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Charles J. Ruma Files Breach of Contract Lawsuit Against Penn National Gaming

The state of Ohio's foray into expanded gaming was met with more lawsuits and accusations on September 16th, 2009, highlighted by a lawsuit filed by Beulah Park proprietor Charles J. Ruma against Penn National Gaming claiming a breach of contract.

According to the case, Ruma and Penn National Gaming agreed in October 2006 that Penn would have the choice whether or not to acquire Beulah Park if the Franklin County racing track were able to offer a minimum of 1,200 electronic slot machines. As part of a state budget bill approved in mid-July 2009, Governor Ted Strickland and legislative officials are trying to install up to 2,500 slot machines at each of the seven racing tracks in Ohio to raise $933 million for the 2-year state budget.

The lawsuit also states that under the agreement, Penn National Gaming was to utilize its resources to get the machines approved and was not intentionally to take any action that could affect the implementation of the slot machines. Ruma stated that by supporting a competing slots plan under which state voters will decide in November 2009 whether to permit casino facilities to operate in Cincinnati, Cleveland, Columbus and Toledo, Penn National Gaming has violated the agreement.

Ruma said that the movement to place a casino facility seven miles away from Beulah Park was a clear violation of the agreement. Ruma added that he sent Penn National a notice of that breach of contract in March. He said that they are taking step to cancel the agreement because Penn National refused to cancel the option.

Ruma said that the officials of Penn National told him they will not pursue the option to acquire the racing track. But they have refused to formally do so because they want to control what will happen to the racing track after the November referendum. Ruma was among the 7 horse racing track owners to file an application to offer slot machines but he did not fulfill the deadline for the first $13 million in licensing costs.

Ruma said that he cannot pay the licensing cost until the agreement with Penn National Gaming is cancelled, because he is not permitted to add more credit to the racing track. A Penn National spokesperson stated that the organization does not comment on any pending lawsuit.

Aside from that, the supporters of state Issue 3, the casino ballot plan, filed a complaint before the Ohio Elections Commission stating that TruthPAC, the organization opposed to the state Issue 3, made some false statements in television and radio advertisements. The statements said that the employment opportunities made by the four casino facilities would go to workers outside of the state.

TruthPAC also said that based on the wordings of the casino ballot proposal, operators can avoid paying a thirty-three percent tax on the kind of cash betting done on electronic slot machines. Using a video from the Hollywood Casino in Indiana, the group showed that while "cash" is not listed in the definition of "gross casino revenue" in the Ohio ballot referendum, all slot machines at the facility took cash payments.

Rep. Louis Blessing (Republican-Cincinnati) said that the casino supporters purposely left out the cash. He said that had the supporters added the "electronic credits" it would have solved a portion of the problem because when players place the money in the slot machine, they will receive credits. But state Issue 3 supporters denied that they will be able to get out of paying taxes on their gaming revenue.

Bob Tenenbaum, the spokesperson for Issue 3, said that their lawyers have said that every transaction is taxable regardless of its nature. Tenenbaum stated that the definition of gross casino revenue includes "similar objects," which would include electronic credits placed on slot machines.


Sunday, 11 October 2009
Alex Van Der Butz