CASH OF THE TITANS

They are like the mega-monsters of Japanese cinema, swatting at each as they rumble through downtown Cleveland, stomping on those who don’t run fast enough. They are the giant figures of this election season, fighting for control over staggering wealth.

In reality, they are just men — very, very rich men with
familiar last names and links to Cleveland’s landmarks and sports
teams. Recently, they fought over the location of the highly touted
medical mart and convention center. Today, they grapple over gambling.
They’ve unleashed salvo after salvo of rhetoric, mudslinging and
conflicting data in an effort to influence how you vote on Issue 3.

The questions for Greater Clevelanders: Do you trust wealthy
pro-casino interests — in this case, Cleveland Cavaliers owner
Dan Gilbert — to deliver on the latest promise of blue-collar and
hospitality jobs, multi-million-dollar tax payments and yet another
facelift of downtown Cleveland? Are you willing to give away a piece of
the Ohio constitution in exchange for those promises?

Issue 3, a proposed constitutional amendment, would allow one
full-scale casino in each of the state’s largest cities: Cleveland,
Columbus, Toledo and Cincinnati. The proponents are led by the
47-year-old Gilbert, a Detroit native best known as the man who signs
LeBron James’ paychecks. Gilbert’s most visible partner in his efforts
is Penn National Gaming, a Pennsylvania-based company that operates a
dozen casinos as well as Raceway Park in Toledo.

The proposal allows casinos to be built and operated on specific
pieces of property in each city. The amendment does not say who will
actually own and operate the casino: The language doesn’t explicitly
mention Gilbert or Penn Gaming, just generic “casino operators.”
(Gilbert has stated that he would control casinos in Cleveland and
Cincinnati, Penn National in Columbus and Toledo). But Gilbert and Penn
seem confident that they’ll benefit from pre-arranged deals with the
landholders.

The public benefit? A 33 percent tax of gross casino revenues, job
creation and a boost in downtown tourism thanks to a new attraction
just west of Quicken Loans Arena.

The loudest opponent isn’t a preacher or politician, but a rival
gaming interest. A coalition of naysayers calling themselves TruthPAC
is led by MTR Gaming Inc. chairman and majority owner Jeffrey P. Jacobs
— of the Jacobs real-estate dynasty.

Sandy Theis, a spokeswoman for TruthPAC, calls Issue 3 an
“embarrassment” and a “joke.” TruthPAC has cried foul about the $200
million in licensing fees the state will collect (much less than other
states), as well as the tax rate. Theis says the numbers aren’t good
enough. “They wrote themselves a sweetheart deal,” says Theis.

We’ve seen this fight before. Last year, Penn National opposed
another proposed constitutional amendment that would have created one
resort casino in Wilmington. Penn National owns a casino in Indiana and
saw a new casino as a competitor. And in 2006, Penn actually
joined MTR, Jacobs Entertainment and Forest City Enterprises,
among others, to support a gambling initiative that ultimately failed.
(This parade of ballot measures, each attempting to carve a narrowly
focused business deal into the marble of the state constitution, is the
result of the legislature’s unwillingness to touch the controversial
issue of gambling.)

Is Gilbert’s plan any different? He calls it the best proposal so
far, in terms of economic benefit to the state, and he could be right.
But it’s still a manipulation of the constitution, and for many, that’s
a deal-breaker.

During a debate at the City Club Monday, Youngstown Mayor Jay
Williams challenged Gilbert before an audience of luminaries including
Mayor Frank Jackson, lawyer Fred Nance and Browns icon Bernie Kosar.
The charismatic 38-year-old Williams represented Jacobs’ Truth PAC,
which has recruited politicians statewide in order to boost its
legitimacy. Williams says wealthy businessmen are misusing the Ohio
constitution to enrich themselves.

Rather than limit gaming to a few interests, he said, there should
be open bidding for licenses, which would raise their value and ensure
a fair cut for the state. Gilbert, as well as some experts, counters
that the 33 percent tax on gambling revenues is generous enough,
especially for a market like Cleveland, which faces little nearby
competition. Williams still contends that what’s proposed amounts to a
legal monopoly.

“I hope that Mr. Gilbert will divulge who all of the partners,
participants, investors, shareholders, lease holders and contract
owners are,” says Williams. “Because the public has a right to know who
will be meddling with and cashing in on our state constitution.”

So far, Gilbert hasn’t disclosed that information, saying he hasn’t
decided yet with whom he would partner to operate the casino. At the
same time, Gilbert told Scene he’ll break ground the day after
Election Day, should the issue pass.

For all the vagueness of the constitutional amendment, there is some
astounding specificity to be found in the amendment’s wording: the list
of designated parcels put aside for casino construction. In Cleveland,
this includes roughly 83 acres of real estate. The Cleveland casino
will, parcel-for-parcel, go on land owned by Forest City Enterprises.
Gilbert would set up shop on land just south of Tower City, or the
adjacent Scranton Peninsula in the industrial flats, just across the
Cuyahoga River, all owned by Forest City.

It would represent a comeback of sorts for the real-estate giant,
which lobbied hard for a medical mart on the same land. (Or perhaps
it’s a consolation prize; the medical mart is going to Mall B, near
prime Jacobs property.) Jeff Linton, a spokesman for Forest City, says
the company was in talks with Gilbert at the same time it was bitterly
trying to hang on to the medical mart deal.

The company has stayed in the background — Gilbert’s face is
much more recognizable. “It’s not our issue,” Linton says. “We’re not a
gaming operator. We are not interested in opening a casino.” The
company has not even invested in the Issue 3 campaign, Linton says.

Still, Forest CEO Charles Ratner stressed the importance of passing
Issue 3 at a recent speech and said the company is telling its workers
to vote in favor it. “If Cleveland succeeds with the convention center
and casinos, I’ll be really happy [the medical mart] went elsewhere,”
Ratner told the audience. “Tower City will be more valuable.”

Meanwhile, Jacobs is hoping the issue fails so he might have a shot
at getting his piece of the pie in the future. Jacobs has called for
the development of a 1,000-room, $500 million convention/casino hotel
adjacent to the convention center/medical mart, a move that didn’t gain
much traction in the media and that even Governor Ted Strickland
brushed off.

The rivalry between Jacobs and the Forest City-Gilbert alliance
became clear during the City Club debate. “I kind of wish Jeff Jacobs
was next to me instead of you,” said Gilbert to Williams in a quip that
drew laughter from the audience. “You’re a lot more likable, that’s for
sure.”

dguevara@clevescene.com

This article appears in Oct 21-27, 2009.