Non-Environmental Cost-Benefit News

Walk around any casino parking lot in Indiana, Michigan or West Virginia and it's impossible to miss all the cars with Ohio and Kentucky license plates.

From Warren County in Ohio to Kenton County in Kentucky, thousands of residents travel every year to bet on games they can't play at home. The exodus proves a point that even gambling opponents no longer dispute:

Greater Cincinnati and Northern Kentucky make up one of the strongest potential casino markets in America. The region has the population, river and interstate access that inspires casino developers and keeps opponents on constant guard.

Most local residents, regardless of their views on gambling, expect to see casinos or racetrack slot machines here within five years, a new Enquirer/WCPO poll finds.

"It's the best spot in the country to bring casinos, no question about it," says Jerry Carroll, a Kentucky developer who would like to build one himself. "You put a casino along the riverfront or along the I-75 corridor in Northern Kentucky, and you couldn't build it big enough."

Plenty of politicians and business leaders now share Carroll's view, if not his enthusiasm.

Supporters in Ohio and Kentucky claim that nearly $1 billion a year could be raised in gambling taxes for their financially struggling states. The mayors of Cincinnati and Cleveland want casinos in their cities, and horse track owners want slot machines at the tracks.

Momentum is so high that opponents in both states are rallying to stall any moves to legalize gambling beyond the bingo, horse racing and lottery already allowed. The last thing this area needs, they say, are casinos to create more crime, corruption and family dysfunction.

"We're going to work harder than we ever have," says Rev. Nancy Jo Kemper, leader of Kentucky's 800,000-member Council of Churches.

No matter where they stand, however, few doubt that casinos here would draw big crowds and money. Among the reasons:

The success of three casino boats along the Ohio River in nearby southeast Indiana. They reported bringing in $735 million last year, making the area the 12th richest casino market of 48 in America. Gamblers leave more money at the Argosy Casino & Hotel in Lawrenceburg than at any other boat in the country.

Proximity to the Ohio River and Interstates 75 and 71. The river makes casino boats a possibility in Cincinnati or Kentucky, and the interstates could provide easy access to land-based casinos for millions of travelers. Developers already have targeted sites.

The popularity of legal gambling. Ohioans spend $2 billion and Kentuckians spend $725 million on the lottery every year. Horse racing has been popular in both states for decades, and countless charities rely on casino nights and bingo to pay their bills. Nearly 350,000 people from Greater Cincinnati and Northern Kentucky visit casinos in Indiana or Illinois every year, according to Harrah's Entertainment Inc.

Casino companies are ready.

Harrah's recently partnered with Turfway Park horse racing track in Florence. Columbus-based Scioto Downs track is owned by MTR Gaming Group Inc., which owns Mountaineer Race Track & Gaming Resort in Chester, W.Va.

Raceway Park horse track in Toledo soon will be owned by Argosy Gaming Co., which operates the Indiana boat. When a $2.2 billion deal closes later this year as expected, Argosy will be sold to Penn National Gaming, a major gambling company that owns or manages nine casinos, four racetracks and six off-track wagering facilities nationwide.

Bill Yung, president of Columbia Sussex Corp., the Fort Mitchell-based company that owns six casinos nationwide, says Northern Kentucky could easily support four casinos right now.

"They would do great," Yung says. "We're right across from a big city here in Northern Kentucky. That's where a lot of gamblers would come from."

Harrah's agrees. "Certainly, because of the size of the Cincinnati market, it would make sense for our company to be there," spokesman David Strow says. "We are in an excellent position to participate should legalized gambling ever happen."

Long-standing resistance

Anti-gambling forces understand the enthusiasm. In 2003, Americans made more trips to casinos than to professional baseball games, zoos and aquariums combined, according to the American Gaming Association.

But the local potential alone is not enough to bring casinos to Ohio or Kentucky anytime soon.

Opposition in both state capitals and long-standing resistance in rural counties are considerable. Ohio voters shot down ballot initiatives on casinos in 1990 and 1996, and top state officeholders continue to oppose casinos. Kentucky's legislature quit for this year without taking any action on gambling.

Even so, a majority of Kentuckians said in a statewide poll in February that they want slot machines at racetracks.

And in Ohio, a new Enquirer survey finds that most state lawmakers would put casinos or slot machines up for a statewide vote this fall - if details on spending the profits could be worked out.

As in other states, money is driving the debate.

Proponents say Ohio casinos could bring in more than $500 million a year for schools, tax cuts or other uses. Kentucky casinos could create $400 million annually in new taxes in that state, according to some estimates.

Argosy officials forecast a $1 billion-a-year market in southeast Indiana once improvements are made on the three boats there.

The money would come from people like Michelle Lee of Lima, Ohio, who travels across state lines to gamble at Argosy.

Every day, customers start arriving in early afternoon and keep coming all evening. Before they leave, they gamble away hundreds of thousands of dollars on slot machines and table games.

"When you see these crowds and the long lines, it makes you wonder: Why doesn't Ohio have gambling?" says Lee, leaving Argosy one recent night. "There's no sense in seeing all this money going to Indiana."

But casinos are a gamble.

Economists say their benefits often are outweighed by hidden costs, such as compulsive gambling and reduced spending at other local businesses.

"The notion that somehow we're all going to gamble ourselves to economic salvation is just false," says Earl Grinols, an economist and the author of Gambling in America: Costs and Benefits. "It's a bogus argument."

A sense of momentum

Most adults in Greater Cincinnati and Northern Kentucky now favor legalizing casino gambling in this region, according to the Enquirer/WCPO poll. But voters here won't have the final say. Statewide initiatives likely would be needed to legalize casinos, and the last attempt in Ohio nine years ago lost in all 88 counties.

History, however, shows states have gradually embraced gambling in the three decades since Atlantic City pioneered major casinos outside of Nevada. Today, the $600 billion-a-year gambling industry touches every state except Utah and Hawaii. See the growth of gambling in the U.S..

More than 400 land-based and riverboat casinos operate in 11 states. Indian tribes run casinos or bingo halls in 25 states. And in Greater Cincinnati and Northern Kentucky, churches rely on charitable bingo, poker tournaments and casino-style gambling at summer festivals as a good way to raise cash.

Kentucky and Ohio also are among 40 states with lotteries, one of the most popular forms of legal gambling in America. Ohio has had a lottery since 1974; Kentucky started playing in 1989.

Lotteries sometimes serve as a precursor to casino gambling.

"That's always the camel's nose in the tent," says John Wolf of the Indiana Coalition Against Legalized Gambling. "Once you change the constitution in the state (to allow gambling), the politicians latch onto it because it's a quick fix for revenue sources."

Sometimes, pressure from neighboring states can hasten legalization. Mississippi opened a casino in 1992, and Louisiana followed in 1993. Louisiana feared losing tax dollars as residents gambled next door at Gulf Coast and Mississippi River casinos.

That's part of the argument in Ohio and Kentucky today. Except for Kentucky, Ohio is surrounded by states that allow either casinos or slot machines at racetracks. Kentucky gamblers can, and do, gamble in adjacent Indiana, Illinois and West Virginia.

Ohio Rep. Lou Blessing, a Colerain Township Republican, wants slot machines at racetracks to keep the money here.

"I'm not so concerned what the money is spent on. I just want to make sure it stays in Ohio," Blessing says.

Economic pitfalls

Gary Anders, an Arizona economist who has studied casinos, says gambling supporters should be careful what they wish for.

Casinos make economic sense, he says, if most of the gamblers come from elsewhere. But if the market is saturated and everyone lives close to a casino, the state is just taxing its own people in another way.

"When gambling becomes ubiquitous, you are basically cannibalizing yourself," Anders says. "It only works when you import customers from other states."

Five years ago, Detroit opened three casinos in hopes of boosting tourism and keeping local gamblers from spending their money across the Detroit River, at Casino Windsor in Canada.

The Detroit casinos have succeeded in keeping $100 million a year in taxes but have failed to generate much tourism: At least 80 percent of Detroit casino customers are from metro Detroit.

"You're shifting money around from other parts of the economy," says William Thompson, who studies gambling and teaches at University of Nevada Las Vegas.

He says social problems such as crime, bankruptcies and lost productivity further erode the advantages of casinos. A federal commission in 1999 estimated the social costs of gambling at $5 billion a year nationwide.

"No matter how you want to cut it, gambling fails a costs-benefits test," economist Grinols says.

But national studies have reached many different conclusions, and the negatives attributed to gambling are hard to pin down because they also are tied to swings in the economy.

Gambling supporters say the combination of more jobs, tax revenue and entertainment trumps the negatives.

"Yeah, I'd like to get some tax money from it," Cincinnati Mayor Charlie Luken said last year, after counting Ohio license plates at Argosy and declaring it's time for a casino here. "But more importantly, I'm interested in the attraction that will bring people downtown, create jobs and help the economy."

Dan Horn dhorn@enquirer.com
The Cincinnati Enquirer http://news.enquirer.com
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