Ohio: Promises meant to deny

Ohio voters were given some seemingly rock-solid figures during the aggressive, well-financed campaign for Issue 3.

'Surprise' casino shortfall shouldn't surprise

Public reaction to Monday's news that initial Ohio casino revenues could be as much as 40 percent lower than voters were promised in 2009 may have been less outrage than resigned cynicism.

Letter-writer Gordon Jewett's reference to the Gomer Pyle signature line "Surprise, surprise" seems typical of comments on the Enquirer's report that the four casinos will open with a total of just 11,519 gambling seats, instead of the 18,960 seats projected during the Issue 3 campaign.

After all, haven't we seen these things before? Those "Oh, never mind" economic projections that somehow don't pan out as anticipated? Revenues from the half-cent sales tax increase? The cost of sports stadiums? The scope and timeline for The Banks project? And dare we say it, the streetcar?

One lesson here is that voters shouldn't be surprised when glowing projections turn to muted reality. They should take such projections with a grain of salt. In other words, your mileage may vary.

At the same time, those who seek public approval for development projects should be held to high standards of transparency and candor. It's hard to avoid the conclusion that casino advocates were not completely forthcoming with Ohio voters.

The Enquirer's Alexander Coolidge reported Monday that the original estimate of $2 billion in first-year gambling revenue has been revised downward to between $1.2 billion and $1.6 billion. This could leave Ohio's 88 counties, public school districts and casino host cities - all of which were promised a cut of the action - as much as $360 million in the lurch in 2013.

We don't use the word "promised" lightly. Ohio voters were given some seemingly rock-solid figures during the aggressive, well-financed campaign for Issue 3. The casinos would recapture $1 billion of the $1.4 billion in economic activity lost each year by Ohioans going out of state to gamble, we were told. The city of Cincinnati could look forward to a $20.9 million yearly revenue boost, Hamilton County $12.2 million, and the county's school districts $14.1 million.

But as Coolidge found out, while revenues may eventually reach that level, they will have to be ramped-up to get there. "Ohio is a $2 billion market - but not in 2013," Steve Galloway of Denver-based Gaming Market Advisors told Coolidge. Fair enough. We can appreciate the need for a new business to start small and grow methodically. But it would be nice for the public and its elected officials to have gotten a sense of the timetable up front.

Casino officials say their revenue projections have changed for a variety of reasons - competitive pressures among them. It's a business, subject to changing conditions. We understand that.

But this is also a unique public project that required major buy-in from the state's electorate and public officials. Ohio had to amend its constitution to authorize these specific projects in these specific locations to these specific owners. Voters reversed decades of opposition to every expanded-gambling plan that came along, convinced this one finally was worth betting on.

Under such circumstances, Ohioans have a right to high expectations and enhanced accountability.

It's impossible to know if Ohioans would have approved Issue 3 if the tax payout to local governments had been pegged at $390 million to start instead of the $650 million that was in voters' minds. There may be no specific "magic number" that was the price for Ohioans' approval.

But this does make you wonder if in the future, voters should simply figure in a "fudge factor" - say 1/3 or so - when deciding on the latest revenue-generating proposal.

On the plus side, Coolidge's report shows there's good reason to believe the casinos will reach or even exceed the original $2 billion projection, given Ohio's untapped potential as a gambling state. And even if it's 20 percent or 40 percent less than that to start out, Ohio cities, counties and school districts will still come out ahead.

But the stir over shrinking casino estimates should remind those who propose development projects not to promise more than they can deliver. And it should remind voters never to take what they're being promised at face value.


A lesson for cities, counties
In late September, Cincinnati City Council voted to allocate the city's share of anticipated casino revenues to various projects, including 25 percent for streetcar operating expenses. The Enquirer objected - not just because it was done through back-room deals that cut out public input, but because the city would be relying on "speculative funds from an unrelated revenue stream."

Now, it's apparent that tapping the casino for streetcar operating funds - which, by the way, residents originally were assured would not be needed as the project would be self-sustaining - isn't as sure a bet as council had assumed.

The lesson is basic: Don't count your casinos before they hatch.

All across the state, cities and counties are looking to the casino jackpot to bail them out of budget jams or pay for wish-list projects. The casino operators' quiet "recalibration" of the amount of business they would generate when the casinos open, which might have gone undetected for months if The Enquirer's Alexander Coolidge had not crunched the new numbers, shows that this kind of revenue stream may be as elusive as that last ace in the deck.

Another consideration for cities and counties: With the state facing an $8 billion budget deficit this spring, lawmakers may well slash local government funds for the foreseeable future. And that means that much - perhaps all - of the money the localities get from casinos might have to be used to cover new shortfalls.