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Economy and Business

Something old and something new: casino dollars may be both
Studies show casinos draw most customers from less than an an hour away
This story is part of a special series.

Tim Rudell
Simulcast racing. Betting at horse tracks has historically been legal in Ohio. Now it's likely that video slot machines will be allowed as well
Courtesy of Rudell
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In The Region:

The new Cleveland casino will pull in big money. How much of it will come from beyond northeast Ohio is unclear. And, as WKSU’s Tim Rudell reports, it’s even less clear how the shuffling of entertainment spending within the region will affect things like restaurants, theaters and charity fund raising.

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Big draw is local

imageCasinos typically draw most of their customers from close to home. John Kindt of the University of Illinois has led studies of gambling economics for two decades.
“The congressional commission that analyzed all of this, to see if it was genuine economic development, indicated that the way to look at this is to think about the 35-mile feeder market around the gambling facility," he says. "You’re diverting money that is not going to be spent on cars, computers, other entertainment.  And, in fact, we’re seeing that people are spending 10 percent less on food [and] 20 percent less on clothing."

So, history suggests most of the dollars flowing to Cleveland’s Horseshoe casino will be re-purposed from spending that’s already going on in the region.  And, in outlying places like Akron, Canton and Youngstown, it may be money that, until the casino opens next spring, would rarely have made it to Cleveland.


Out in the region
The head of the convention and visitors bureau in Stark County says: That’s OK. Unlike John Kindt, John Kiste believes the casino in downtown Cleveland may draw substantially from outside the region. He believes at least some of the entertainment spending that’s now being pulled out of the area by casinos in neighboring states will stay here.  And he says all of that may help visitor attractions throughout the region by making the whole of northeast Ohio a more defined and high-profile “destination.”
"That’s why we’re putting $26 million into the Hall of Fame. We still want to be an area that is attracting people for things like tourism. If this casino is gangbusters, and is everything they claim it is going to be, I don’t think it is going to hurt these surrounding areas," he says. 
Still, he has reservations.
“If it doesn’t do as well, you’re only going to have a lot of local people," he sayd. "Then you may not be able to help these other areas; in fact, you may hurt them.”

Economist John Kindt acknowledges casinos can help the tourist draw of an area. But, he maintains that how they traditionally draw in and hold customers represents a challenge as much as an opportunity for surrounding businesses and communities.
“Remember, it’s all about concentrated slot machines…lacing as many slot machines as close as possible to major numbers of people," he says. "And that is siphoning money.  Most businesses call it ‘cannibalization’ of the pre-existing consumer economy."
But, the developers of Cleveland’s Horseshoe Casino say its part of a new model of urban casino that blends into and boosts the surrounding area rather than sucking people away from it.
“We believe that rising tide lifts all boats. And if we get enough people down here, everyone will benefit. (We) … are delivering a great experience, excellent service, and a quality product.  If you do those things, and you can get the volumes of people to this corridor, I think everyone will benefit," Horseshoe’s General Manager, Marcus Glover says.

Different gamble
Still, a big part of the pre-existing entertainment industry in Northeast Ohio is nowhere near downtown Cleveland’s sports arenas, bars and restaurants.  For that matter, it’s not necessarily considered entertainment at all. It’s the community and charity fund raising that goes on in church basements and community halls from Mansfield to Youngstown, Ashtabula to Canton.  According the state attorney general, $1.4 billion circulated through Ohio’s roughly 2,000 licensed bingo parlors last year.
Most of the money went to pay winners, and some to overhead, with typically 10 to15 percent going to the charities.     

Bingo Night
Cindy West is volunteer coordinator working a bingo night at St. Joan of Arc Catholic church, half way between Canton and Massillon.  Her husband Don calls the numbers.  Proceeds from bingo, which can be more than a thousand dollars a week, help fund St. Joan of Arc’s elementary school.
West says any competition is going to hurt the 30-year-old bingo nights to some extent. But a casino in Cleveland is fairly far away. And, she says bingo provides something for the Tuesday evening regulars that the big entertainment venues can’t: A sense of community.
"Yeah, they’re gamblers out here. But, it’s also like they’re family. You get to know them. They’re here every week. And it’s kind of nice. You’re not going to get that same feeling when you go to a casino,” she says. 

Family Affair 
June Cox, Sherill Stewart and Mary Goodwin have been coming to St. Joan of Arc Bingo Night since Sherill was a little girl.  
“We’re making memories," she says. "We’re mothers and daughters, so we’re not just occasional friends, or ladies who met at bingo; we’re family." 
"My husband passed away – it’s be five years in May – and he always liked it when we would go to bingo once a week.  He would tell us, ‘You’re making memories,’” she says.
But, they acknowledge they could be tempted to make memories – though less frequently – in Cleveland, especially if it provides a free bus service, as the Mountaineer casino and race track in West Virginia does.
Buses or no, Cindy West says she does not think a bingo night in Canton is going to be affected by a casino in Cleveland as much as by some competitors for the entertainment dollar right down the street.
“Bingo players still like their bingo," she says. "But unfortunately some of them are going not only to Mountaineer and others, but to these little “7s” that are popping up absolutely everywhere.”
The “7s” are also known as instant sweepstakes parlors and internet cafés. They’re all over the state. Local officials’ estimate several hundred are in northeast Ohio alone. And, testimony when Summit County sought to shut some of them down showed that the parlors can take in $40,000 to $60,000 a month.
That may change. The General Assembly is working on legislation that could ban the parlors altogether.

Slots and horses
Meanwhile, yet another type of legalized gambling in Ohio is poised to grow. The state has authorized video slot machines at Ohio’s seven horse tracks. Two of those – Thistledown and Northfield – are in northeast Ohio, and a third will be if the state racing commission OK’s plans to move  the Toledo track to Youngstown.
Gambling expert John Kindt says the economics of slots at horse tracks will be much the same as at the casinos; and, he warns, some of the side effects will be, too. ”Whether it’s at a race track, at a casino, or any other gambling facility, it’s all about the 35-mile feeder market. The problem is, that expands bankruptcies, leads to increased crime around these facilities, and taxpayers in the area have to pay for all that.”
Rock Gaming, the company building Horseshoe Casino in Cleveland, is buying into Thistledown.  Horseshoe GM Maurice Glover says the track is a good complement, with a focus on the local draw.
“There may be some spillover when the tracks get VLTs. But most of those operations are catering to a convenience and a more local experience," he says. "We have a location that has great access. We have a great operation going, and right now we’re concentrating on delivering a great thoroughbred racing experience at our current location.”
Meanwhile, Northfield Park plans to spend as much as $200 million expansion – once the final green light for slots comes.

A different breed
It’s a cold night with wisps of snow as the horses flash past. Their great puffs of breath are white under the lights.  Marty Baudo, Sam Bompeidi, some friends and half a dozen coffee mugs and racing forms are at a table just inside the observation area on Northfield’s ground floor.  Baudo says slots and casinos won’t change life much for horse players.
“They’re two different breeds of gamblers. Slot machines are pure chance, whereas horse players, we tend to have a little skill involved you know," he says. "It’s a socialization. Like people who drink get together and socialize at a bar.  We get together at the track.”
Still Sam Bompeidi thinks the casino needs to be built.
“We have a lot of people from here who go to West Virginia, Michigan, Pennsylvania,who will go downtown instead. To me it’s a great thing for Ohio," he says. 
Backers of the four Ohio casinos insist it is a great thing.  For Northeast Ohio it could mean $140 million a year in taxes and fees – much of it for schools, and 2,000 construction and 1,600 permanent jobs.  And, a grand new life for the old Higbee’s department store when the doors open anew as the Horseshoe Casino in March or  April.

Listener Comments:

I think this casino is the death knell for Cleveland...the Indians are already feeling it, they are in first place and can't fill the stadium...people are pretty dumb to accept this casino in their community while no new long-term good paying jobs created.....Cleveland is one of the poorest regions in the nation so why a casino?
What a joke this town is and the lack of political leadership is even more appalling.

Posted by: cindy (cleveland) on May 21, 2012 7:05AM
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