Ohio's proposed 33 percent tax rate for casino operators is in the middle range of Midwestern casino tax rates. That hasn't stopped supporters and opponents of Issue 3 from making conflicting claims about the proposal on the Nov. 3 ballot to amend Ohio's Constitution so that casino gambling can be legalized. "The tax rate would render Ohio the fourth-highest for a pure casino jurisdiction."
Ohio's proposed 33 percent tax rate for casino operators is in the middle range of Midwestern casino tax rates.
That hasn't stopped supporters and opponents of Issue 3 from making conflicting claims about the proposal on the Nov. 3 ballot to amend Ohio's Constitution so that casino gambling can be legalized.
"The tax rate would render Ohio the fourth-highest for a pure casino jurisdiction," said Eric Schippers, a spokesman for Penn National Gaming Inc., one of the proposed amendment's backers.
Jerry Chabler, a Lucas County member of the Ohio Racing Commission and an outspoken opponent, calls the 33 percent tax rate "one of the lowest rates in the country in states that have casino gaming."
Rates vary nationally from 8 percent in Nevada to 74 percent in Rhode Island.
Issue 3 would authorize casinos in four Ohio cities - Toledo, Cleveland, Columbus, and Cincinnati.
The ballot issue would put $651 million of annual revenue generated by the 33 percent tax rate out of lawmakers' reach. The proposal has a detailed plan for distributing that revenue, with big cities and school districts getting significant chunks.
Casinos are taxed on gross revenues - cash left after winnings are paid. The Ohio casinos are projected to generate nearly $2 billion in gross revenues.
Tax rates vary dramatically in the Midwest, with racetrack casinos and slot machines typically taxed higher. Here's a quick look:
•Michigan - 19 percent.
•Pennsylvania - 55 percent, on slot machines only.
•Indiana - a graduated rate of 15 to 40 percent on revenue over $600 million, with an average rate of 38 percent.
•West Virginia - 54.4 percent at four race track casinos.
•Illinois - a graduated rate of 15 to 50 percent over $200 million, with most paying between 20 and 36 percent.
A study released last week by Hiram College, a liberal arts college in northeast Ohio's Portage County, attacked the proposed 33 percent tax rate as insufficient to cover the costs associated with casino gambling.
The study, paid for by opponents of Issue 3, quotes Earl L. Grinols' 2004 book Gambling In America: Costs and Benefits as saying that "the appropriate tax rate should be 45 to 70 percent."
It says the Ohio rate should be at the midpoint of the estimate, close to Pennsylvania's 55 percent.
"Ohio is surrendering $473 million annually by agreeing to a tax rate of only 33 percent," the Hiram study concludes.
Supporters say the Pennsylvania tax rate is an unfair comparison because Pennsylvania allows only slot machines.
And according to the Pittsburgh Post-Gazette, lawmakers in Pennsylvania are considering allowing full-service casinos with tax rates predicted to be no more than 21 percent.
Mr. Schippers said the casinos in Ohio would have the same blend of slot machines and table games that one finds in Detroit and Indiana, such as blackjack, roulette, poker tables, and the slots.
"We set the 33 percent where we did because this is a full-casino jurisdiction. It gives us a chance to be competitive with the neighboring states on an apples-to-apples basis," he said.
The Ohio initiative allows for up to 5,000 slot machines and an unspecified number of tables.
Penn National's Argosy casino in Lawrenceburg, Ind., has 2,417 slot machines and 74 tables. Detroit's three casinos - none operated by Penn National - have between 2,500 and 4,000 slot machines and 60 to 90 tables each.
The issue on the Ohio ballot last year for a single casino in southwest Ohio would have mandated a tax rate of 30 percent.
The Learn & Earn slot machines proposal in 2006 included a 45 percent tax rate.
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