Study says forecast for casino-created jobs is too high

9/30/2009

Casino gambling, if approved for Ohio by voters on Nov. 3, would produce far fewer than the 34,000 jobs claimed by its sponsors and would take revenue out of Ohio rather than spark economic development, according to a study conducted by Hiram College and released yesterday.

The Hiram study - sponsored by Ohio Licensed Beverage Association, a bar-and-restaurant trade group that opposes Issue 3 - aims to counter the claims made in a rival study by the University of Cincinnati that the casinos would produce 34,000 jobs and $11 billion in economic impact during construction and the first five years of operation.

The UC study was paid for by the pro-Issue 3 Ohio Jobs and Growth Committee, which is backed by Penn National Gaming, owner of Raceway Park in Toledo.

Issue 3 would legalize four full-service casinos, including one in Toledo.

According to the Hiram study, the figure of 34,000 jobs is "misleading" because it includes a large number of temporary and part-time positions.

The real number is closer to 7,500 in direct casino employment and 8,307 additional jobs in the state, it says.

The study also says that other states with casinos gained fewer jobs than are projected by the backers of Issue 3.

"It's really an exchange of money; it's not economic growth," said Thomas Pascarella, professor emeritus of economics and management at Hiram College, which is northwest of Akron.

Mr. Pascarella said Ohio's casinos largely will attract local visitors and won't bring in a large amount of money that wouldn't normally be spent in the community.

The authors say their study provides a full cost-and-benefits analysis and says the study done by the University of Cincinnati was an economic impact study that didn't take into consideration a casino's effect on surrounding businesses.

"Casinos are specifically designed not to partner with other businesses in the immediate vicinity - they provide food, lodging, and entertainment under one roof to minimize the need for patrons to leave the premises," the researchers concluded.

The study criticizes the 33 percent tax on gross profits as less than that charged in comparable states.

Hiram's researchers concluded that a more representative tax rate would be 57 percent and that by settling for 33 percent, Ohio is surrendering $473 million in annual revenue.

The study cites Pennsylvania's 55 percent tax rate, a comparison the Ohio Jobs and Growth Committee said yesterday is "seriously flawed" because Pennsylvania has only slot-machine casinos, not the labor-intensive, full-service casino gambling that would happen in Ohio.

The Hiram study says a "broad array of studies" shows that gambling addiction, divorce, and bankruptcy rise the closer the population is to a casino.

Jacob Evans, vice president of government affairs and general counsel for the Ohio Licensed Beverage Association, said his members believe the casinos will only hurt them.

"Hundreds of restaurants and taverns will go out of business if Issue 3 is approved and the people who will benefit will be the casino developers," he said.

Jeff Rexhausen, associate director of research for the Economics Center for Education and Research at the University of Cincinnati, defended the UC study and said the Hiram study doesn't live up to its claims of being a cost-benefit analysis. He said it lacks evidence of having made calculations.

"If we had been asked to do a full costs-benefits study, rather than shorten our study, it would have been two to three times as long," Mr. Rexhausen said.

And he said Hiram's conclusions about the social and economic consequences of casinos do not reflect a broad range of research.

"The literature on social costs is much more complex and divided on its conclusions than the material that they cite would suggest," Mr. Rexhausen said. The UC study was 48 pages. The Hiram study is 21 pages.

Contact Tom Troy at:

tomtroy@theblade.com

or 419-724-6058.