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BY TYREL LINKHORN
BLADE BUSINESS WRITER

Since Ohio’s first legal casino opened in 2012, more than $37 million in tax revenue has flowed from gamblers’ pockets to public treasures in Lucas and Wood counties.

That’s a big number, but it’s hardly the kind of panacea many casino-backers promised as they campaigned Ohio’s voters for the right to built four shimmering gaming houses around the state.

Even so, taxes on casinos have been a welcome source of revenue in northwest Ohio, particularly as the state has cut the funding it distributes to local governments.

“It is an important part of the budget, particularly when you look at the fact the state has eliminated almost $13 million in local government funds to the city of Toledo,” said George Sarantou, finance director for the city. “Thank God we at least had the casino.”

The city anticipates $5.6 million in casino revenue this year, on par with what it received last year. Local government funding from the state, meanwhile, continues to fall. In 2009 — the year gaming was pitched to Ohio voters — Toledo received $20.9 million from the state. This year the city projects receiving $7.7 million from the state.

Since 2013, when the fourth and final casino opened, Toledo has collected an average of $1.4 million each each quarter. In total, casino tax revenue has given the city almost $16 million it wouldn’t otherwise have had.

“Overall, I’d say it’s been a very positive experience for Toledo, and we are doing very well with it,” said Mr. Sarantou, a former city councilman who supported the casino initiative. “It’s been very consistent.”

The arrival of Las Vegas-style gaming in Ohio was touted by some as practically a gift from the heavens. A billion dollars would be invested. Thousands of jobs would be created. Hundreds of millions of dollars in tax revenue would appear virtually overnight.

Some of that has come true. Some has not.

In October, 2009, officials from Penn National Gaming appeared before Toledo City Council and laid out the numbers. A 33 percent tax on casino revenues would translate into $651 million a year statewide by 2013. That would include $6.4 million for Lucas County, $11.3 million for Toledo, and $8.7 million for public schools in Lucas County. Penn National’s consulting firm estimated by 2017 statewide tax revenues would nearly hit $775 million.

And it wasn’t just the industry that had lofty projections. A joint analysis prepared by the state’s Department of Taxation and Office of Budget and Management estimated $643 million in tax revenue once all four casinos were operational. Even if seven racinos with video slot machines were also to open, the agencies said, the four casinos would still generate $470 million in annual tax revenue.

In reality, casino tax revenues have been barely more than half of that. In 2013, total tax revenues from the four casinos was $272.5 million. Last year it was $267.5 million.

Officials in and outside the gaming industry cite a number of reasons that real revenues haven’t matched projections. For one, they said, the industry’s original projections for Ohio didn’t take racinos into account.

“Those projections were made in May of 2009, before there was any discussion of the racinos. So in our view, you can’t really go by those projections because the landscape changed so dramatically,” Penn National spokesman Bob Tenenbaum said. “Having said that, Ohio is still a developing market.”

Experts say there’s also an issue of timing.

“A lot of the economic studies that the analysts had prepared at that time were using data from the 2005 to 2007 era of gaming, which like many things in our economy was a time of rapid growth,” said Daniel Holmes, manager of the gaming services group at St. Louis accounting firm RubinBrown.

Mr. Holmes said U.S. gaming industry revenue has been relatively flat since 2007. Revenue at commercial casinos decreased by almost 1 percent last year, and for the first time in nearly 30 years, the number of U.S. casinos dropped.

But in Ohio, in which the final three racinos opened last year, gaming revenue was up 36 percent in 2014. Though Mr. Holmes said the state’s gaming industry is still settling in, it appears successful.

“Ohio’s really taken away a lot of revenue from the neighboring states, which is great for the citizens of Ohio and the governments of Ohio,” he said.

Including racinos, total gaming revenues in Ohio were $1.46 billion last year.

Mr. Holmes believes there’s room for growth in Ohio’s market, particularly as the state’s economy continues to improve. Penn National predicts Ohio’s total gaming revenues should reach $2 billion by 2018.

Though casino tax revenue hasn't yet lived up to the lofty projections from the industry or state, officials in northwest Ohio aren't complaining.

Far from it, in fact.

“I think it’s attracted visitors we wouldn't normally get. Maybe not to the degree we’d hoped for — it seems to be more of a one-day vacation for many people — but has it helped bring some revenue to the area? Yes. Has it created some jobs? Yes,” said Lucas County Commissioner Pete Gerken.

Job numbers

At its opening, Toledo’s casino had some 1,300 employees, more than the 1,200 Penn National initially had predicted. The number has fallen since then, however, settling to about 950. A spokesman for Penn said on average, a full-time employee makes about $40,000 a year.

Company officials note those employees pay city income tax and spend money in the community. They also point out that on top of the 33 percent tax Penn National pays on gambling revenues, it pays regular business and property taxes.

And Mr. Gerken said the county is happy with the money it has received from casino revenues, even if it is less than promised.

“We assumed right off the top the state was overestimating their numbers,” Mr. Gerken said. “We were much more conservative in our expectations.”

In fact, casino tax collections in Lucas County have consistently exceeded the county’s expectations.

In 2012, the county budgeted for $554,000 and collected $575,341. In 2013, the county budgeted for $1.5 million and collected $2.48 million. Last year, the county budgeted for $2.5 million and collected $2.6 million.

This year Lucas County initially budgeted for $2 million, but it has since increased that estimate to $2.25 million.

“When you put it in context of the fact that the state reduced their obligations to the local communities, in our community the casino revenue has filled a signification void,” Mr. Gerken said.

Wood County’s plan

While Toledo and Lucas County have used the money to shore up the general fund, Wood County has viewed its share of casino revenue as a way to fund things that would be good to do, but might not otherwise fit in the budget. Last year for example, commissioners directed $500,000 of casino revenue for bridge engineering expenses.

“We have not designated a use for it in 2015, but we’re using it more for special kinds of projects that may need extra attention in that particular year,” Wood County Commissioner Doris Herringshaw said. “I think that was our philosophy from the beginning. We don’t want to be where we relied on it for salary or expenses because it could go away.”

Wood County has received a little more than $4 million in casino revenue since 2012.

“It certainly is an asset to us as well as the other counties around us,” Ms. Herringshaw said.

Contact Tyrel Linkhorn at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 419-724-6134 or on Twitter @BladeAutoWriter.