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Penn National Gaming Inc. Message Board

  • tsterni45 tsterni45 Jun 14, 2011 11:05 AM Flag

    Kasich Casino Report in Ohio

    Report paints rosy profit picture for casino
    Tuesday, June 14, 2011 03:09 AM


    The timing of the report's release - the first business day after Penn National backed out of a deal with Kasich - could further bruise a negotiation process between two sides that aren't talking publicly about each other but are privately grumbling about the other's demands.

    According to the report, which was produced as part of the gambling firm Moelis & Co.'s contract to advise Kasich, Penn National's Hollywood Columbus casino would enjoy a first-year return on investment of about 40 percent even if it paid Ohio a $100 million license fee, twice what is currently required.

    The report also shows that total gambling revenue in Ohio would shoot from about $1.9 billion to as high as $2.7 billion if video slot machines were allowed at race tracks.

    Penn National, which owns two Ohio race tracks and will operate future casinos in Columbus and Toledo, is said to have walked away from a deal with Kasich in part because of the fees associated with video slots.

    On Saturday, Kasich came to terms with Rock Ohio Caesars for multiyear payments on top of the $50million license fee with no tax increases. Sources told The Dispatch that Penn National was offered the same deal and initially accepted but backed away at the final hour.

    Kasich said he would announce the financial terms of his deal with Rock Ohio Caesars, which will operate the Cleveland and Cincinnati casinos, on Wednesday.

    "I feel very good about where we are," Kasich said yesterday in Hamilton. When asked whether a deal could be reached with Penn National before Wednesday's announcement, the governor said, "It's a long time between now and Wednesday."

    Penn National spokesman Bob Tenenbaum said the company would continue to avoid commenting on the negotiations and also declined to comment on Moelis' report.

    The report, released in response to a Dispatch public-records request dated May 26, does not include any data on Rock Ohio Caesars. Administration officials said Rock's omission from the report was due to its status as a privately held company. Penn National is publicly traded.

    Kasich has said for months that Ohio taxpayers were saddled with a bad deal when they approved a 2009 constitutional amendment allowing casino gambling in the state. It required a $50 million license fee and 33 percent tax on gross gambling revenue for each casino.

    Moelis' report, dated May 24, shows that Ohio's casino license fees are lower than New York's ($380 million), Indiana's ($250 million), Illinois' ($100 million) and Pennsylvania's ($66 million). It also shows that Ohio's 33 percent tax on gross gambling revenue is lower than similar taxes in 10 states.

    Moelis stands to make more than $15 million as Kasich's gambling adviser from additional revenue extracted from casinos through these current negotiations.

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