Report: Ohio casinos will hurt Detroit's budget

Associated Press
Workers put the finishing touches on a gaming floor at the Horseshoe Casino Cleveland in Cleveland on Wednesday, May 9, 2012. Located in the city’s old Higbee department store, the $350 million project is scheduled to open to the public on Monday, May 14. (AP Photo/Amy Sancetta)
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Workers put the finishing touches on a gaming floor at the Horseshoe Casino Cleveland in Cleveland on …

DETROIT (AP) — Detroit's hard-pressed treasury can expect to take another hit as Ohio opens four casinos that'll be in direct competition with three in the Motor City, according to a consulting company.

The treasury stands to lose up to $30 million in annual casino tax revenue by 2015 as some gamblers switch to the neighboring state's casinos, says a report from the global management company McKinsey & Co. Detroit already has lowered casino revenue estimates for the coming fiscal year.

The city has a $265 million budget deficit, $13.2 billion in long-term structural debt and is operating under a consent agreement with the state as an alternative to being taken over by an emergency financial manager.

The Horseshoe Casino in Cleveland opens Monday, and the Hollywood Casino in Toledo opens May 29. Casinos in Columbus and Cincinnati will follow.

About $177 million of Detroit's $1.2 billion general fund budget in the last fiscal year came from taxes on the MGM Grand Detroit, MotorCity and Greektown casinos, which get 80 percent of their revenue from people living within 150 miles.

"Detroit's casinos will no longer be the obvious gaming choice for day-trippers," the McKinsey report said, singling out Toledo's casino as particularly detrimental to Detroit's gambling revenue.

Bettie Buss, a former Detroit budget analyst who monitors the city's fiscal problems for the nonprofit Citizens Research Council of Michigan, said stable casino revenues have been the "single bright spot in an otherwise dim revenue picture for the city's general fund."

She said city officials know Detroit is going to take a hit from the competition in Ohio, but how much is hard to say.

"The pressure is to underestimate the loss to minimize the reductions you're going to have to make," Buss told the Detroit Free Press (http://on.freep.com/Ke1xIY ). "It's hard to cut. Nobody can argue that city services are even adequate, so how do you keep cutting from already inadequate city services?"

City Finance Director Cheryl Johnson said Mayor Dave Bing's proposed 2012-13 budget anticipates a drop in casino-related money — from an estimated $175 million this fiscal year to $150 million next fiscal year.

If casino and other revenues fall short, "we'll adjust," said Bing spokeswoman Naomi Patton.

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