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Horseshoe Cincinnati Eyes 2013 Opening After Tax Hiccups Cause Construction Delays

Posted on April 29th, 2011

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Developers are adapting a more mellowed and less aggressive stance on its plans to bring the Horseshoe Casino Cincinnati “online” as latest projections put the much awaited opening of the new Broadway Commons facility to 2013. There is even talk of pushing it as far back as 2014, but for now developers refuse to comment on that prospect. For them, what matters is the next two years but even that could already prove fatal for what was once a promising new gambling hub springing out of the American region. The delays can be traced to the impasse with Ohio Gov. John Kasich over the way casino taxes and fees would be levied once the facility goes online. As a result, officials for Rock Gaming Ohio – the local subsidiary that partners with Dan Gilbert to build the Horseshoe Cincinnati – is delaying a critical steel order that would have put the facility on the quick road to completion.

Indeed, the dilemma is both massive and crippling. Rock Gaming together with its national partners are pouring up to $400 million in the facility and would want to see its investment grow in an area that’s craving for established casino brands but until the regulatory framework is completed to finalize how much casinos would be paying to the government in terms of taxes and fees, the developers have decided to slow the project down. The governor, over the last few weeks, has repeatedly reiterated his position that there is a need to study the taxes and fees to be levied on operational gambling facilities in order to ensure that the taxpayers are getting only the best deals possible. A spokesman confirmed the position again Wednesday with a statement that the governor has no plans of rushing on the matter of tax policy determination if that would only serve to compromise the public’s position. Instead, they will take it slowly and deliberately until a workable solution is met.

“We missed that date – the steel has been delayed,” fired back Steve Rosenthal, the principal for Rock Gaming Ohio during the City Hall meeting held last Wednesday. The meeting was a conference call to provide feedback on the status of the project as well as give the latest architectural renderings and plans to the City advisory panel. Stressed Rosenthal, the steel order was critical to the erection of the casino’s steel framework and without it, interior work will not be able to being this winter. Instead, the timeline will be pushed back consistent with the new steel deliver dates through which opening will also be delayed. Rosenthal is personally in charge of the construction and design of the Horseshoe Cincinnati and stresses that for now, there is no planned work stoppage for the developers on-site. However, Rosenthal let it slip that if an agreement is not reached soon over exactly how much the casino would be paying in fees and taxes, a much smaller casino with few games and fewer jobs could be in the offing.

For sure, Kasich is fueling an unnecessary rift between his office and casino developers, one that could put in jeopardy what so many people worked very hard for in order to become reality. Kasich, since his election last fall, was a staunch critic of the 2009 constitutional amendment passed by the voters in Ohio concerning the legalization of casinos in the state. Kasich particularly focused on the issue of taxation saying the agreements did not tax facilities enough; the agreement currently stipulates a 33 percent taxation rate with much of the profit funneled into the various cities and local governments in the state. On top of the annual taxation numbers, operators are also required to pay upfront a $50 million licensing fee.

Kasich said he is determined to seek avenues to raise the licensing fees and taxes even before casinos have become operational. The governor’s office has already moved ahead with the hiring of gambling consultants to formulate a revised policy regarding taxation of the new industry.

The Horseshoe Casino Cincinnati was originally envisioned as a 2,-300 slot and 72-gaming table facility spread over 350,000 square foot of gaming space.