Judge pledges decision on racetrack-slots suit

4/5/2012

COLUMBUS -- Attorneys for casinos, racetracks, state regulators, and Gov. John Kasich joined forces Thursday in an attempt to persuade a judge to kill a lawsuit challenging Ohio's authority to install video slot machines at racetracks without a vote of the people.

Franklin County Common Pleas Judge Timothy S. Horton said he would decide in the "near future" whether to dismiss the lawsuit, which also questions a tax deal negotiated by Mr. Kasich with the developers of four Las Vegas-style casinos.

"Video lottery terminal games are lotteries that will be conducted by the Ohio Lottery Commission where the entire net proceeds will support education programs in Ohio," said Susan A. Choe, an attorney representing the state lottery and casino control commissions. "Accordingly, video lottery games are constitutional…"

But Tom Connors, attorney for the staunch gambling opponent Ohio Roundtable, countered that thousands of slots-type video games at seven horse-racing tracks were not what voters envisioned when they approved a state-run lottery in 1973. "Lotteries are not equivalent to all gambling. That's a basic part of Ohio law," he said.

He said lawmakers had opportunities in the past to include other games of chance under the definition of lottery but did not. "If there was any question at all that slot machines are lottery, that should end it," Mr. Connors said.

Penn National Gaming's $300 million Hollywood Casino Toledo is expected to open on May 29, two weeks after Rock Ohio Caesars plans to open its $350 million Horseshoe Casino in downtown Cleveland. Casinos in Columbus and Cincinnati will follow.

The suit before Judge Horton does not challenge the legality of the four casinos because they were approved by voters.

But it does challenge elements of subsequent deals negotiated by Mr. Kasich's administration with the casino operations that included a change in the definition of a state business tax so it applies to casino revenue only after winnings are deducted.

Matthew Fornshell, attorney for several Penn subsidiaries, including Toledo's Raceway Park, argued that lawmakers have approved more than 30 such exemptions from the commercial activity tax.

"This is yet another one," he said.

He noted that, if the tax applied to every penny wagered, a player could conceivably walk into the casino, play once, and walk away with winnings. The casino would pay the commercial activity tax on that wager even though it lost money.

Mr. Connors, however, argued that the voter-approved constitutional amendment specifically required the casinos, in addition to a 33 percent wagering tax, to pay commercial activity, sales, property, and other state and local taxes.

"What they did was constitutionalize existing laws … then they wanted to change it by legislation … " he said. "It's too late. They can't change it. They've got to go through the constitution."

The lawsuit also challenges the state's authority to grant slots-parlor monopolies to private racetracks.

Some racetracks, most notably Scioto Downs in Columbus, are charging full speed ahead with plans to open slots parlors. Penn National wants to move its Raceway Park and suburban Columbus track Beulah Park to Dayton and the Youngstown area, respectively, to get them out of the shadows of its new casinos, but it has opted to wait for the outcome of the lawsuit before making those moves.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.