New Castle News

June 10, 2013

Mitchel Olszak: Casino satire comes to fruition

Mitchel Olszak
New Castle News

NEW CASTLE — Several years ago, I wrote a satirical column about government subsidizing casinos.

In it, I envisioned a time in the future when casinos became so prevalent that the gambling market was glutted with them.

These casinos I fabricated couldn’t generate enough revenue to support themselves, so government had to step in to assist, even though it was originally promised they would be gold mines.

Pretty silly stuff, huh? How could anyone believe that casinos need government aid?

Well satire, it seems, has a way of becoming reality.

Locally, a proposed harness racing track and casino project required a commitment of $50 million in funding from Lawrence County government to get off the ground. Apparently the owners couldn’t generate enough funding in the private sector, so government had to step in with the promise to issue a special bond.

Meanwhile, another project — just across the Ohio border in Austintown — is getting $60 million in low-interest financing from the Western Reserve Port Authority. So once again, government comes to the rescue of a casino.

Typically, when a government floats a bond issue, it’s backed by taxing authority to assure investors they will get their money back with interest. In Lawrence County, we are told the $50 million casino bond will be backed instead with the revenue the county anticipates as its share of casino profits under state law.

The good news, then, is that taxpayers won’t be footing the bill for the bond. The bad news is that every dollar the county has to divert to the bond issue is less money available locally to fund economic development projects.

And one of the key selling points for Pennsylvania casinos was that they provide local governments with a source of revenue that can be used to encourage economic activities. But if much of that money instead has to go to pay off bonds, the attraction of casinos wanes.

That’s especially true when you realize any Lawrence County casino will have considerable difficulty drawing customers — and their money — from outside the community. With casinos in Austintown, Pittsburgh, Washington, Erie, Cleveland and Wheeling, the competition for gambling dollars is intense. And the question has to be asked: Why would people travel if they have gambling options nearby?

Although casino backers tout the jobs they create, economically they are a dubious proposition — because they drain more revenue out of a community than they put back in. Any benefit stems from the ability to draw customers from a wide area or from the share of profits distributed to local government.

In both of these instances, the Lawrence County project loses luster. It’s a consequence of a casino market that is indeed glutted.

And amid all of this, 10 years after the casino was first proposed for Mahoning Township, there’s still no final word on whether it will be built. The decision is now in the hands of the Pennsylvania Gaming Control Board, which must review the application submitted a little more than a week ago.

At the same time, construction is under way in Austintown, on a track and casino being built by Penn National Gaming. Interestingly, Penn National is now a major partner in the Lawrence County track proposal. Does this put the company in competition with itself?

Even a satirist would have difficulty dreaming up that scenario.