Ohio Supreme Court Puts Slots on Hold; Rules That Issue Must Be Voted On

Ohio's race tracks and slot machine proponents have been dealt a devastating blow as the Ohio Supreme Court ruled Monday that Governor Ted Strickland's plan to put in video slot machines at horse racing tracks is subject to a statewide vote. This ruling could potentially create a nearly $1 billion hole in the state budget.

In addition, the court put any plans to begin implementing the slots on hold for 90 days, giving a group seeking to put the issue on the ballot the time they need to gather signatures.

The ruling is not only a blow to race tracks and slot machine supporters, but also Gov. Strickland and the state legislature, who worked in the slots to help balance the state's two-year budget without having to raise taxes or enact further spending cuts.

In a 6-1 decision, the highest court in the state ruled that it could not take the state's budget into consideration when deciding that according to Ohio's constitution, the plan was subject to a vote:

"We are not unmindful of the effect our decision may have on the state budget, nor of the commendable efforts of the members of the executive and legislative branches of state government to fulfill their constitutional duties to balance the budget in Ohio. (H)owever, our own constitutional duty is to ensure compliance with the requirements of the Ohio Constitution irrespective of their effect on the state's current financial conditions."

When Strickland and the legislature agreed on the slots plan, they argued that because it was included as part of the state budget and appropriations blils aren't subject to referendum, the slots could not be challenged. The court, however, ruled otherwise, stating that the provisions for slots in the budget bill do not appropriate any money.

The lone dissenter was Justice Paul E. Pfeifer, who stated in his opinion that the provisions included in the budget bill regarding the video-lottery terminals are appropriations for current expenses of state government:

"The VLT legislation is at the very heart of the budget bill, at the very heart of how Ohio is going to pay for its spending over the next two year. Without VLT-enabling legislation, the budget crumbles."

Along witht he ruling, the court ordered that Secretary of State Jennifer Brunner to begin processing the initial petition signatures that LetOhioVote.org collected to begin the referendum process. They must collect at least 241,365 valid signatures from Ohio voters to get the issue on the ballot. This includes signatures from at least 44 of Ohio's 88 counties equal to 3 percent of the 2006 vote for governor in those counties.

Being that it is already late September, it is far too late to get the issue on the fall ballot. The earliest that a referendum could be held is in May, which is when the state had original said they expected 80 percent of the 17,500 slots to be operational. This would have put the state on track to raise the projected $933 million from the slots to fill holes in the two-year-budget ending on June 30, 2011.

Other complications have also recently arisen. Last week, five of the seven race tracks failed to meet a deadline to file the initial $3 million installment of a $65 million license fee. The tracks said that the lawsuits, track ownership issues, and other concerns were making it difficult to secure financing. There is also an issue on the fall ballot which, if approved, would allow four full-fledged casinos to operate in the state. This could pose competition to slots-only race tracks, and may impact projected revenues.