June 30, 2015 marked the end of the 13th quarter that Ohio has received tax revenues from Ohio’s Casino profits tax. Issue 3 (the Constitutional amendment approved by Ohio’s voters in 2009), created a state tax of 33% on the gross casino revenues generated by the four casinos permitted by the amendment. Gross casino revenues equal the total amount wagered minus the amount paid out in winnings. Table one shows quarterly casino tax revenues since the first two casinos opened in Cleveland and Toledo in May 2012.
Table 1: Quarterly Ohio Casino Tax Revenues, Calendar Years (CY) 2012-2015
| CY 2012 | # of Casinos Open | Total Casino Taxes | School Tax Revenue (34% of Total) |
| Q2 (May-June)* | 0 | $19,760,133 | $6,718,445 |
| Q3 (July-Sept)* | 2* | $39,439,631 | $13,409,474 |
| Q4 (Oct-Dec)* | 2 | $52,417,622 | $17,821,991 |
| 2012 Total | 3* | $111,617,385 | $37,949,911 |
| CY 2013 | # of Casinos Open | Total Casino Taxes | School Tax Revenue (34% of Total) |
| Q1 (Jan-March)** | 4* | $62,935,379 | $21,398,029 |
| Q2 (April-June) | 4 | $70,645,627 | $24,019,513 |
| Q3 (July-Sept) | 4 | $70,244,213 | $23,883,032 |
| Q4 (Oct-Dec) | 4 | $68,691,396 | $23,355,075 |
| 2013 Total | $272,516,615 | $92,655,649 | |
| CY 2014 | # of Casinos Open | Total Casino Taxes | School Tax Revenue (34% of Total) |
| Q1 (Jan-March) | 4 | $66,267,980 | $22,531,113 |
| Q2 (April-June) | 4 | $68,189,741 | $23,184,512 |
| Q3 (July-Sept) | 4 | $69,174,952 | $23,519,484 |
| Q4 (Oct-Dec) | 4 | $63,838,237 | $21,705,001 |
| 2014 Total | $267,470,910 | $90,940,109 | |
| CY 2015 | # of Casinos Open | Total Casino Taxes | School Tax Revenue (34% of Total) |
| Q1 (Jan-March) | 4 | $68,795,288 | $23,390,398 |
| Q2 (April-June) | 4 | $64,205,986 | $21,830,035 |
| Q3 (July-Sept) | 4 | ||
| Q4 (Oct-Dec) | 4 | ||
| 2015 1st Half Total | $133,001,274 | $45,220,433 |
*The Cleveland casino opened May 14, 2012. The Toledo casino opened May 29, 2012. The Columbus casino opened October 8, 2012. The Cincinnati casino opened March 5, 2013.
Table one also shows the 34% share of casino tax revenues that were earmarked to Ohio’s public schools by Issue 3. Public schools eligible to receive Casino Tax revenue distributions include the 610 “regular” K-12 school districts, the 49 Career Technical Educational Centers (JVSDs), and Community Schools and STEM schools.
The figures in Table one show that total casino taxes averaged roughly $68 million per quarter in calendar year 2013, and have fallen slightly to roughly $67 million per quarter since then. Calendar year total casino tax revenues appear to have stabilized at roughly $267 million in 2014 and 2015. This amount is about $40 million less than the $309 million in total casino taxes that was projected for FY14 in the FY14-15 Administration Budget proposal. And it is roughly 1/3 less than the $412 million total casino tax revenue originally projected for CY 2014 by the Ohio Department of Taxation (however, that estimate assumed a larger casino in Cleveland and a more rapid recovery from the 2008-2009 recession than actually occurred).
While casino tax revenues are collected quarterly, they are distributed to Ohio public schools twice per year. Table two shows the casino tax revenue payments to schools from FY13 through the first of the two FY16 distribution payments.
Table 2: Casino Tax Distributions to Ohio Public Schools, FY13-FY16
| FY 2013 Distributions | Quarterly Revenue Period | School Payments | # Students | $ Per Student |
| January 2013 | May-Dec 2012* | $37,953,633 | 1,815,517 | $20.91 |
| FY 2013 Total | $37,953,633 | |||
| FY 2014 Distributions | Quarterly Revenue Period | School Payments | # Students | $ Per Student |
| August 2013 | Jan-June 2013* | $45,447,895 | 1,808,609 | $25.13 |
| January 2014 | July-Dec 2013 | $47,257,538 | 1,795,583 | $26.32 |
| FY 2014 Total | $92,705,433 | |||
| FY 2015 Distributions | Quarterly Revenue Period | School Payments | # Students | $ Per Student |
| August 2014 | Jan-June 2014 | $45,759,631 | 1,802,603 | $25.39 |
| January 2015 | July-Dec 2014 | $45,250,043 | 1,806,192 | $25.05 |
| FY 2015 Total | $91,009,674 | |||
| FY 2016 Distributions | Quarterly Revenue Period | School Payments | # Students | $ Per Student |
| August 2015 | Jan-June 2015 | $45,281,117 | 1,791,952 | $25.27 |
| January 2016 | July-Dec 2015 | |||
| FY 2016 Total | $45,281,117 |
* The Cleveland casino opened May 14, 2012. The Toledo casino opened May 29, 2012. The Columbus casino opened October 8, 2012. The Cincinnati casino opened March 5, 2013.
The data in Table two shows that since the 4th casino in Cincinnati opened in March 2013, Ohio public schools have consistently received casino tax distribution payments amounting to roughly $25 per student (roughly $91 million in total per fiscal year). While this is not a large amount of money in the context of approximately $16 billion in total state and local operating revenue annually, the language of Issue 3 does delineate that these distribution payments are to be on top of — rather than in place of — other state and local funds received by Ohio’s public schools.
Impact of Video Lottery Terminals (VLTs) at “Racinos”
The most likely reason that casino tax revenues are now on a lower trajectory than initially forecast is the impact of competition from Ohio’s seven “Racinos” (horse racetracks with gaming areas) that include video lottery terminals (VLTs). Ohio’s first Racino opened at Scioto Downs in Columbus in June 2012. The second Racino opened at Thistledown in Cleveland in April 2013 and was followed by Racinos at Northfield Park in Cleveland and the former Lebanon Raceway in southwest Ohio which both opened in December 2013. The final three Racinos opened at Belterra Park in Cincinnati in May 2014, at Dayton Racing in August 2014, and at the Mahoning Valley Race Course in November 2014.
As VLTs are technically part of the Ohio Lottery, revenues from the seven Racinos are distributed to schools as part of the Lottery Profits Fund rather than through the casino tax. In FY15 VLT deposits into the Lottery Fund totaled $258.9 million. FY16 Lottery distributions from VLTs will likely be slightly higher as the Mahoning Valley Racino was only open for slightly more than half of FY15.
Because VLT profits are deposited into the Lottery Fund, any reductions in casino tax revenues resulting from gaming competition provided by the Racino VLTs will likely be felt more by Ohio’s counties and the four host casino cities than by schools. However, those familiar with school funding in Ohio no doubt are aware that lottery revenues have long been thought to displace other state funding that would have flowed to schools in the absence of the lottery. To the extent that this phenomenon occurs with VLT revenues, then any future reduction in casino taxes due to competition for Ohio’s gambling activity from Racinos will ultimately also be felt by Ohio’s public schools.
A future issue of the OEPI Newsletter will provide a more detailed summary of the VLT proceeds generated for schools by the state’s seven Racinos.
Impact of Video Lottery Terminals (VLTs) at “Racinos”
The most likely reason that casino tax revenues are now on a lower trajectory than initially forecast is the impact of competition from Ohio’s seven “Racinos” (horse racetracks with gaming areas) that include video lottery terminals (VLTs). Ohio’s first Racino opened at Scioto Downs in Columbus in June 2012. The second Racino opened at Thistledown in Cleveland in April 2013 and was followed by Racinos at Northfield Park in Cleveland and the former Lebanon Raceway in southwest Ohio which both opened in December 2013. The final three Racinos opened at Belterra Park in Cincinnati in May 2014, at Dayton Racing in August 2014, and at the Mahoning Valley Race Course in November 2014.
As VLTs are technically part of the Ohio Lottery, revenues from the seven Racinos are distributed to schools as part of the Lottery Profits Fund rather than through the casino tax. In FY15 VLT deposits into the Lottery Fund totaled $258.9 million. FY16 Lottery distributions from VLTs will likely be slightly higher as the Mahoning Valley Racino was only open for slightly more than half of FY15.
Because VLT profits are deposited into the Lottery Fund, any reductions in casino tax revenues resulting from gaming competition provided by the Racino VLTs will likely be felt more by Ohio’s counties and the four host casino cities than by schools. However, those familiar with school funding in Ohio no doubt are aware that lottery revenues have long been thought to displace other state funding that would have flowed to schools in the absence of the lottery. To the extent that this phenomenon occurs with VLT revenues, then any future reduction in casino taxes due to competition for Ohio’s gambling activity from Racinos will ultimately also be felt by Ohio’s public schools.
A future issue of the OEPI Newsletter will provide a more detailed summary of the VLT proceeds generated for schools by the state’s seven Racinos.