Ohio casinos' effect on Detroit

[Bong-Man]

I've always flown to Vegas to use it as a starting point for other destinations. Bryce Canyon, Zion, Grand Canyon, Sonoma, Flagstaff. There's nothing finer than spending a couple days in the desert and driving back into Vegas at night.

Every time I go thru Cleveland I see at least 5 or 6 billboards for Motor City Casino, so this is going to have an effect. I doubt those folks were doing anything more than taking day trips to Detroit.

[Patrick]

Yikes, and jjaba wasn't even "trying to get his schitt back."

Just laghed m ass off thinking of hoow you woould even atttempt to get some of that "schitt" back! OJ, now that was a casino character....or Cecil Fielder....asshole blew 40 mil at casinos

[TJC]

Although I am being optimistic myself, these simple facts will determine the bottom line for Detroit Casinos once Ohio gets 4 of there own up and running. First, let me say that although I live in Windsor, I frequent 2 of the 3 Detroit Casinos on a regular basis [[MGM Grand and Greektown). Windsor as well, but sometimes you need a change of scenery. I can say that since Ohio has passed Casinos, I have taken notice to the number of Ohio plates going in and out of these 2 Casinos. The numbers are quite alarming!!! [[especially at Greektown!). On a recent trip to Greektown, I can say that the parking garage had almost 1 Ohio plate to every 3 Michigan. Doesn't sound bad, but crunch the numbers. Let's not forget the folks who live in Michigan, but closer to places like Toledo than Detroit. With casinos at thier back door, new ones at that, most will go to Ohio. Smoking or not WILL NOT make a difference. As a smoker, I have learned to cope with non-smoking establishments, so will patrons in Ohio. The recent smoking ban in Michigan is being hailed as a joke because the Casinos were allowed to continue to allow smoking. I give it 2 more years. Casino Windsor and the 2 casinos in Niagara Falls continued to allow smoking for 18 months after the ban, untill private business owners put a stop to that. Also, the economic state of Michigan is another factor. Less and less jobs, people relocating out of state, foreclosure, and unemployment insurance. No one knows what the true effects are going to be, but keep in mind, Detroit built 3 casinos to dilute trafic to Windsor Casino. Ohio is opening 4 casinos to dilute traffic to Detroit!!!

[esp1986]

I suspect the Detroit casinos will see about a 4% impact from the Ohio casinos, and that is mostly from the Toledo area. The Ohio casinos are a complete joke. It is a plan crafted overnight by Dan Gilbert and Penn National Gaming to exploit the Ohio taxpayers by saying it will create jobs and keep Ohioans money in Ohio. While it will accomplish those two things, the only well thought out casino is Gilbert's in Cleveland. The Toledo casino is south of the river in an industrial district, across the street from a Days Inn and some abandoned and run down houses... classy. This plan was an easy sell to Ohio taxpayers because Ohio, like Michigan, needs jobs, and rather than taking their time to correctly craft a plan to put the casinos in downtown areas where they could have a real economic impact, they were assembled merely to be ready in time to be put on the ballot, without any real long term economic plan. The whole thing was built on the premise of jobs and tax revenue for the state of Ohio, rather than a long term plan to stimulate local economies.

Long story short, the Detroit casinos have a leg up, in that they have attached hotels [[I don't believe the one in Toledo does, being Detroit's closest competition, most people in the areas of other Ohio casinos likely visit casinos in states other than Michigan... Pennsylvania and Indiana mostly).

The number of people that visit Detroit's casinos from afar is very minimal. Far more people from the Detroit area visited Windsor than Ohioans that visit Detroit alone. Every state surrounding Ohio has legalized casino gambling, and a lot of money currently goes to Pennsylvania. If the impact of the Detroit casinos on Windsor was 8%, the impact of Ohio casinos on Detroit would likely be no more than half of that.

[canuck]

Las Vegas has 183 casinos and 140,000 hotel rooms in the middle of a desert in the most useless city on this planet and they're still making money and there's still hotel and casino construction going on. Yet, Detroit has 3 casinos that are struggling. The problem with this area is that there's not enough casinos. This area has to think big and those casinos will create demand. Gamblers like to go where there's a lot of a competing casinos. When the State hands out 100 casino licenses in Detroit instead of a measily 3, that's when the real traffic starts flowing and you don't have to worry about other States taking away your market share.

You're right Dave, Detroit should churn out casinos on an assembly line.

[Gambling Man]

A couple of thoughts/facts here....
Detroit tax rate is 20.25% plus 1.25% municipal svc fee paid to city of Detroit.
An additional 1% is levied on anything over 400MM Gross Gaming revenue for an all-in tax rate of 22.25% PLUS, in Michigan, the Gaming Control Board fee is on top of this tax, an additional 10MM per casino per year.
Casino Windsor has been decimated. Their revenues are perhaps 1/3 of what they used to be. Especially after the smoking ban. The Illitches haven't profited a single dime from Motor City Casino, they have put in multi millions to keep themselves in compliance with their loan covenants. The tax rates in Detroit are the highest in the country for land-based casinos without a protected market. In addition, they had to build 400 room hotels that are an anchor on any profits.
Will Toledo affect the revenues....certainly. How much? I don't have a clue. I can assure you of this, they will do well, and not having to build a hotel is a huge advantage.

[Gambling Man]

Sorry, 20% plus 1.25% munic svc fee.......just read it back to myself.

[esp1986]

Las Vegas has 183 casinos and 140,000 hotel rooms in the middle of a desert in the most useless city on this planet and they're still making money and there's still hotel and casino construction going on. Yet, Detroit has 3 casinos that are struggling. The problem with this area is that there's not enough casinos. This area has to think big and those casinos will create demand. Gamblers like to go where there's a lot of a competing casinos. When the State hands out 100 casino licenses in Detroit instead of a measily 3, that's when the real traffic starts flowing and you don't have to worry about other States taking away your market share.

People want to build more casinos in the Detroit AREA... classic Detroit problem, they want to build them in the suburbs. Rather than creating a collection of them that can be a destination in one locale, they want to spread them out, Detroit style.

[bailey]

A couple of thoughts/facts here....
Detroit tax rate is 20.25% plus 1.25% municipal svc fee paid to city of Detroit.
An additional 1% is levied on anything over 400MM Gross Gaming revenue for an all-in tax rate of 22.25% PLUS, in Michigan, the Gaming Control Board fee is on top of this tax, an additional 10MM per casino per year.
Casino Windsor has been decimated. Their revenues are perhaps 1/3 of what they used to be. Especially after the smoking ban. The Illitches haven't profited a single dime from Motor City Casino, they have put in multi millions to keep themselves in compliance with their loan covenants. The tax rates in Detroit are the highest in the country for land-based casinos without a protected market. In addition, they had to build 400 room hotels that are an anchor on any profits.
Will Toledo affect the revenues....certainly. How much? I don't have a clue. I can assure you of this, they will do well, and not having to build a hotel is a huge advantage.

Little off topic here, but what does that 22% come out to annually? I'm guessing that is a rather large number and huge chunk of Detroit's budget.

[esp1986]

A couple of thoughts/facts here....
Detroit tax rate is 20.25% plus 1.25% municipal svc fee paid to city of Detroit.
An additional 1% is levied on anything over 400MM Gross Gaming revenue for an all-in tax rate of 22.25% PLUS, in Michigan, the Gaming Control Board fee is on top of this tax, an additional 10MM per casino per year.
Casino Windsor has been decimated. Their revenues are perhaps 1/3 of what they used to be. Especially after the smoking ban. The Illitches haven't profited a single dime from Motor City Casino, they have put in multi millions to keep themselves in compliance with their loan covenants. The tax rates in Detroit are the highest in the country for land-based casinos without a protected market. In addition, they had to build 400 room hotels that are an anchor on any profits.
Will Toledo affect the revenues....certainly. How much? I don't have a clue. I can assure you of this, they will do well, and not having to build a hotel is a huge advantage.

There is some flawed logic here... yes the hotels, when not full, can be a drain on the company's books, but the hotels don't have a negative affect on revenues, in fact, just the opposite it true. With a hotel, more people are likely to come from afar to spend a weekend, and that means more revenues.

In terms of affect on revenues that the Toledo casino will have on Detroit, it will be minimal. Not having a hotel will certainly be an advantage from a business standpoint, as it won't drain profits. Then again, Ohio never was building their casinos to be destinations, they were simply doing it to keep Ohioans from gambling in other states.

[rjk]

The Toledo casino is south of the river in an industrial district, across the street from a Days Inn and some abandoned and run down houses... classy.

As opposed to the elegance that surrounds the Motor City Casino? Excluding Vegas, most gamblers will gamble in a drainage ditch if it's a short distance from their house.

I was at a Detroit casino last summer and was amazed by the number of Ohio plates I saw in the parking lot.

[esp1986]

As opposed to the elegance that surrounds the Motor City Casino? Excluding Vegas, most gamblers will gamble in a drainage ditch if it's a short distance from their house.

I was at a Detroit casino last summer and was amazed by the number of Ohio plates I saw in the parking lot.

I think you missed the point here. The point is that the Ohio casino proposal was thrown together just to get the proposal on the ballot and get four casinos up and running. Motor city is at least a stone's throw from downtown... a five minute walk, and all of the Detroit casinos capitalize on being close to Comerica Park, Ford Field and JLA... they get a lot of people after events. Toledo is not the same... they have two brand new facilities Huntington Center Arena and Fifth Third Park, both downtown. One would think that you would want to capitalize on 10,000 extra people being in the area 100 nights a year by putting the casino in the same locale. Downtown Toledo is more desolate than Downtown Detroit, so it's not that they couldn't find the land, the problem is they threw it together overnight so they could get it on the ballot. Go to Toledo and take a look at where it is... It is on the southwest corner of I-75 and the Maumee River... nowhere near downtown, demonstrating that very little foresight went into planning it.

[ghettopalmetto]

One would think that you would want to capitalize on 10,000 extra people being in the area 100 nights a year by putting the casino in the same locale. Downtown Toledo is more desolate than Downtown Detroit, so it's not that they couldn't find the land, the problem is they threw it together overnight so they could get it on the ballot.

That's because cobbling together the facade of a real city by assembling various entertainment traps is pure horseshit. You can't run a city of 300,000 predicated on 10,000 folks going out to dinner, having a couple beers, and throwing some cash into a gutter.

[iheartthed]

Go to Toledo and take a look at where it is... It is on the southwest corner of I-75 and the Maumee River... nowhere near downtown, demonstrating that very little foresight went into planning it.

Well, Detroit at least had enough foresight to attach strings to the development of the casinos. I guess Toledo just left it up to the license holders to decide what location made the best business sense?

[Schoolcraft]

Columbus has decided to put their casino away from their downtown area too, which is originally where the developers wanted it. The people in the Arena District downtown were afraid of the people a casino would attract in an area trying to build itself up, so that's probably the thinking in Toledo too.

[iheartthed]

The people in the Arena District downtown were afraid of the people a casino would attract in an area trying to build itself up, so that's probably the thinking in Toledo too.

Old people? Chain smokers? lol.

[esp1986]

Well, Detroit at least had enough foresight to attach strings to the development of the casinos. I guess Toledo just left it up to the license holders to decide what location made the best business sense?

Actually the locations were set before the election. This proposal was passed during the August primary. Following the August primary, the Cincinnati casino made a proposal to move the location. Since the original location was approved by the voters, the change of location went before the voters in the November election. Gilbert also has the rights to this one, which he has vowed to develop much like the Cleveland one. They selected the locations and voters and leaders alike were completely ignorant as to the long term effects of the deal.

[ghettopalmetto]

They selected the locations and voters and leaders alike were completely ignorant as to the long term effects of the deal.

Well, that much is obvious. If the voters in Ohio knew what they approved, they would have known that:

1. The bill under consideration for referendum was written by Dan Gilbert and Penn National. Do you think they were being altruistic?

2. The rate of taxation is far lower than just about every other state with legalized gaming.

3. Their money, in fact, will STILL be going out-of-state. Only now, they won't have to leave their state to do so--Dan Gilbert and Penn National will back the Brinks truck up to their house.

[esp1986]

Columbus has decided to put their casino away from their downtown area too, which is originally where the developers wanted it. The people in the Arena District downtown were afraid of the people a casino would attract in an area trying to build itself up, so that's probably the thinking in Toledo too.

Columbus is a lot different than Toledo... when you think Toledo, think a smaller Detroit of 10-15 years ago, a lot of empty lots and abandoned buildings [[more than there are today anyway). The site in Toledo was picked because it was available and large enough, and could be built on cheaper, as they would build out instead of up. In Columbus the downtown area is much nicer than Toledo, especially with the state capitol and offices there, so I can understand a little bit of their concern. But at the same time, look at Greektown. You don't see a lot of beggars around the casino all the time, not like you do outside the gates of Comerica Park or Ford Field. I think the arena and ballpark in downtown Columbus attract shadier people into the area than the casino would.

[Schoolcraft]

Beggars [[for the most part) are pretty sparse in downtown Columbus... I don't think I've ever seen one in the Arena district. I think they were thinking more along the lines of prostitutes and pimps and maybe even a higher concentration of black folk from the areas surrounding downtown.

[1KielsonDrive]

It's a Race to the Bottom!!! BRACE YOURSELVES!

That is the core message of this whole conversation.

[ghettopalmetto]

Well, one thing is certain. Wherever they put the casino in Columbus, you should expect to see a lot of pawn shops and tattoo parlors stocked with Buckeye memorabilia.

Are NCAA athletes eligible to get comped a car if it's earned from casino gambling?

[esp1986]

Beggars [[for the most part) are pretty sparse in downtown Columbus... I don't think I've ever seen one in the Arena district. I think they were thinking more along the lines of prostitutes and pimps and maybe even a higher concentration of black folk from the areas surrounding downtown.

Come to think of it, I was at the Blue Jackets home opener this year and I don't recall too many beggars... Look at Detroit though, there really aren't that many more shady people with the casinos than without... perhaps less since the vacant buildings they once infested have fallen one by one.

[Mikeg]

Little off topic here, but what does that 22% come out to annually? I'm guessing that is a rather large number and huge chunk of Detroit's budget.

Through Aug. 2010, Detroit's wagering tax revenues were coming in at a rate equal to about $154 million for the whole year [source - see page 2 for the Detroit wagering tax revenue data and page 4 for an update on the Ohio Casino legislation].

Keep in mind that back in 2009 the City of Detroit agreed to put their wagering tax revenues up as collateral to insure that the City and the Detroit Water and Sewage Department make their quarterly payments on their interest rate Swap Agreements [source]. Detroit's wagering tax revenues for each month in a quarter are deposited in a trust fund and released to the General Fund only after the City and DWSD make their Swap Agreement payments for that quarter.

[hybridy]

all of my family in cincinnati goes to indiana to the river boats...they're all smokers and stated they won't gamble at the cinci casino