Toledo casino's 1st 33 days put $531,617 in city coffers

COLUMBUS -- Now comes the real payout time from the winnings at Hollywood Casino Toledo.

Gamblers dropped nearly $242 million into slot machines and onto game tables in the casino's first month and three days of operation. That translates into about $7.5 million in tax revenue for school districts and government entities across the state.

Among those "winners" was the city of Toledo, which will receive $531,617 -- putting the city on track to at least meet its budget projection for the year of $3.4 million total in casino money.

"This is all good, but obviously there's a lot of excitement with a new casino," said George Sarantou, Toledo City Council finance committee chairman. "People are going to visit it because they've never been to a casino and it's in their backyard. Now the test is how this keeps up.

"A casino is not a panacea," he said. "This is not going to solve our financial challenges, but it's a step in the right direction."

Numbers released by the Ohio Casino Control Commission this week showed that Toledo's entry into the world of casino gambling trailed the performance of its counterpart, Horseshoe Casino in downtown Cleveland, in total revenue and gambling profits. Horseshoe Casino, however, had a roughly two-week head start in operations over the Toledo casino, which opened on May 29.

Horseshoe gamblers forked over about $340 million during that time, translating into gaming profits for the casino of $42.6 million after prize payouts. The Toledo casino pocketed some $22.8 million for its adjusted gross profits.

"They are tracking right along with our expectations," said Matt Schuler, the casino control commission's executive director.

According to the numbers, Toledo gamblers seem to like their 2,000 slot machines more than Cleveland gamblers do. A comparison of June activity alone showed that Toledo gamblers put $195.6 million into the machines compared with $159.6 million in Cleveland.

But Hollywood Casino Toledo paid out a greater share, nearly 91 percent of the take, in jackpots, compared with 88.3 percent at Horseshoe Casino -- so the Cleveland casino showed greater profits. State law mandates a minimum payout of 85 percent.

Hollywood Casino's payout at the 80 game tables was 86 percent.

Of the $20.4 million taken in by Hollywood Casino in gross revenue in June alone after payouts, $17.8 million, or 87 percent, came from the slot machines.

In all, gamblers in Toledo and Cleveland bet $582.2 million since Ohio joined the casino market in mid-May. The casinos reported a total of $65.5 million in gambling revenue after prize payouts.

The Ohio Department of Taxation reported putting $19.7 million in wagering tax revenue from both casinos into various funds for host cities, schools, counties, casino regulators, horse-racing purses, law enforcement training, and problem-gambling programs.

Of the city of Toledo's total of $531,617 from these disbursements, it receives $339,575 as the host city for the casino and $192,042 as its guaranteed 50 percent share of Lucas County's take.

The numbers do not count other profits that Hollywood owner Penn National Gaming Inc. or Horseshoe owner Rock Ohio Caesars took in for food, drinks, and other sales at their sites. Those profits also would be subject to state and local taxation.

"We're very pleased with what we've seen from the operations for the first month and a half. It's very encouraging," Toledo Deputy Mayor Steve Herwat said. "We're seeing new money coming into our community, frankly money that was driving right past us to Detroit and Windsor [Ontario]."

Toledo also stands to benefit from income taxes paid by employees at the casino. Withholding numbers are not due yet, so the city won't have figures on that for a while, Mr. Herwat said.

City officials said they have budgeted for an increase in income tax revenue too this year as a result of the casino opening. They would not provide specific figures. However, overall income tax collections for 2012 are projected to be $2 million higher than last year's.

Toledo also will gain taxes this year from any casino winnings by people living in the city. Administration officials said they hope to extend their ability to tax winnings to people visiting the casino from out of town. However, that will require a legal amendment that the city hopes to put before the voters in November, Mr. Herwat said.

In adjacent Rossford, Mayor Neil MacKinnon III said he does not know how much tax revenue his city will receive or when it will come in. The revenue will go to Wood County before being portioned out to each individual city, he said.

Rossford has received a "generous gift" of $200,000 from the casino, in addition to funds in excess of $12,000 to help pay for a new police canine unit, both of which Mayor MacKinnon said were intended to help with the impact of the casino's opening week. A large portion of that $200,000 was spent on new radios for Rossford's police and fire departments.

"The first week we had a lot of increased traffic," Mayor MacKinnon said. "After that, to be quite honest, it's kind of been really nice that traffic has died down -- you almost forget it's there unless you drive by it. … It's basically business as usual here."

Although traffic might have eased after the casino's debut, the mayor said that local businesses -- including nine to 12 stores that moved in shortly before the opening -- have gained customer traffic.

Isaac Hubbard, who opened his store, Cigar Bar, a quarter-mile away from the casino site seven months ago, said he chose the location specifically to appeal to casino-goers. His choice hasn't disappointed him, with business having "absolutely" increased.

"People are coming and we've been getting people talking about how they're from different parts of Toledo and different parts of the state," Mr. Hubbard said.

"We're pleased with the response from guests during the casino's first month of operation," Penn National spokesman Brent Burkhardt said. He said any additional comment about the Toledo casino's performance would be reserved for Penn National's quarterly earnings conference call with investors on July 24.

Hollywood's sister casino in Columbus is expected to open this fall. Horseshoe's Cincinnati sister casino is expected to open next year.

"The high numbers in the beginning don't come as a surprise," said Rob Walgate, vice president of the Ohio Roundtable, an ardent gambling opponent. "Anytime a casino opens, they always show promise in the first couple of years. These casinos are not a long-term solution to the problems that Ohio faces. This does not negate the fact that the constitutional monopoly that was created still shortchanges Ohio."

The voter-approved constitutional amendment imposes a 33 percent state tax on the casinos' adjusted gross revenue to fuel the various funds. The distribution figures announced by the Department of Taxation were slightly smaller than the expected amount, a discrepancy attributed to the lag time between the close of the quarter and the casinos getting the money to the state.

So far, casino operations have proceeded relatively smoothly, Mr. Schuler said.

"They've been very cooperative with us," he said. "There's always a shaking-out period of fine-tuning. I feel like we are absolutely fulfilling our mission of ensuring the integrity of casino gambling."

Ohio Attorney General Mike De-Wine recently announced indictments against seven people from northeast Ohio in connection with alleged cheating at table games at Horseshoe Casino. Mr. Schuler said investigations are under way for similar activity at Hollywood Casino with potential charges pending in Lucas County.

Meanwhile, the Ohio Lottery Commission reported that Ohio's sole racetrack slots parlor, Scioto Downs in Columbus, saw wagering of $122.7 million since it went into operation last month. Of that, $7.4 million will go to the Ohio State Racing Commission and $3.7 million to the lottery. The latter's profits are earmarked for K-12 schools.

The racing commission on Tuesday approved proposed rules for the relocation of licenses for racetracks, including the requirement of a $75 million relocation fee for each track. The rules must still undergo legislature review, so it may be fall before the commission makes final decisions on Penn National's pending applications to move its Raceway Park from Toledo to Dayton and Beulah Park from the Columbus suburbs to the Youngstown area.

Staff writers Madeline Buxton and Claudia Boyd-Barrett contributed to this report.

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