Reason #5 to VOTE NO on ISSUE 3
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Because it fails technically as a constitutional amendment.
Here is the 13th and final paragraph of Issue 3's proposed amendment language to the Ohio Constitution:
For purposes of this section, “gross slot machine revenue” means the total of wagers received by a slot machine minus the total of: (1) cash or cash equivalents paid out to patrons as a result of playing a slot machine which are paid to patrons either manually or paid out by the slot machine; (2) cash paid to purchase annuities to fund prizes payable to patrons over a period of time as a result of playing a slot machine; and (3) any personal property distributed to a patron as the result of playing a slot machine, excluding travel expenses, food, refreshments, lodging, or services.”
My objections to the definition of "gross slot machine revenue" include:
1. Is "the total of wagers" the same as the total dollar amount of wagers? And, although when I first read it, I wasn't sure if "wagers" referred to a person or a bet placed by a person, I'm pretty certain that it's a bet placed by a person, said person being a wagerer.
2. Why is anything being subtracted from the "total of wagers received by a slot machine"? Doesn't subtracting all those things from the total of wagers received by a slot machine make the total of wagers received by a slot machine no longer a "gross" amount? Because I always thought that a gross amount referred to a sum before anything was subtracted from it. Because once you start subtracting from the total, you end up with some kind of a net amount.
So - again, why are
1) cash or cash equivalents paid out to patrons as a result of playing a slot machine which are paid to patrons either manually or paid out by the slot machine;
2) cash paid to purchase annuities to fund prizes payable to patrons over a period of time as a result of playing a slot machine; and
3) any personal property distributed to a patron as the result of playing a slot machine
being taken out of the total of wagers received by a slot machine? Aren't each of those a cost, an expense, of running slots? Therefore, they are amounts that should be subtracted only to produce some NET number, not a gross number.
Go ahead someone - tell me why I'm wrong and what I'm not getting. Are you going to tell me that it's industry standard and that while it's true that this formula doesn't produce a real gross amount, it's still some kind of gross?
Yeah, it's gross alright.
I mean, the language does make it clear that travel expenses, food, refreshments, logding or services will not be taken from the gross. So why are all the other things removed from the gross?
I don't get it.
Here's a definition of "gross", here's one and here's one. All three indicate that a gross amount is the amount before ANY deductions.
So why do the operators get to deduct at least three categories of EXPENSES from the total sum of wagers before determining the gross amount?
By the way, who will be drafting the spreadsheet and auditing the spreadsheets to make sure that the right formulas are used?
Fleeced. Ohio is being fleeced. Big time.
Previous reasons to vote no on Issue 3:
Reason 6
Reason 7
Reason 8
Reason 9
Reason 10
Reason 11
Reason 12
Reason 13
Reason 14
Reason 15
Reason 16
Reason 17
Reason 18
Reason 19
Reason 20
Reason 21
Reason 22
Reason 23
Reason 24
Reason 25
Reason 26
Reason 27
Reason 28
Reason 29
Reason 30
Reason 31
Reason 32
Reason 33
Reason 34
Reason 35
Reason 36
Reason 37
Reason 38
Reason 39
Reason 40
Reason 41
Reason 42
Reason 43
Reason 44
Reason 45
Reason 46
Reason 47
Reason 48
Reason 49
Reason 50
Reason 51
Reason 52
Reason 53
Reason 54
Reason 55
Reason 56
Reason 57
Vote no on Issue 3 (Ohio Learn and Earn).
Here is the 13th and final paragraph of Issue 3's proposed amendment language to the Ohio Constitution:
For purposes of this section, “gross slot machine revenue” means the total of wagers received by a slot machine minus the total of: (1) cash or cash equivalents paid out to patrons as a result of playing a slot machine which are paid to patrons either manually or paid out by the slot machine; (2) cash paid to purchase annuities to fund prizes payable to patrons over a period of time as a result of playing a slot machine; and (3) any personal property distributed to a patron as the result of playing a slot machine, excluding travel expenses, food, refreshments, lodging, or services.”
My objections to the definition of "gross slot machine revenue" include:
1. Is "the total of wagers" the same as the total dollar amount of wagers? And, although when I first read it, I wasn't sure if "wagers" referred to a person or a bet placed by a person, I'm pretty certain that it's a bet placed by a person, said person being a wagerer.
2. Why is anything being subtracted from the "total of wagers received by a slot machine"? Doesn't subtracting all those things from the total of wagers received by a slot machine make the total of wagers received by a slot machine no longer a "gross" amount? Because I always thought that a gross amount referred to a sum before anything was subtracted from it. Because once you start subtracting from the total, you end up with some kind of a net amount.
So - again, why are
1) cash or cash equivalents paid out to patrons as a result of playing a slot machine which are paid to patrons either manually or paid out by the slot machine;
2) cash paid to purchase annuities to fund prizes payable to patrons over a period of time as a result of playing a slot machine; and
3) any personal property distributed to a patron as the result of playing a slot machine
being taken out of the total of wagers received by a slot machine? Aren't each of those a cost, an expense, of running slots? Therefore, they are amounts that should be subtracted only to produce some NET number, not a gross number.
Go ahead someone - tell me why I'm wrong and what I'm not getting. Are you going to tell me that it's industry standard and that while it's true that this formula doesn't produce a real gross amount, it's still some kind of gross?
Yeah, it's gross alright.
I mean, the language does make it clear that travel expenses, food, refreshments, logding or services will not be taken from the gross. So why are all the other things removed from the gross?
I don't get it.
Here's a definition of "gross", here's one and here's one. All three indicate that a gross amount is the amount before ANY deductions.
So why do the operators get to deduct at least three categories of EXPENSES from the total sum of wagers before determining the gross amount?
By the way, who will be drafting the spreadsheet and auditing the spreadsheets to make sure that the right formulas are used?
Fleeced. Ohio is being fleeced. Big time.
Previous reasons to vote no on Issue 3:
Reason 6
Reason 7
Reason 8
Reason 9
Reason 10
Reason 11
Reason 12
Reason 13
Reason 14
Reason 15
Reason 16
Reason 17
Reason 18
Reason 19
Reason 20
Reason 21
Reason 22
Reason 23
Reason 24
Reason 25
Reason 26
Reason 27
Reason 28
Reason 29
Reason 30
Reason 31
Reason 32
Reason 33
Reason 34
Reason 35
Reason 36
Reason 37
Reason 38
Reason 39
Reason 40
Reason 41
Reason 42
Reason 43
Reason 44
Reason 45
Reason 46
Reason 47
Reason 48
Reason 49
Reason 50
Reason 51
Reason 52
Reason 53
Reason 54
Reason 55
Reason 56
Reason 57
Vote no on Issue 3 (Ohio Learn and Earn).
JBlog Me
5 Comments:
Jill, here is how I understand it.
First there is what is called the "handle" or (I think) the "drop." That is all of the money placed into the slots -- what you and I would tend to think of as "the gross," but the gambling industry doesn't.
Subtract from that all of the winnings as defined, and you have what THEY call the gross.
Now here is the big point: THEY control the payout ratios of the slots, BUT they have to compete against other gambling locations who are also setting payout ratios. Set 'em too low; people, esp the big bettors, will figure it out and won't come. Set 'em too high, and the business doesn't make enough money even with heavy gambling traffic.
"Loose" slots might pay out as high as 98% of the handle, while tight slots obviously pay a lot less.
The success of OL&E is totally dependent on their realizing what they call the gross and what you and I would call "net after payouts." THAT net after payouts is the $2.842 billion OL&E is peddling. It would well be that slot players will have to bet somewhere between $30 and $100 billion for that $2.842 bllion to be realized. With maybe 6 million adults in Ohio, you're assuming that each person will bet $50 - $160 per year (obviously ignoring out-of-state traffic, if any).
You can see why OL&E wouldn't want to talk too much about the handle. Those are BIG numbers that are being sucked out of the pockets of all but a very few lucky winners.
And guess what else I just thought of? Am I dreaming, or do NONE of the revenue and profits from food and drink get considered (I don't think I'm dreaming)? If not, why not? AND, are the salaries that come off of that $2.842 bil in the pretty projection the salaries JUST of those who are monitoring the slots, or does it incuding ALL of the help, including those involved in the races (I think so)? In other words, are the slots funding the entire business operation before the taxpayers see a dime (I think so)?
The slots pay higher purses, they pay salaries, they pay for site operations (the whole site? I'm guessing yes), they pay for advertising (which the tracks are doing some of already. As far as I can tell, the only costs of food and drink is the raw cost of the food and drink (usually no more than 20% of the menu price), and heck, they might even think THAT is part of "site operations."
What a pantload.
Oops suffering from Saturday math disease. If the handle needs to be $100 billion to generate $2.842 bil in net, that would be a mind-boggling $16,667 for every adult in OH.
Even a 95% payout ratio would dictate that $57 bil would have to be bet, or $9,333 for each adult in the state.
To say that this isn't adding up is an understatement. I wish I would have focused on this earlier because I don't see how they can hope to generate the $2.842 bil.
Tom - Thank you VERY much for this analysis. Obviously, I really mean it when I say I don't know a thing about this industry. So, to that extent, when drafting legal provisions for the industry, industry people need to be involved. BUT, the people who will be interpreting and applying the law aren't going to be industry people and that's why you need definitions etc.
Not to mention, given that most Ohioans aren't in the racing industry, shouldn't their ability to understand be a priority too?
Your point is well-taken in that you should never vote yes (unless yes/no has been twisted, which occasionally occurs, but thankfully not this time) if they don't understand it and it hasn't been explained satisfactorly to them. One would hope this alone would kill 3.
Well, of course that is the more conservative view of when you don't know something definitively and I would say that I'm a split personality when it comes to taking chances. It really depends on the specific situation. For sure, with a constitutional amendment? you can bet I'm saying no if I don't completely get it.
On the other hand, I used a PC for 20 years and just switched to a Mac. Now THAT was a big unknown. :)
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