Rock Ohio Caesars halted construction indefinitely Wednesday on both its Cleveland and Cincinnati casinos in a battle over additional taxes or fees.
“The recent legislative action and discussion proposing significant higher taxes and fees specific to the operation of casinos in Ohio… have created an environment of uncertainty concerning the projected economic vitality of our planned developments in both Cincinnati and Cleveland,” read a statement from Rock Ohio Caesars.
At issue is a .26 percent commercial activity tax. In states with gaming, casinos pay this tax on their gross profits, that is the money left after all bets are paid. The Ohio House of Representatives last week though passed their version of the budget that amends the tax in Ohio to apply to all casino bets wagered.
So say someone comes to the casino with a $10 roll of quarters and between winning and losing winds up putting $100 worth of quarters in the machine but in the end walks away with their original $10.
Even though neither the casino nor the customer made money, the casino would have to pay the tax on the $100 bet.
“You’re taxing money over and over again,” said Roger Gros publisher of Global Gaming Business magazine. “It really is not going to be very fair to the casinos.”
Not fair to Ohio taxpayers is what Governor John Kasich says was Issue 3, the statewide referendum that approved the four casinos in 2009.
While Issue 3 set a tax rate of 33 percent of gross casino revenues that money is spread throughout the state but doesn’t go to the state. In addition the one time fee of $50 million per casino to the state is constitutionally earmarked for jobs training.
Since taking office he’s been looking at ways the state might be able to get more out of the casinos in taxes or fees.
“Frankly the taxpayers of this state have a little leverage right now,” Kasich told Newsnet5 in April. He hired two casino consultants to advise him on how best to proceed.
The first sign of trouble came two weeks ago when Rock Ohio Caesars announced they had missed a steel order for their Cincinnati casino because concerns that they may need to rethink the size of the structure should the state seek more money.
That move delayed until 2013 the opening of that property. At the time Rock said the Higbee project was not affected, today came word it would be.
“Construction work on both sites has been suspended and will remain so until these issues have been resolved and a reliable state economic environment is in place,” read the Rock Ohio statement.
“Only then can we proceed with construction and deliver on our commitment to employ thousands of Ohioans in new private sector construction and casino related jobs.
“Rock Ohio Caesars is hopeful that a resolution can be reached quickly so that the State of Ohio can reap the economic benefits sought by voters when they approved Issue 3 in November, 2009,” said Rock Ohio.
Governor John Kasich’s spokesperson Rob Nichols said “the state has hired gaming consultants to ensure that Ohio taxpayers are being treated fairly and we look forward to hearing their recommendations.
“The governor doesn’t oppose gambling and wants the casinos to be successful and we are confident that a resolution can be reached that will be in the best interest of Ohioans,” said Nichols.
The budget sits in the state senate where it’s possible the CAT tax amendment could be removed, if not the matter will likely end up decided in court that’s because the casinos say the wording in the constitution protects them from additional taxes and fees.
After the budget passed the house last Thursday Rock Ohio Caesars issued a statement, “we firmly believe that it is unlike any other tax in Ohio, and we will oppose it through all means necessary.”
