which is building casinos in Cleveland and Cincinnati, would be right there with it.
Meanwhile, though, the gaming businesses have their own good cards to play. Ground is already being broken on the casinos, with the Cleveland and Toledo casinos supposed to open in the first quarter of next year.
So, in addition to taking the state to court, casino executives could decide to send construction workers home.
Penn’s Eric Schippers also told reporters that his company could cut back on its investment — which is code for saying that the company could decide to build glorified bingo halls, which is not the sort of project that the host cities want for their communities.
“Given the inordinate impact this unique and discriminatory application of the CAT tax would have on gaming companies,” Mr. Schippers has said, “if this provision remains in the budget we may need to reevaluate the scope of our planned investment, which for Penn has already reached over $100 million in Ohio.”
The governor is being appropriately unreasonable. He’s right that the gaming industry has never proposed casino rules that weren’t stacked in its favor; Ohio is no exception.
Setting gambling policy at the ballot box — and in concrete in the constitution — was a mistake. Trying to compensate for that decision after the fact is a hard game to play.
The governor deserves credit for looking out for the state’s interests, though he is taking a far-out negotiating position. His willingness to be over the top is exceeded only by the people he’s arguing with.
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