Ohio opens it's doors to Casinos - FINALLY !!!!

[Bettor Slots]

Copied report from FOXNEWS.com

COLUMBUS -- Cleveland Cavaliers owner Dan Gilbert said he would start first thing Wednesday making plans for the four casinos that Ohio voters wrote into the state Constitution.

"Let's start lighting it up like Las Vegas," a giddy Gilbert said Tuesday after learning of Tuesday's election results. Gilbert is a main investor in the casino plan.

Passage of Issue 3 marked a significant victory for Gilbert and Penn National Gaming Inc., who spent nearly $35 million to persuade one of America's most stubborn anti-gambling states to change its mind. It marked the fifth time in 20 years a gambling expansion was proposed in the state, with all four previous attempts rejected.

With 99 percent of precincts reporting unofficial results, Issue 3 passed 53 percent to 47 percent.

The issue amends the state Constitution by authorizing casinos in Columbus, Cleveland, Cincinnati and Toledo, sets a 33 percent tax rate and outlines how the money will be distributed. Penn National president David Wilmott predicted all four casinos would be built in a little over two years.

David Zanotti of the Ohio Policy Roundtable, an anti-gambling activist, said citizens of a state with more than 10 percent unemployment were enticed by omnipresent ads promising 34,000 jobs.

"It's pretty obvious that the Ohio electorate bought into the whole culture of despair that's going on with the economy," he said.

Ohio becomes the 39th state to legalize casinos and a coveted prize that had held out among neighboring casino states Indiana, Michigan, Pennsylvania and West Virginia. TruthPAC, backed by MTR Gaming Inc. chairman Jeffrey Jacobs, spent almost $6 million opposing the measure.

Tuesday's vote may not be the end of the story, however.

State Rep. Lou Blessing, a Republican who fought the plan, said he plans to push a ballot issue next May that amends elements of the plan, collects more taxes from the casinos, and put the licenses up for bid.

Lawmakers cannot make changes to the casino outline without going to the ballot because it was inserted into the state Constitution.

"I don't know how even the newspaper that endorsed this issue could possibly object to that," Blessing said. "There are some obvious problems that need to be fixed."

The Humane Society of the United States also vowed a future Ohio ballot issue after it was struck a blow by the passage of Issue 2, which creates a new board to oversee livestock care. The issue was approved by 64 percent of voters, with 99 percent of precincts reporting.

The issue was intended to thwart efforts by animal right groups to outlaw holding sows, hens and veal calves in cramped cages or crates.

Michael Markarian, the Humane Society's chief operating officer, said the group will return to Ohio with a future ballot measure that protects animals.

"By packaging Issue 2 as a pro-animal and pro-food safety measure, the factory farming interests really did everything they could to ensure its passage," he said. "We never really viewed it as a poisonous measure but we viewed it as an empty one, because it doesn't achieve any reforms for animal welfare."

Large farm operators mounted a $4 million campaign to pass the issue, which was backed by Gov. Ted Strickland, while environmental, animal rights and other activists fought it mostly through the press and the Internet.

Ohio voters also passed Issue 1, which will pay bonuses of up to $1,000 to war veterans who served in the Persian Gulf, Afghanistan and Iraq. It was approved by 72 percent of voters, with 99 percent of precincts reporting.

In big-city mayor's races, incumbent Democrats Mark Mallory of Cincinnati and Frank Jackson of Cleveland won re-election.

Voting went smoothly statewide except for a glitch in Summit County, which includes Akron. The county ran out of ballots around 5 p.m. and had to turn away some voters.

Poll workers contacted them and asked them to return after printing more ballots.

The casino fight attracted more than $40.6 million in spending this year -- more than the $40.1 million presidential rivals Barack Obama and John McCain spent trying to win the pivotal swing state in 2008.

TruthPAC spokeswoman Sandy Theis called it a sad day for the state.

"Many Issue 3 supporters genuinely believe it will help Ohio's economic recovery. I hope they are right. I fear they are wrong," she said. "Issue 3 is riddled with loopholes that will shortchange Ohio, muzzle the casino watchdogs and exempt cash wagers from the taxes casinos pay."

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[rickhunter]

WOOT WOOT!!!

I wonder if this will affect the slot wholesalers based out of Ohio, like nevada's "wait" period.

[Flexpipe]

The Casino slated here in Columbus will not be open for 3 Years, I hear.  Lots of money will flow to the borders, as it has in the past. This should of been approved by the voters years ago. I believe the reason it passed this time, is because of the state of the present economy. Won't be an easy or quick fix here in Ohio, like some think.

[StatFreak]

I wonder how long it will take Ohio to change it's non-restricted private slot ownership laws? Don't be too surprised if "someone" tries to make you guys a 25 year state after you have an established "gaming commission" and the revenue starts flowing in.

[scratchee35]

Being from Ohio, i was very disappointed in the passage of this....even as much as i hate to travel to michigan or indiana...i dont think the state was ready for this....there is very little if any regulations setup....nobody cares to discuss what the min/max payout would be...sooo much confusion about the taxable table...i know their ads were announcing anywhere between 150,000,000 to 500,000,000 would go to schools...yea right, and no clear method to distribute any money to the counties...assuming it would be done on a percapita, even the government will manage to screw that up...

altho, in all fairness...the issue that was on the last ballot was even worse...it was for 1 casino, located in franklin county *columbus* area i belive, and the % was even worse....really glad that one didnt pass

it will probably be recinded by the attorney general from what ive heard in the news....

the owner of Hollywood is supposed to be building the Toledo casino, assuming that he will build the other 3

just my 2 cents!!!!

S

[Bettor Slots]

Being from Ohio, i was very disappointed in the passage of this

I agree completely.  This passing is obviously a measure of desperation by the voters.  My opinion is that it is too little, too late to do any real good for Ohio.  Its problems run much deeper than this band aid.

The concept of opening a casino in a State works great when there is no surrounding competition, i.e., ability to draw many customers from surrounding States keeping the casinos full and the revenue flowing.  However now that we have casinos in Michigan, Pennsylvania, West Virginia, and Indiana, (almost every surrounding State) what exactly is our client base?   It is of course our own and will there be enough clientele through the doors?   And does it do any good to bury many of these local clientele with more dept?

Las Vegas will remain successful and pull through its current problems due to its ability to draw customers on a regular basis worldwide.  In Ohio, do the investors actually expect to draw customers from out of state or country to come to Columbus, Cincinnati, or Cleveland?  Toledo has a fighting chance with Cedar Point.  But if I lived in Florida or Texas or California or more to the point, any surrounding state of Ohio, I just don’t see myself saying “honey, this year for vacation let’s go to that Cleveland casino and maybe see the Rock and Roll Hall of Fameâ€�.  Or “let’s go to that new casino in Columbus, I hear they have cows to look at alsoâ€�.  

I can remember a time when I would wait in a line out the door at Argosy in Lawrenceburg waiting for people to leave just so we could get in.  They even charged a $5 admission to get in the doors at that time.  Can you believe that???  Paying a cover charge to get into a casino!!!  In recent years, the place seems empty and only at half capacity.  They are even now completing a construction of an adjacent casino at that location at almost 3 times the size to take the current casino’s place.  This project began almost 4 years ago and has been going at a snail’s pace, and to what end?  Four years ago maybe it made sense.  Now that more and more casinos are popping up and now in Ohio, it is a risky investment to be certain.

I am curious to read the news 5 years from now with the results.  My fear, much like the demise of Mega Mall development’s in the late 90’s as a result of the Internet shopping boom, that casino’s and racino’s are going to end up like the half empty malls…..a glitzy, flashy and fun idea that looks great on paper but in the end, are doing no better and no real good like the Mega Malls.

[reho33]

I wonder how long it will take Ohio to change it's non-restricted private slot ownership laws? Don't be too surprised if "someone" tries to make you guys a 25 year state after you have an established "gaming commission" and the revenue starts flowing in.

They will have 2 pry the handle from my cold, dead fingers!!!!!! The 25yr thing is rarely enforced anyway. Never understood the history behind the slot free laws in Ohio anyway. Why did some end up wit the 25yr rule, some no slots allowed period, and the others free and clear. I wish PA would get rid of the age requirement.

[stayouttadabunker]

I try to look at the big picture of things...
10-20 years from now, there will be a casino in every city in the U.S.
It's a trend definitely heading that way.
After some time, every casino will be trying some gimmick or two to keep it alive.
Most of them will be half empty and struggling.
They'll probably die out like drive-in theaters...
The picture does look dim for the end, but it will be a ride!
Something else will pop up...doesn't it always?

[reho33]

Everything old is new again and "There is nothing new under the sun"

[StatFreak]

I try to look at the big picture of things...
10-20 years from now, there will be a casino in every city in the U.S.
It's a trend definitely heading that way.
After some time, every casino will be trying some gimmick or two to keep it alive.
Most of them will be half empty and struggling.
They'll probably die out like drive-in theaters...
The picture does look dim for the end, but it will be a ride!
Something else will pop up...doesn't it always?

I tend to agree IF the current morality holds. However, there is the possibility of another swing in the moral pendulum that will result in the closing of casinos and another era of anti-gambling in the U.S. before that occurs.

[reho33]

I tend to agree IF the current morality holds. However, there is the possibility of another swing in the moral pendulum that will result in the closing of casinos and another era of anti-gambling in the U.S. before that occurs.
[/quote]

Like Vladmir Putin did in Russia?

[StatFreak]

I tend to agree IF the current morality holds. However, there is the possibility of another swing in the moral pendulum that will result in the closing of casinos and another era of anti-gambling in the U.S. before that occurs.

Like Vladmir Putin did in Russia?

 

In the U.S. it would spring from the same folks who brought you prohibition. Hard economic times bring about changes, even if they are the wrong changes. It's human nature, and it's predictable.

In fact, you said it best:

Everything old is new again and "There is nothing new under the sun"

[jdkmunch]

I'd love to see a casino in Maine.

The poor people in the North East are trapped.   They only have Mohegan Sun and Foxwoods. 

[Op-Bell]

However, there is the possibility of another swing in the moral pendulum that will result in the closing of casinos and another era of anti-gambling in the U.S. before that occurs.

Oh god, I hope not. I've had it up to here with these god damn social conservative and religious bigotbodies telling everyone else what they can and can't do with their own lives and money. I kind of hope the reactionary fervor of the past decade is the last desperate "damn kids, get off my lawn" yell of a dying ideology. The pendulum has a very long way back to swing before it reaches anything like the degree of social freedom I enjoyed when I was a youngster. I'll believe we're getting somewhere when they can show a boob on TV without half the country screaming that the sky is falling.

As for Ohio, I wouldn't count on a casino opening within the next three or four years. Bettor Slots is right. There's no money in it. States only benefit when they draw in money from other states. If they just consume their own, it takes money out of the local economy, like imposing a crippling tax. And last time I looked, Ohio was in the poor house and can't afford to have any more of its disposable income siphoned off to Wall Street investors or the state capitol. Build some bloody productive industry, already.

[Bettor Slots]

As for Ohio, I wouldn't count on a casino opening within the next three or four years. Bettor Slots is right. There's no money in it. States only benefit when they draw in money from other states. If they just consume their own, it takes money out of the local economy, like imposing a crippling tax. And last time I looked, Ohio was in the poor house and can't afford to have any more of its disposable income siphoned off to Wall Street investors or the state capitol. Build some bloody productive industry, already.

Yes sir.  And did you happen to catch the article today from the U.S. Census Bureau that Ohio has 3 of the nation's Top 10 leading cities for decrease in population including Dayton, Toledo and Cleveland.  And Cleveland is ranked 2nd only to New Orleans.  The Cleveland population has been forced to migrate due to the lack of jobs and since the year 2000 has lost approximately 43,000 residents.  It only had a little over 400,000 to begin with.  Is it no wonder why there is not enough tax base to handle the infrastructure?  Ohio has been hardest hit by the economy and I can tell you myself, my family and many friends are very much feeling the hurt here with the lack of work and income.  It's a sad state of affairs to be certain.

[reho33]

Well I am going to leave some of my money behind in OH. And I live in PA. Lets see......... 2 slot machines, gas purchased from a OH gas station, food for breakfast and lunch purchased from an OH eating establishment. Thats probably about 1500.00 dollars or so. So I am doing my part. We just need to convince others to do the same and then the economy will start to hum again. P.S. PA is not doing much better (bettor).

[reho33]

However, there is the possibility of another swing in the moral pendulum that will result in the closing of casinos and another era of anti-gambling in the U.S. before that occurs.

Oh god, I hope not. I've had it up to here with these god damn social conservative and religious bigotbodies telling everyone else what they can and can't do with their own lives and money. I kind of hope the reactionary fervor of the past decade is the last desperate "damn kids, get off my lawn" yell of a dying ideology. The pendulum has a very long way back to swing before it reaches anything like the degree of social freedom I enjoyed when I was a youngster. I'll believe we're getting somewhere when they can show a boob on TV without half the country screaming that the sky is falling.

Yes, the 1st ones to scream say that video poker, slots, etc ruin and tear apart families. Look, any activity taken to it's extremes is bad and will ruin everyone involved in it. I know I 've said it before but when California is more concerned with a slot that is less than 25 years old versus a marijuana cigarette, somethings wrong. Maybe I could say that I need the slot machine to improve my hand/eye coordination and get a note from a doctor. All you need to get pot in CA is a note from a doctor saying that you need it. Well, I want my slot fix so sue me!

[Op-Bell]

The view from Wall Street -

11/3

It looks like after an extremely slimy and expensive campaign, PENN has come out on top in Ohio again.   Even though all the votes have not yet been counted, Issue 3 appears to have passed by a decent margin.  With 56% of the votes counted Issue 3 is passing by a 53% to 47% vote and they have already called it as a victory.  We don’t know what will happen with PENN tomorrow as there have been all sorts of wild predictions of 5 point gains and such being given but we can tell you that a few weeks ago when PENN started its descent we felt the decline was due to the uncertainty caused by:  the money spent by PENN in Ohio; their fascination with Fontainebleau; and their decision to bid so high for Lone Star Park.  Two out of those three uncertainties have been eliminated now and it looks like PENN may finally get tired of dealing with a pretty much tapped out owner of Fontainebleau that refuses to realize the jig is up.  In other words, rather than assign value to the Issue 3 casinos that have absolutely no timeline and could face delays just like every new legalized market, we believe it is better to look at the uncertainties that have been bringing gaming stocks down.    Speaking of which, we believe there is no better way to remove uncertainty from supplier stocks or make people forget what they were nervous about than new gaming jurisdictions.

11/4
The Issue 3 passage in Ohio had pretty much the impact we were expecting on Penn National Gaming.  The stock has regained about half of its value since it began tanking under the weight of concerns over Ohio, Fontainebleau and Lone Star.  It also had a positive impact on the slot makers and other suppliers, something we also expected.  It also erased the ridiculous speculative rally that had taken place in MTR Gaming shares yesterday.   We had told you previously that everyone had been forgetting that Lakes Entertainment could be involved if Issue 3 passed and today LACO filed an 8K showing they funded $4.3 million of the costs associated with promoting and passing Issue 3 and has an option to invest up to 10% of the cost of the casinos for a 10% equity stake.  If they don’t do anything, LACO will have the $4.3 million already spent as an equity stake in the casinos.
 
As for the timing of casino development, we know that it will be some time before the casinos are developed as there already is talk of lawsuits, other constitutional amendments to do things like jack up the tax rate and because we never believed the comments from Dan Gilbert that they would start building as soon as his hangover went away. Gilbert is now saying construction of the Cleveland casino will begin no later than the second half of next year.  PENN said they intend to get construction on the Columbus casino underway about a year from now.  PENN also dismissed the possibility of delays.  Everyone seems to have a different opinion of how much these casinos will add to the equity value and earnings of PENN and the slot makers.  It should be safe to say that this is a positive and since there is no time frame on this, no estimates or projections will reflect in the earnings or valuation of these companies.  For PENN it removes uncertainty and for the slot makers, it is just another 10,000 or so slots in that growing pipeline of future business that the companies are not including in their guidance and analysts are not putting in estimates.  In other words, higher valuation on conservative earnings continues to show signs of being justified.