Dwindling revenue has numerous states searching for extra money, and many, including Ohio, are turning to legalized gambling.

At least a dozen states are betting that an expanded lottery or another gambling variation will help them balance budgets buffeted by the recession and the aftermath of the Sept. 11 terrorist attacks.

"It seems to be gaining some steam,'' said Mandy Rafool of the National Conference of State Legislatures. "There's more discussion than there has been in the last several years. I think states are looking wherever they can for additional revenues.''

But legal challenges from religious groups and others are brewing in several locales.
Last month, Gov. Bob Taft signed legislation giving the Ohio Lottery Commission permission to join the 22-state Powerball lottery or eight-state Big Game.

Ohio officials aim to begin offering one of those games by July 1, increasing lottery revenues in the state by an estimated $41 million in the next fiscal year.

Elsewhere around the country, growing legalized gambling activity includes:
* Connecticut and Hawaii, which opened legislative sessions this month with renewed debate on gambling legislation.
* Indiana, which is considering a proposal to dock its riverboat casinos, offering onshore access to gamblers.
* Kansas, whose $500 million budget deficit has prompted legislators to revisit gambling as a revenue draw.
* Minnesota, with 18 casinos owned or run by American Indians, which may allow state or private operators to open a casino to help balance the state budget.
* Nebraska, whose governor has proposed casino gambling.
* Pennsylvania and New York, which are the latest states to join multistate lotteries. Pennsylvania plans to offer Powerball later this year; New York plans to join the Big Game.
* Rhode Island, whose Narragansett Indian tribe has its best odds in 10 years of building a casino. Similar casinos exist on Indian reservations in two dozen states.
* Seneca Indians, who propose building casinos in Buffalo, Niagara Falls and at a western New York reservation. And privately owned casinos are being proposed again at struggling Catskills resorts.

In Ohio, church leaders fear the lottery expansion could be just the beginning, and comments from legislative leaders seem to confirm those concerns.

"The Ohio Lottery will die if it does not expand,'' said the Rev. John W. Edgar of the Anti- Gambling Coalition and United Methodist Church. "Left to its own devices, the Ohio Lottery will die.''

Lottery officials concede that any new game ultimately reaches a saturation point of popularity, spurring them to offer what they call a "new play-style.''

Indiana, Kentucky and West Virginia have Powerball, with Pennsylvania joining in soon, while Michigan offers the Big Game.

"We're surrounded,'' said Jennifer Detwiler, a spokeswoman for House Speaker Larry Householder, R-Glenford. "He's concerned an awful lot of (Ohio) money is being spent outside Ohio.''

Householder and other leaders of the General Assembly already have stated support for electronic slot machines at Ohio horse-race tracks.

Despite Taft's assurances that he won't sign such legislation, lawmakers are under increasing pressure to consider that form of betting to bolster the state budget.

"The speaker is not pushing for that to happen,'' Detwiler said. "He's not a very big proponent of gambling or VLTs (video lottery terminals), but he's a realist.''

The video lottery terminals, also known as electronic slot machines, exist at West Virginia racetracks, which also offer other forms of video gaming. Other states with video lottery terminals include Delaware, Oregon, Rhode Island and South Dakota.

Kentucky lawmakers are being lobbied to install the electronic slots at struggling horse-race tracks -- including Churchill Downs. The Kentucky Council of Churches is rounding up opponents. A group called Citizens Against Gambling Expansion is using the council's Web site (www.kycouncilofchurches.org) to pressure Kentucky legislators.

According to Kentucky racing officials, horse industry revenues have dropped almost 40 percent, or more than $400 million, in recent years. They blame riverboat casinos in Illnois and Indiana, and competition from racetracks that now have slot machines.

Pointing to declining Ohio Lottery profits, Ohio Roundtable President David P. Zanotti says competition in adjoining states and increased saturation of gambling in any given state prompts officials to look for a new game.

"Everyone around us is talking about taking it to the next level,'' he said. "How far do you go before you reach market saturation?''

Last week, a coalition of church groups and gambling addicts joined the Ohio Roundtable in suing Taft and the lottery commission to halt a multistate lottery. Claiming Ohio's Constitution has been violated, they plan to ask a judge for an injunction this week to halt the expansion.

Zanotti has opened an office Downtown with the Freedom Forum to lobby state lawmakers. His coalition also plans an ad campaign of up to $100,000 in radio and cable TV spots to discredit the state's lottery.

Zanotti's conservative think tank previously helped defeat two proposed constitutional amendments that would have allowed casino gambling on riverboats in Ohio.

"It's not a moral argument; it's an economic argument,'' he said. "The house always wins.''

jcraig@dispatch.com