Don’t go to the bank on casino money

First Posted: 2/19/2015

Two years after Ohio voters were convinced to legalize gambling, the state is finding it is a long-shot when trying to project tax revenue from Ohio’s four casinos and seven racinos.

The state’s projections for 2014 tax revenues were off by a whopping $200 million. The state Department of Taxation predicted $470 million in annual tax revenue when it weighed in on the proposed constitutional amendment in October 2009. However, when reality came knocking on the door at the close of 2014, the bookie’s books showed tax revenue from the casinos totaled $267.5 million.

Ohio’s missed forecast was one of biggest among states who harbor casinos, but it wasn’t unusual. Most state forecasts are almost always too high, according to a recent study by Cummings Associates, a Massachusetts-based consulting firm.

Errors in state forecasts have been blamed on miscalculations of spending habits and competition, but one also has to wonder how much the projected numbers reflect wishful thinking. Mike Sobul, who was the Ohio Tax Department’s director of research, admitted as much in an interview with The Associated Press.

“In retrospect, we were guessing,” Sobul said. Analyst Alan Woinski chimed in, “This isn’t a science.”

That’s not a comforting thought.

While state’s like Ohio will gladly take the $267 million handed to them last year in tax money, it can be dangerous when using projected revenues as the basis of funding programs.

All that said, January is off to a great start thanks to the Ohio State football team’s national championship. The Buckeyes’ wild ride to the title, along with some unseasonably mild January weather, was a boon for Ohio’s casinos. The two national championship playoff games packed the Columbus Hollywood Casino’s O.H. sports bar, helping it fill its pockets with $17.9 million for the month, a healthy 17 percent jump from a year ago. The Scioto Downs racino also did well, bringing in $10.9 million in January, a 12.4 percent increase from last year.

It makes you wonder what would happen if LeBron and the Cavs could make it to the NBA finals, the Tribe could get to the World Series and the Browns to the Super Bowl.

That would make a sweet year, but we won’t roll the dice on it happening. We’re talking Cleveland sports, after all.