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Posts Tagged ‘Rock Ohio Caesars’

Back To Work

June 15th, 2011 No comments

Earlier today, Ohio Gov. John Kasich released an agreement he reached with Rock Ohio Caesars, ending a month long dispute between the parties that had resulted in casino construction stoppage.

The gaming giant suspended construction of casinos in Cincinnati and Cleveland in order to protest a tax measure Gov. Kasich sought to include in the state’s budget; namely, the 0.26% Commercial Activity Tax (CAT) imposed on all wagers placed in the casinos, regardless of amounts paid for winning wagers.  This levy on casino revenues would have been the first in the United States not to reduce the tax base by paid winning wagers.  Given the obvious difficulties the casinos would have faced administering the tax, and, more importantly, the unpredictably high tax dollars at stake, I didn’t blame Caesar’s at all for making this move.

If you read the agreement, you’ll realize Caesar’s in part got what it wanted: modification to the CAT formula.  The CAT will be imposed on total wagers less winnings paid.

In my opinion, this result is significant not only for the parties involved, but also the U.S. internet gambling industry as a whole.  Various bills for the legalization of internet gambling are currently being drafted at both the federal and state levels.  Of course, a major selling point to the skeptics of legalization is the amount of tax revenues to be generated.  If Kasich and Caesar’s had agreed to his CAT formula, then I believe it would have been more likely for federal and state legislators to seek a similar internet gambling taxation framework in the form of a deposit tax.

Whether or not Kasich sought to impose the CAT according to his definition simply as a bluff in order to squeeze as many dollars as possible out of Caesar’s, we’ll likely never know.  Indeed, Caesar’s could have taken Kasich to court to challenge the validity of the tax.  Instead, sidelined casino construction workers in Ohio can now get back to work.  I think I can even hear them happily humming along to this classic:

[youtube=http://www.youtube.com/watch?v=7SCt8JPAkgU]

Rock Ohio Caesars Construction Delayed

May 15th, 2011 No comments

Political jostling at its finest.

Last week, the two Rock Ohio Caesars casino construction projects in Cincinnati and Cleveland halted because of a tax battle between the state governor and Caesar’s Entertainment.  The casinos’ projected openings have been delayed from 2012 to 2013.

On November 3, 2009, Ohio Issue 3, also known as the Four Casinos Initiative, was approved by state voters to amend the Ohio Constitution, permitting one brick and mortar casino to operate in each of the state’s four most populous cities, Cincinnati, Cleveland, Columbus and Toledo.  One notable component of Issue 3 is the 33% tax on gross casino revenues.

When on the ballot, Issue 3 was opposed by current Ohio governor John Kaisch, who narrowly defeated incumbent Ted Strickland in the 2010 election.  Strickland was the biggest backer of Issue 3.  Now forced to tangle with Issue 3, Kaisch is demanding for the state to receive an even larger chunk of casino revenues.  One measure that Kaisch introduced to and was subsequently approved by the state’s House has resulted in a casino construction stoppage.

Governor Kaish seeks to impose, in addition to the 33% gross revenue tax, a .26% tax on all casino bets wagered via the state’s commercial activity tax.  As the local ABC affiliate network points out:

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 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.”

The commercial activity tax is different from the 33% gross revenue tax, which is imposed on all bets wagered less amounts paid for winning wagers.  All other states with legal gambling levy winnings by the gross revenue tax.  In other words, Kaisch’s introduced measure is unprecedented in the U.S. gaming industry.  And Caesar’s believes the additional tax would far too significantly cut into the casino’s after-tax profits.

Caesar’s publicly stated that the construction hiatus will continue until a resolution between the gaming giant and the state governor is reached. The governor’s budget currently sits in the state’s Senate.  If approved, the casino companies are likely to take the measure to court and argue that the commercial activity tax violates the state constitution.

In the meantime, construction workers remain sidelined indefinitely, and the likely boost to state revenues from Issue 3 will have to wait longer than initially expected.  Anything but “winner winner, chicken dinner” will be heard in the state of Ohio for now, it seems.

Categories: Gambling, Ohio Tags: ,
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