Rock Gaming's COO talks about suspending casino construction

CLEVELAND - The following is a Q&A with Matt Cullen, president and chief operating officer for Dan Gilbert's Rock Gaming and the man in charge of the two casinos under construction in Cleveland and Cincinnati.

How difficult was the decision to suspend casino construction?  

"It was a tough decision but we really didn't feel we had any choice until we had more of an understanding of what the economic environment was going to be."

What is the main concern for Rock Ohio Caesars at this point?  

"It's really that, the governor has embarked on a review of gaming overall in the state and we appreciate that and understand it but when there's a discussion about changing the economic terms of the casino initiative, that which we counted on as the foundation for our investment which is nearly $1.5 billion between the two cities, we just needed to stop until we could better understand the outcome of that discussion."

And that could affect the size of the casino? 

"It could, until you know what the economic structure is, it's hard to say what kind of investment makes sense the scale of the casinos themselves and the timing and so on.

"All of that was contained in the referendum that was passed and is part of the constitution now and so we had embarked on this significant investment and were going full tilt.  We had hoped Higbee to be open by the very beginning of next year. But when that's called into question and it creates some uncertainty we just need to stop, from a prudent investment standpoint, we needed to stop until we better understood it."

The Ohio House of Representatives attached a tax hike on casinos by amending their interpretation of the state's .26 percent commercial activity or CAT tax. They feel you should pay it not on your gross profits but on all bets wagered. What was your reaction?

"The proposal to put CAT towards coin in as opposed to the revenue is inconsistent with how it's applied in every jurisdiction in the United States and really doesn't seem practical.

"First off you can't even measure it and secondly it's really not fair because it's revenue that's never received by the casino its simply a churn. If somebody comes in with $50 and bets all day long and leaves with $100 the proposal would be you would pay tax on every bet that was made all day long even though you lost money so it really, it doesn't seem to make any sense in the construct of a normal interpretation of gaming revenue."

The CAT tax amendment is in the state senate right now if they were to pull that would you change your mind? 

"Well it isn't CAT by itself, all we're really looking for and again the governor has embarked on this to get clarity of the overall gaming environment in the state and we appreciate that, we think that's a good process but we do think that our piece of it had already been locked in and approved by the voters.

"So CAT by itself is that the only issue, no it's not but getting clarity and reinforcement that the economic deal that had been struck by the casino operators and the people of  Ohio through the referendum ,if we can get that confirmed, then we would be anxious to get moving as soon as we could."

The governor has said all along he wants to get the most out of the casinos for the people of the state, would you be willing to give the state anything more than is constitutionally required?

"Well we are already giving the state in many ways a lot more than is constitutionally required because the state constitution required a $250 million investment per project, we're going to do nearly a billion dollars in Cleveland alone between Phase I and Phase II and $500 million in Cincinnati so we feel like not only are we making good on every commitment that was made, local jobs, local contractors, the taxes and so on but we're significantly increasing the investment because we think it's the right thing to do for everybody."

If they stick with the CAT will this end up in court?

"Well I don't want to speculate as to what happens but the CAT tax as it's proposed is really problematic and we don't think its equitable we don't think it's consistent with what's in the constitution and so it would be problematic for sure."

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