Ohio State Senator Bill Coley Wants to Tax “Free Play” Casino Promotions

Last updated on November 2nd, 2018

Affiliate Disclaimer Please note that some links on legaluspokersites.com are affiliate links. We may receive a commission, at no extra cost to you, if you click through our links and make a purchase from one of our partners.

A state senator from Ohio wants to tax the free play incentives offered by the state’s casinos and racinos, saying it puts the state in line with the laws in neighboring states. Penn National, which is heavily invested in the Ohio gaming industry, says the plan is “ill-conceived”.

State Senator Bill Coley, a Republican from Liberty Township, wants to tax all free play promotional cash above $5 million. The tax on the incentives would be 33%. For Cincinnati’s Horsehoe Casino, which offered $29 million in free play money in 2014, $24 million per year would be taxed. That would represent an increase of $8 million in tax revenues for Ohio and a major liability for the Horseshoe Casino.

$231 Million in Free Play Money

The other four Ohio casinos handed out $104 million in free play money in 2014. The 7 racinos, which only have slot machine gaming, paid out $98 million in free play bonuses to players last year.

Add it all together and the state would collect about $65 million more each year, if it taxed the free play money gamblers are allowed each year. Of course, that tax likely would cause major adjustments to the way casinos offer free money. If they changed their basic promotional model, then the state might net a significant amount less per month.

Lawmakers Were Naive

Bill Coley said the legislature approved the tax-free promotional money when it approved casino gambling in 2009. At the time, Ohio lawmakers were somewhat naive about the way the industry worked, which could cost the state a couple of hundred million dollars if not changed. Lawmakers want to rectify that mistake, as they see it now.

Coley told the news, “We approved that; it was a minor piece of a bill. It was presented to us in the legistlature as something small. Well, this month we will have surpassed over $500 million given away in promotional gaming credit in this state. That’s $165 million that didn’t flow to schools and local governments.”

Comparisons to Michigan and Indiana

The state senator says the nearby states of Indiana and Michigan have similar laws, so the Ohio initiative is simply bringing the state in line with a national trend. In both cases, the $5 million threshold is deemed to be the correct time to begin taxing the giveaways. He said that Ohio is one of only 6 states out of 25 that do not tax the free play money.

Opponents of the bill say that is a mark in Ohio’s favor–that it will help bring in more and better businesses. Penn National Gaming, a Pennsylvania gaming companies which operates casinos and racetracks in 18 states, is strongly opposed to the measure. Penn National owns 2 Ohio casinos, including Hollywood Gaming at Dayton Raceway.

Penn National’s Reply

Eric Shippers, SVP for Public Affairs at Penn National Gaming, said of the proposals, “This proposal is ill-conceived and misguided. In fact the proposal, if implemented, could wind up producing the opposite of what Sen. Coley indicates he’s trying to achieve. Eliminating or reducing the discount on promotional credits would nullify one of the very weapons the state needs to help keep Ohio competitive in the ongoing regional gaming arms race.”

Sen. Coley, on the other hand, believes Penn National has not invested enough in its Dayton facility and wants the new law to force their hand. Pointing to the fact Hollywood Gaming has only 964 slot machines in its facility as a sign the gaming company is not dedicated to making their product better. Coley added, “They can install 2,500. For whatever reason, they have not invested in the facility enough.”

Coley Criticizes Penn

When asked about Penn National Gaming’s quotes, the state senator struck the chord of a person who had been deceived by the company. He once again suggested the legislature had been duped when the laws were written, saying, “We [Ohio] have more people per gaming facility than all but about four or five other states. It can’t be that we have too much gaming. They assured us (downsizing) would have no negative affect on the tax revenue. Strangely enough, the facilities were about 40 percent smaller (than originally planned) and revenue is about 46 percent smaller.”

What Is “Free Play” Money?

Free-play money is the money given by casinos to loyal or high stakes customers as an incentive to keep playing. Slots clubs and casino clubs hand out free money to promote their casino. The idea is to get gamblers into the casino, where they are likely to gamble more than the money offered (and lose).

When a state taxes the monopoly money handed out, it draws on more revenues. Opponents of Coley’s bill suggest they give Ohio an advantage by having no tax on the cash handed out. By taxing the freeplay cash the same as other states, they take away one incentive for out-of-state gamblers to play in Ohio. If less players travel to the Ohio gaming venues, then the state receives less tax revenues. Either way, the casino loses profits. The argument goes that Coley’s bill would not draw in $65 million in new tax revenues, while driving away customers from the casinos.