09.26.2012
Summer 2012
Betting on a Big Impact
Some numbers are in, but it may still take a roll of the dice to determine whether Horseshoe Casino Cleveland, Ohio’s first casino, will provide the economic payout that developers had promised.
That’s because new tax revenues aren’t the only positive expected from gambling—so is spillover business to the city’s wider entertainment sector. While we have some tax data already, it will take a while longer to fully register just how successful the Horseshoe has been in driving customers to nearby restaurants and hotels.
From its opening day on May 14 through the end of July, Horseshoe Casino Cleveland grossed $66.5 million after paying out winnings, according to the Ohio Casino Control Commission.
Ned Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, says it’s way too early to tell what type of economic impact the casinos will have on the regional economy. The premise of allowing casinos to operate in Ohio was in part to capture tax revenue that otherwise was going across the border. But of equal appeal is how much casinos help create new energy in the downtown areas where they are being built.
A complex mix of variables are at play, such as whether customers are coming from within or outside the region, and whether the entertainment dollars are being repurposed or shifted from other types of entertainment. Beyond that, the durability of the new casino jobs has yet to be tested, and long-term revenue streams—from which the state takes a bite—are unknown.
Horseshoe officials have touted the casino as a way to pull in dollars not only for itself, but for other downtown businesses.
“This casino [Horseshoe] has a different model from the others,” Hill notes. “They are trying to build it into the fabric of the entertainment district.” Add it to the Medical Mart, the Rock and Roll Hall of Fame and Museum, and the Lakefront Bikeway that’s expanding—the casino is part of that mix.
Horseshoe’s adjusted gross income at the end of July, which is the amount left after winnings are paid out, was $23.9 million, an 8 percent drop from one month earlier when the adjusted gross income was $26.1 million.
And the state’s second casino, Hollywood Casino Toledo, went from $20.4 million in June to $19.1 million in July. It opened May 29.
Is the novelty of Ohio’s first casinos wearing off? Or was this drop in revenue predictable?
“I knew the initial opening attendance would be up and there would be a great deal of interest, and over a period of 90 days there would be some leveling off,” says Matt Schuler, executive director of the Ohio Casino Control Commission. “I still believe it will take some time before we get a performance trajectory.”
Horseshoe Casino Cleveland, a 300,000-square-foot facility inside the historic Higbee building in downtown Cleveland, offers 2,100 slot machines and 65 table games. The casino brought 1,600 new casino jobs to the region.
Hollywood Casino in Toledo has 2,000 slot machines and 60 table games. It upped the number of new jobs by 1,300 workers.
A casino in Columbus will open in October and one in Cincinnati in the spring of 2013. The four casinos were approved by Ohio voters in 2009.
Despite the drop-off in revenue, early numbers from the Ohio Department of Taxation indicate that the casinos’ economic impact could be felt across Ohio’s 88 counties, where the money is distributed in proportion to the population of each county.
The Ohio Department of Taxation made its first quarterly distribution of $19.7 million in July. The tax money is split between counties, host cities such as Cleveland, school districts, the Casino Control Commission, and other agencies.
The gross casino revenue tax is 33 percent of the gross casino revenue. Cuyahoga County received $554,424; Franklin County $514,490; Hamilton County $349,320; and Lucas County $192,041.