The Casino Vultures refusing to take "NO" for an answer, finally succeeded on their 5Th attempt to legalize Slot Barns in Ohio, barely eking out a win from their $50 million investment. With projected state revenues of $600 million, the investors' profits would be far higher, so it was money well spent.
The legislation was flawed, as is the norm, and no independent cost benefit analysis was conducted, much like Beacon Hill. At this late date, the best that can be offered are 'estimates' of start-up and regulatory costs.
As for funding Ohio’s regulatory duties, the Department of Taxation analysis estimated the Casino Control Commission’s start up expenses at $5 million, with an annual budget of about $14 million once the agency is fully operational. Three percent of the tax collected on gross casino revenue – totaling an estimated $600 million annually once the casinos are fully operational – will cover commission expenses.
“That’s probably ambitious at this point,” Saxbe said. “It’s just a plugged-in number.”
Noteworthy in this discussion is the lag time from voter approval to job creation and revenue stream. Beacon Hill has misrepresented their flawed legislation as an immediate solution, when in fact, it's not.
A federal report determined that every $1 in gambling revenue costs $3.
No wonder elected officials are salivating at the prospect!
Casino commission's hiring spree to begin
The commission charged with overseeing Ohio’s new casino industry is starting down the path of creating a staff whose job will be ensuring everything is on the up-and-up at the gambling facilities.
The new Ohio Casino Control Commission will need about 160 employees to do that job once the casinos in Columbus, Toledo, Cleveland and Cincinnati start coming online in 2012, according to an analysis by the Ohio Department of Taxation.
The goal, said Commission Chairman Charles “Rocky” Saxbe, is to find the best people for state jobs that will include gaming administrators, auditors, accountants, legal staff and law enforcement officers.
“We want the right people and right systems in place before the first dollar is wagered,” said Saxbe, a partner in the Columbus law firm of Chester Willcox & Saxbe LLP.
But the hiring process will be challenging given the tight time frame to pull together and train the staff, uncertainty over the commission’s funding and political issues involving the pending confirmation of commission members by the Ohio Senate.
Created as part of the voter-approved 2009 constitutional amendment allowing Ohio’s first casinos, the commission will license and regulate casino gaming, operators, management companies, employees and vendors.
The seven commission members were appointed by Gov. Ted Strickland last month – as required by state law. They held their first meeting Oct. 25 and will hold a roundtable discussion with key state legislators Nov. 8, Saxbe said.
One of the commission’s first tasks is to hire an executive director and top staff members. They will help commission members fill the other staff positions, which are expected to number 35 in the agency’s first year of operation. The rest of the jobs would come in 2012 with gaming control employees in place at each of the casinos.
Based on a review of the casino regulatory agencies in Indiana and Michigan, a 2009 analysis by the Ohio Department of Taxation said the Ohio commission will need 41 employees to enforce criminal laws for gaming, 41 to enforce regulatory statutes and 21 to investigate financial and background issues with casino suppliers and employees.
The commission’s staff also would include 19 employees in auditing services, 16 in central administrative support positions, eight in legal services and four in gaming lab services, the analysis said.
Transparency, credibility
States new to casino gambling typically fill many of their gaming commission positions with workers from in-state agencies that regulate liquor sales, lottery operations, horse racing and business licensing, said Robert Russell, a gaming industry analyst with Regulatory Management Counselors P.C. in East Lansing, Mich.
There also are consultants experienced in the licensing and regulation of casinos who can be hired, he said, and Ohio may also want to recruit employees from gaming boards in other states in what has become a maturing industry.
The success of casino regulatory bodies in other states can serve as a benchmark for Ohio, said Fredric Gushin, a former casino enforcement official for New Jersey and managing director of Spectrum Gaming Group, a gaming research and services firm in Linwood, N.J.
“The important thing,” Gushin said, “is that everything is done as transparently as possible and with a high degree of credibility. Public confidence in the regulatory process is the key element of success.”
As for funding Ohio’s regulatory duties, the Department of Taxation analysis estimated the Casino Control Commission’s startup expenses at $5 million, with an annual budget of about $14 million once the agency is fully operational. Three percent of the tax collected on gross casino revenue – totaling an estimated $600 million annually once the casinos are fully operational – will cover commission expenses.
“That’s probably ambitious at this point,” Saxbe said. “It’s just a plugged-in number.”
Election effect
It is unclear from where the commission’s startup funding will come because it will be operating before the casinos open and considering that the constitutional amendment did not address the issue. Tapping the state’s general revenue fund is a possibility, according to the Department of Taxation analysis.
Also unclear is whether Strickland’s appointees to the commission will be confirmed by the Republican-controlled state Senate. Under state law, the Senate has until the end of the year to confirm any or all of the commission members.
If it fails to act by then, the appointments are automatically confirmed, Saxbe said.
And, it’s up in the air what effect Republican John Kasich’s victory over Strickland in the Nov. 2 governor’s race will have on the appointment process.
One possibility is for Senate Republicans to reject Strickland’s choices so Kasich can have a say on the people who will shape the state’s casino regulatory structure in the coming year.
Saxbe is a Republican, but he backed Strickland in the 2006 governor’s campaign.
“We’re running as best we can now,” he said, “and will continue to do so until someone tells us to stop.”
Ohio Casino Control Commission
Here are the seven members of the commission, the state agency that will oversee the regulation and operation of casinos in Columbus, Cleveland, Toledo and Cincinnati:
Charles “Rocky” Saxbe: of Columbus, a partner in the law firm of Chester Willcox & Saxbe LLP.
Joseph Rugola: of Columbus, executive director of the Ohio Association of Public School Employees.
Vanessa Whiting: of Cleveland Heights, a partner in the law firm of Roetzel & Andress LPA.
Jerry Chabler: of Sylvania, a member of the board of directors for the Toledo-Lucas County Port Authority and former member of the Ohio State Racing and Lottery commissions.
William Kirkham: of Cincinnati, an attorney at the law firm of Frost Brown Todd LLC.
John Wainscott: of Cincinnati, a retired city of Cincinnati police officer.
Greta Russell: of Columbus, a controller at Ohio State University and certified public accountant.
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