The developer of Cincinnatis incoming casino warned Tuesday that state indecision over taxing issues and racetrack slot machines could complicate the projects progress.
Rock Gaming president Matt Cullen said lenders who are helping finance the casino are worried about how much its operators might be charged in taxes and the impact on revenues if slot machines are legalized at
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We dont have the necessary clarity we need out of Columbus about additional taxes and fees, Cullen said. When youre looking to invest more than $1 billion in the state and working with lenders, you need clarity on those points.
Cincinnatis $400 million casino at Broadway Commons downtown is under construction, projected to open late next year. Rock Gaming also is developing a $600 million casino in downtown Cleveland, also expected to open next year.
Cullen told about 300 business leaders at the Over-the-Rhine Chamber annual meeting that unresolved questions over taxation and racetrack competition could make lending costs more expensive for developers.
Rock Gaming and its operating partner Caesars Entertainment will invest hundreds of millions of their own money and borrow hundreds of millions more from banks, Cullen said. But the ultimate deals for financing agreements will depend on details still to be decided by lawmakers and Gov. John Kasichs administration in Columbus.
When voters approved casinos in Cincinnati, Cleveland, Columbus and Toledo in November 2009, they were told the casinos would pay 33 percent of revenues in taxes to the states cities, counties and schools, among others. But other taxes also may apply.
Debate over how to apply the Commercial Activity Tax on the casinos also is critical, Cullen said. He noted that casino developers had always envisioned paying that tax as applied against gross gambling revenues the traditional measure of casino revenues in the gambling industry. But some lawmakers have suggested that the tax be applied against total bets at a casino.
Gross gambling revenue is how much gamblers lose after making several bets. For example, a gambler with $100 in his pocket might make $800 worth of bets during a visit before, ultimately, losing that $100 and going home.
If the casinos are taxed on the $800 rather than the $100, the consequences would be impactful, Cullen said.
Legalizing slot machines at the racetracks could be another drain on casino revenues. Former Gov. Ted Strickland was seeking legalizing slots at the racetracks when he was defeated for re-election.
Rob Nichols, a spokesman for Kasich, said the governor hasnt endorsed specific taxes on the casinos or legalizing slots at racetracks, but is hiring a consultant to help inform his positions. He said the consultant would be hired shortly.
Cullen said casino developers continue to meet and work with state officials. He praised Kasichs choice of former House speaker Jo Ann Davidson as chairwoman of the newly named Casino Control Commission. Its supposed to develop rules governing the gambling industry.
Rock Gaming is building a 350,000-square-foot casino and a 2,500-spot parking garage on 20 acres at Broadway Commons on the northeast edge of downtown. Once it opens in late 2012, the 24-hour facility will be operated as the Horseshoe Casino Cincinnati by Caesars Entertainment, which will take a partial ownership stake. The project is expected to generate 2,100 construction jobs and 1,700 permanent jobs once it is up and running.
Most of the demolition and environmental work on the site has been completed, and work crews are due to begin installing the foundation for the casino complex in the next few weeks. Cullen said the exterior hull of the casino should be completed by the end of the year.
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