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Commentary: The Casino Will Trump Hamilton County, Ohio’s Stadium Deal. Want to Bet?

[important]This commentary initially published via GraniteRG.com on August 13, 2011. It has been updated and moved to kennethdprice.com for more efficient management of online content. [/important]

 

COMMENTARY

 

As if the Hamilton County debacle of raising sales taxes to pay for $700 million in stadiums was not enough, now comes the encore. Horseshoe Casino will not only fill a hole in an under-utilized stretch of land, but one that will also put a hole in the pockets and hearts of many unsuspecting citizens.

If history is our guide, that latter hole will manifest in crime, substance abuse, marriage collapses, bankruptcies, etc.

cincinnati_s_next_bungle_-_casino

Once again, African Americans trumpeted the casino in the same way that some did the Hamilton County Stadium Sales Tax. It reflects a culture of a city where leaders exert considerable influence on common citizens both directly and indirectly. In a direct sense, leader can threaten certain outcome if the residents fail to support key initiatives. As an example, Cincinnati Bengals owner, Mike Brown, leveraged the idea of relocating his NFL franchise if citizens rejected the construction of a new stadium.

Likewise, indirect influences enrolls faith leaders, social agencies, small businesses, and trade associations to either support or not openly oppose efforts that have included new jail construction, schools, convention center expansion — each very questionable as to their need. Here, community intermediaries enlisted to advocate these initiatives, despite the negative implications, either seek benefits or succumb to immense pressures.

As the stadiums were sold on a pipe-dream so was the casino. Namely, proponents of the Ohio referendum that legalized casino gambling asserted these venues would will generate huge tax revenues, bring home to Ohio gambling dollars lost to other states (e.g., MI,IN,KY), and stimulate jobs. All upside economic benefits similar to the claims. Ohioans have been down this road before. The rosiest economic climates and the most ambitious outcomes. The Ohio Lottery was to do so much for our state’s economy. And the schools would just be rolling in greenbacks because of this legalized gambling windfall. And yet, Cincinnati is in financial desperate straits, losing population, and constantly seeking new schemes to establish fee-based services. Hamilton County’s fiscal woes were not mitigated by restructuring the debt to the stadiums that contributed to them. And the State of Ohio’s financial conditions, while aided by auto bailout, are equally problematic.

Jurisdictions are selling assets in desperate attempts to generate needed capital and to lessen the strain on operating budgets. The City of Cincinnati closed the Cincinnati-Blue Ash Airport. The State of Ohio recently sold Lake Erie Correctional Institution in Conneaut, Ohio to Nashville, TN-based  Corrections Corp. of America for $72.7 million; a move also expected to produce $13 million in annual operating savings. Similarly,  North Central Correctional Institution and vacant Marion Juvenile Correctional Facility transferred to  Management and Training Corp. of Centerville, Utah.

Taxpayers have been forking out more and more dollars for school levies – both capital and operating. Property taxes have gone up. Services have been cut. But black, poor whites, and other vulnerable groups flood lottery ticket retailers across the region in hopes for cashing out large.Citizens soon forget that gambling is predicated on the winners and losers – and typically the big losers are the most vulnerable. Casinos become an indirect tax. The economic impact jargon neglects the fact that casino activity trades one spending decision for another – which does not translate into new economic activity. The social costs are enormous. There are myriad direct reasons why casinos are terrible. And just like the availability of studies that demonstrate taxpayer-funded stadiums are bad deals when groups like a local black ministers conference supported sales tax ballot initiative, studies were available that articulate the dark side of legalized gambling when groups like the Cincinnati NAACP failed to oppose it.

The Brookings Institution is one of many organizations to study the impact of gaming enterprises. Reports such as these are invaluable for citizens who faced with the decision to approve/reject gaming. Unfortunately, for Cincinnati and the State of Ohio, the horse has left the barn on Horseshoe Casino.

But stay tuned. If my hunch is right, what the region is betting on will eventually not be worth the value of a losing lottery ticket.

 

SEE BROOKINGS INSTITUTION REPORT:  The Economic Winners and Losers of Legalized Gambling“.

 

 

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