Tax hike idea jolts Ohio casino developers

May 2, 2011 9:00 PM

Visions of thousands of jobs resulting from the development of four casinos Ohio voters approved two years ago were beginning to blur Monday as casino operators were jolted by a tax change proposed by lawmakers.

The change would permit the state to tax casinos on their gross receipts rather than after winnings and payouts have been deducted, a taxing system used by nearly every jurisdiction.

The new tax plan originated with recently-elected Gov. John Kasich who has cried that the taxpayers "got a bad deal" in the manner in which the state will license and tax the casino developers, Penn National Gaming Inc.(PENN) and Rock Gaming LLC, a privately-held company.

The plan being proposed, said Eric Shippers, a spokesman for Penn National, is "unique and discriminatory."

For example, said Shippers, "Let’s assume a customer puts $10 in a machine and eventually gets the original $10 up to $1,000 in winnings before ultimately cashing out his or her original $10. Under this scheme, we would be forced to pay the (proposed tax) on the $1,000…money that never existed in any rational person’s definition."

Penn National immediately indicated it would now review its investment in Ohio casinos, although it already has completed 45 percent of its Toledo casino and has broken ground on the Columbus facility.

Meanwhile, Kasich has filed a $55 billion two-year budget plan that includes the additional casino tax revenue.