Electronic-slots parlors would generate thousands of jobs and tens of millions of dollars to seed local business growth, gambling supporters say.
But the four parlors that would sprout in Greater Cleveland are by no means a sure bet to bolster the region's economy, anti-gambling forces respond.
Even the local power brokers who back the plan to bring nine parlors and 31,000 slots to Ohio acknowledge that gambling is not an engine of resurgent economies.
"If you were to start from scratch and draw your optimal economic development paradigm, you wouldn't necessarily include gambling as part of it," says Fred Nance, adviser to Cleveland Mayor Frank Jackson and chairman of the Greater Cleveland Partnership, the local chamber of commerce.
Yet Nance, Jackson, Cuyahoga County commissioners and other civic leaders say slots at two sites downtown - and at racetracks in North Randall and Northfield - would join lakefront museums and Gateway sports sites as valued attractions.
"This is the biggest project and proposal this community has confronted since 1990," said Commissioner Tim Hagan.
But critics say, and research suggests, that casinos can exact a toll on local economies. They pull money from local businesses and create social costs, due in part to gambling addiction.
It might be a positive for Cleveland, where two casinos along the Cuyahoga River "will suck money in from the suburbs," argues Ed Morrison, an economic-development consultant working on business-growth strategies for the Cuyahoga County Department of Development.
"But you're basically just taking money out of the home market," Morrison adds.
Local leaders are intimately familiar with the plan -- a team of business, labor and city-county elected leaders haggled over the details with racetrack owners and two prominent developers, Forest City Enterprises Inc. and investor Jeff Jacobs.
Under the proposed change to the Ohio Constitution, Forest City would be allowed to open a slots parlor near Tower City and Jacobs could open one at his Nautica Entertainment Complex. The state's seven track owners could each get one, too. After four years, Cuyahoga County voters also could be asked to turn the four local slots parlors into full-fledged casinos.
Forest City, Jacobs and track owners formed the Ohio Learn and Earn Committee, which expects to spend $15 million to $20 million to gain voters' approval on the Nov. 7 ballot.
The slots group estimates gross revenue at $2.84 billion annually, if all 31,500 permitted machines go online.
Thirty percent of the take will go to college grants and scholarships, Learn and Earn's main selling point. Eight percent, some $227 million, would fund economic development projects in all Ohio counties.
"The best antidote for the plight of the poor is jobs and opportunity for higher education," said county Commissioner Peter Lawson Jones. "That's what this proposal provides."
Research on the benefits and costs of casino-style gambling varies widely. But the only presidential commission to study gambling's national impact asserted in 1999 that the economic benefits of casinos "have been especially powerful in economically depressed communities."
Research for the National Gambling Impact Study Commission found that casino gambling creates jobs and reduces dependence on government aid.
Local leaders estimate that $600 million would be invested in slots parlors and new hotels for Cleveland and North Randall. Besides construction jobs, the three Cuyahoga County developments would yield 5,300 full-time workers, according to the Greater Cleveland Partnership. Tower City is one of two proposed convention center sites, meaning Forest City could land a slots parlor and convention center along the Cuyahoga River.
Public officials have suggested that slots proceeds could finance a convention center, along with a medical-merchandise mart.
"The gaming issue makes it much easier to expedite all of this," Hagan said in a recent interview. "But I don't think the community should be held hostage by that vote."
Albert Ratner, co-chairman of Forest City, said Friday that landing a casino, convention center and medical mart in the Tower City area would mean a $1 billion-plus development.
It could drive long-discussed plans by Forest City to bridge the river and develop on Scranton Peninsula, Ratner said.
Slots as
seed money
Besides bringing new construction and jobs, casinos would generate significant money for economic development projects.
Cleveland and Cuyahoga County would split roughly $75 million a year under Learn and Earn's estimates.
North Randall, home of Thistledown, would see a $1.9 million windfall yearly. Northfield, home of Northfield racetrack in northern Summit County, would gain $2.1 million a year, while Akron and Summit County would split $10.5 million annually, the slots group reported.
And there's a prospect for $60 million more. The four sites in Cuyahoga County, including Northfield (part of the track property lies in Cuyahoga County), would pay a one-time fee of $15 million each for the right to upgrade to casinos.
That would mean $45 million more for Cleveland and Cuyahoga County to split for economic development and capital improvements and $15 million for Akron and Summit County.
Slots money could be plowed into redevelopment, innovation and work force training efforts that are under way but underfunded, Cleveland and Cuyahoga County leaders say.
Questions of
fairness arise
Critics of Learn and Earn say the proposal is too friendly to the would-be slots parlor owners.
Casino companies in other states have paid $300 million to $400 million each for slots or casino licenses, said Jeff Hooke, a former investment banker and gambling-industry watchdog.
"They're getting billions in free licenses," Hooke said in March, when Learn and Earn announced its plan.
Another expert disagreed. Eugene Christiansen, of Christiansen Capital Advisers, noted that the proposed 45 percent tax rate on gross revenue is comparatively high.
And the reason for licensing is to ensure "the public receives the best possible operator, not the one who will pay the most," Christiansen said.
Opponents question the wisdom of using a constitutional amendment to identify specific businesses -- Forest City, Jacobs and the track owners -- as the state's only slots operators.
"Will we bring out the class warfare argument of nine private owners setting up a constitutional monopoly?" asked anti-slots leader David Zanotti, of the conservative Ohio Roundtable. "Oh yeah."
In central Ohio, some are unhappy that Northeast Ohio is reaping so much of the slots benefit.
The Columbus Partnership, a group of business and civic leaders, opposes the slots plan partly because it puts downtown Columbus at a competitive disadvantage to downtown Cleveland, which could eventually have full-fledged casinos.
Downtown Columbus won't have slots parlors, though two horse tracks in the suburbs will.
Local leaders acknowledge that slots parlors won't be a panacea for Cleveland's ills. But they insist it will be a net positive, even with increases in gambling addiction and its attendant woes.
They note that Learn and Earn will generate about $28 million a year for gambling-addiction treatment and prevention. It would be the largest such budget in the country, they say.
But Morrison, the economic development consultant, joined Gov. Bob Taft in arguing that new gambling addictions -- especially within a 10-mile radius of the slots parlors -- will generate hundreds of millions of dollars in social costs, including lost productivity, medical bills, domestic problems and crime.
That's in addition to the money that casinos will divert from local businesses, Morrison said.
He estimated Cleveland casinos will have to draw more than half of their revenue from visitors outside the region to be an economic asset.
That's unlikely, if Detroit's three casinos are an indication. There, only 20 percent of visitors are from outside the region, research showed.
But Joe Roman, president of the Greater Cleveland Partnership, said Cleveland and Ohio will benefit by capturing a big chunk of an estimated $925 million that Ohioans now wager in bordering states.
Some businesses might feel a crunch when slots parlors open, but the economy as a whole will grow, he said.
For information on the "Learn and Earn Ohio" proposal, click here.
To learn more about the "Opposition to Learn and Earn Ohio, Ohio Issue 3 slots and the Vote No Casinos Committee, click here.
To read the Ohio Learn and Earn ballot language, click here.
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