Studies put casino cards on table
Let the jockeying begin.
The release this week of two studies on the social and economic impact of casino gambling in Ohio is likely to touch off a frenzy of real estate deals and business alliances as casino interests posture for whats now estimated to be a $4 billion gaming market.
"Its a watershed day," said Ohio Rep. Bill Seitz, R-Green Township, who is trying to broker a political compromise to produce a 2006 ballot initiative legalizing casino gambling in Ohio.
"Previously, we had ideologues on one side faced off against people whose very cogent arguments could be dismissed as self-interested," Seitz said. "Now, we have objective folks weighing in with good data on the question."
The studies, available online at www.ohiogaminginfo.org, concluded that casinos would create 85,000 new jobs and generate $610 million in annual tax revenue for state and local governments. On the down side, the studies found that new casinos in seven Ohio cities would also increase the number of Ohioans with gambling problems from 3 percent to 4 percent of the population, essentially creating 109,000 new problem gamblers.
Seitz said the studies improve the chances of a casino measure passing in Ohio. Political observers in Kentucky say that increases the odds of a casino measure in Frankfort as well.
Where would the casinos go? Its probably too early to say, but this weeks events offer data to handicap potential sites. If the ponies follow the path of least resistance, River Downs, Monroe and Queensgate would lead the pack on the Ohio side of the river, while Florences Turfway Park and Covingtons western riverfront could overtake the favorites as they approach the wire.
Seitz said the studies offer a strategic template for the industry to follow in development of new casinos statewide.
One premise adopted by researchers is that Ohio should locate casinos at sites that "stop the outflow of money to other states," Seitz said. That points to development of casinos along "major road corridors connecting us to other states and locating these things close to their borders."
One of the studys co-authors, Mark RosenÂtraub, dean of Cleveland State Universitys college of urban affairs, said cities can maximize the economic impact of casinos by putting them in or very close to downtowns.
"There are unique activities that you can place in those areas that are not easily replicatable elsewhere," he said. But Rosentraub added that cities need to be careful with this approach. Spin-off development halts when casinos are too far from downtowns. How far depends on the town, he said. In Milwaukee, two-and-a-half miles was too far. In Philadelphia, four miles was the limit.
The horseracing industry has the inside track on future casino licenses.
"Theyre an incumbent Ohio industry," Seitz said. "They benefit not just their own racetrack, but also the agriculture industry in Ohio.
The study said Ohio could support up to 18 casinos. Polling data actually indicates public support is strongest if the number of new casinos in Ohio stays below a dozen, Seitz added. He thinks that will lead to 11 new casinos -- seven at racetracks, four elsewhere. Under that scenario, Cincinnati would likely see three new casinos, he said. But where would they go? The Courier interviewed developers, political analysts and gaming experts to compile this list of likely sites:
River Downs. "I know a casino would work here," said Edward "Jack" Hannessian, president of River Downs Investment Co. The Anderson Township race track sits on a 150-acre site that could easily accommodate a hotel and casino. Hannessian hasnt been approached by casino interests, but two Ohio race tracks were recently acquired by casino operators. One of the tracks, Toledo Raceway, was purchased by the Argosy Gaming Co., whose Lawrenceburg casino racks up more than $40 million in monthly revenue and could stand the most to lose from the legalization of gambling in Ohio. Hannessian said hes willing to talk.
"Would we like to have one? Id be foolish to say no. If it were legalized and we didnt have one, it would be curtains for the racing industry," he said.
Monroe. "Its a good casino location because its right along I-75," said Lenny Robinson, a Warren County broker and partner in Corridor 75 Park LLC. The group owns 800 acres on the southwest quadrant of Interstate 75 and State Route 64. It has a contract to sell 150 acres to the Eastern Shawnee tribe of Oklahoma, which sued the state to reclaim 93,000 acres of ancestral land after Ohio Gov. Bob Taft refused to support legislation to enable up to six Shawnee-sponsored casinos in Ohio.
The tribe has offered to settle the suit in exchange for a casino deal. Robinson said a Monroe casino would trigger up to $1 billion in new development on the remaining 650 acres, including a sporting lodge, fishing village and lifestyle center that emulates the San Antonio riverwalk. Another factor in the sites favor is that its nearest competitor, the Lebanon Raceway, owns no land for a potential casino. It leases its site from Warren County.
If it secured a casino license, Seitz said Lebanon Raceway could relocate. Robinson said some have speculated that the tracks owners would buy land near Corridor 75 Park, but he knows of no deals in place. The Courier was unable to reach the tracks owners, the Nixon family.
Downtown. Developers mentioned three sites as potential casinos: Broadway Commons, The Banks and Queensgate. All have bugaboos, but one development source predicted Queensgate would emerge as the leading contender. "Id love to do a casino deal in Queensgate," said the developer, who asked not to be named. "Its on I-75. Its close to the convention center. There are plenty of sites where it could go."
Broadway Commons is the triangular patch of land where baseball fans once wanted to build a new home for the Cincinnati Reds. It has limited highway access and might be too far from the citys hotel and convention infrastructure. The Banks is the land between Cincinnatis new riverfront sports stadiums. Corporex Cos. Inc., which is negotiating with Hamilton County to become the sites master developer, said it is not focused on casinos, just on crafting a master development plan.
"Were just not involved in any casino projects at this time," said Debbie Vicchiarelli, the companys chief marketing officer. The Banks has other problems.
The Cincinnati Bengals have a lease provision that prohibits gambling west of the Suspension Bridge. Two blocks west of the Great American Ball Park could be large enough, but the idea might not go over with Cincinnati Reds owner Carl Lindner, who helped finance the 1996 campaign against legalizing gambling in Ohio. That leaves Queensgate, whose main problems are lack of pedestrian access to downtown and the areas industrial nature, where shipping yards and freight trains are prevalent.
Covington. Corporex Cos. CEO Bill Butler and developer Jerry Carroll teamed up in 2002 to form Riverfront West Associates, which touted Covingtons western riverfront as an ideal casino site.
"Jerry Carroll talked to us about Covington being the best location in the state," said Covington Mayor Butch Callery. "The fly in the ointment is, of course, the legislature."
Casino legislation was a back-burner issue for Kentucky lawmakers this year, but many observers think that will change if momentum builds for casinos in Ohio.
"It surely will be considered and discussed in the General Assembly," said Steve Stevens, senior vice president for public affairs at the Northern Kentucky Chamber of Commerce. "This new research (in Ohio) may change the tide a little bit."
Butler and Carroll have since disbanded their development partnership. But Covington is proceeding with studies by the U.S. Army Corps of Engineers that must be completed before any development can happen, Callery said.
Turfway Park. The track has been viewed as a likely site since 1999, when it was purchased by three gaming-industry giants -- casino operator Harrahs Entertainment, the Keeneland racetrack in Lexington and GTECH Corp., a Rhode Island-based maker of video lottery machines. This year, GTECH sold its stake to its partners, prompting speculation the tracks days are numbered.
"We continue to be faced with significant competition, and the competition has become more fierce," said Turfway Park President Robert Elliston. "If Ohio starts looking seriously at this, that will present another potential competitor to us and an even more direct one."
This weeks developments raise questions about whether Ohio and Kentucky might produce a surplus of casinos, generating more supply than demand.
Raymond Martz, chief financial officer of Covington hotel operator Eagle Hospitality Properties Trust Inc., said business principles that rule the hotel industry apply to casinos.
When a market becomes saturated with hotels, Martz said, owners begin to offer discounts and generate less revenue. That forces companies to invest less in their property, leading to rundown properties and an overall weak hotel market.
While he stressed hes not an expert on the casino industry, Martz said he could see the race to grab gambling revenue causing a "saturation of supply" in both states. "Its just like a convention center," he said. "Just because you build one doesnt mean its always going to do well."
2005-08-12
