Struggling Ohio Casinos may have Untaxed Freebies taken away

Struggling Ohio Casinos may have Untaxed Freebies taken away

In 2009, there were plenty of bold promises made by future casino operators when Ohio became the 39th state to legalize casino gaming. But fast-forward six years later, and these casinos have largely failed to live up to their promises, including generating a collective $500 million for Ohio schools and local governments and creating 34,000 jobs.

Now, State Senator Bill Coley believes that it’s time to take away the nontaxable freebies that they use to entice more customers. Despite failing to generate the promised $500 million, Coley argues that the state’s four casinos and seven racinos have given away far more than $500 million in promotional gaming credits – none of which is currently taxed. The West Chester Republican further adds that these freebies have cost Ohio’s government $165 million in tax revenue.

The Columbus Dispatch reports that Coley now plans on introducing a bill that would only allow casinos the nontaxable promotional credits if they can meet original revenue projections promised to state voters in 2009. Additionally, these free-play coupons would be capped at $5 million a year for each gaming establishment.

“The effect of this bill would be to increase revenues to schools and local governments, and Lord knows during the budget process I’ve heard loud and clear that schools and local governments need more revenue,” Coley explains. “I think it’s high time the people that made the promises to the people of the state of Ohio – start delivering the revenues that they promised.”

This legislation would overturn a law that was signed into effect by Gov. John Kasich in 2011, which approved untaxed promotional casino credits if the gaming operators would pay the state an additional $10 million over 10 years. So if the credits do become taxable, then it’s very likely that operators Penn National and Rock Ohio Caesars could get out of paying the entire $10 million.

Eric Schippers, a senior vice president for Penn National Gaming, explained this by saying, “The proposal, if implemented, could wind up producing the opposite of what Sen. Coley indicates he’s trying to achieve. Eliminating or reducing the discount on promotional credits would nullify one of the very weapons the state needs to help keep Ohio competitive in the ongoing regional gaming arms race.”

With strong arguments on both sides, it’ll be interesting to see whether Ohio casinos and racinos do indeed have their untaxed freebies taken, or if they’ll continue offering them and making the $10 million payment.