Rock Gaming officials are optimistic that they will be able to break ground on a new casino in Cleveland next year. However, they want to finalize a developer and operator agreement with Las Vegas-based Harrah's Entertainment Inc. first. In August, Harrah's and Rock Gaming agreed in principal to form a joint venture to develop and operate downtown casinos in Cleveland and Cincinnati.

Rock Gaming is the gaming entity of Rock Ventures LLC formed by Dan Gilbert, who also owns the Cleveland Cavaliers and is chairman and founder of Quicken Loans. The proposed terms of the agreement contemplate Harrah's making a significant minority investment in the projects and serving as the day-to-day casino manager in both cities, while Rock Gaming will retain majority ownership in the proposed partnership. Casino gaming, including the development of four new casinos statewide, was approved by Ohio voters in a constitutional referendum in November 2009.

Gilbert said: "After a thorough evaluation, our team is certain that Harrah's top notch and innovative management team is completely aligned with our unwavering commitment to create and deliver projects that embrace and interact with the downtowns they serve. Our partnership will positively impact surrounding businesses while stimulating new growth in the urban cores of Cleveland and Cincinnati."

Harrah's chairman, CEO and president, Gary Loveman, said that the company looks forward to the opportunity to bring its casino brand, management expertise and Total Rewards loyalty program to Ohio, adding: "Harrah's shares a common vision with Rock Gaming to develop and manage first-class urban-based casinos that will be a catalyst for economic expansion and job creation in both markets."

The joint venture is expected to invest more than US $600 million to develop the Cleveland casino, which will sit between the bank of the Cuyahoga River and Huron Road in the city's downtown entertainment district. The gaming operation is projected to attract 8 million visits to downtown Cleveland annually.

Casino officials say more than 8,000 construction and permanent jobs are expected to be created by the development and operation of the project. The companies are also exploring opening a phase I casino operation in downtown Cleveland's historic Higbee building, which is close to the new construction casino development. Should officials conclude that a phase I casino is viable, the companies project a 2011 opening and the creation of up to 1,500 jobs in the initial phase.

The parties also have agreed that Harrah's will contribute its recently acquired Cleveland-area Thistledown Racetrack into the pending joint venture. If the Ohio Lottery's efforts to implement video lottery terminals at Ohio's horse racing tracks are successful, the agreement calls for Harrah's to manage Thistledown.

The formation of the joint venture and the pursuit, development and completion of the contemplated casino projects are subject to various conditions, Rock Gaming officials said. They include the receipt of regulatory approvals, the parties' agreement on development plans for the projects and the cost and availability of financing for the projects.

Gross casino revenues will be taxed at 33 percent. Officials anticipate approximately US $29.7 million in casino tax revenue will annually be distributed to the city of Cleveland, US $18.7 million to Cuyahoga County and US $22.5 million to Cuyahoga County school districts. Portions of the tax revenue are also designated for public school districts; the host cities; the Ohio State Racing Commission to help revitalize the horse racing industry; law enforcement training; and research and treatment of problem gambling and substance abuse.

The state will receive $200 million in total upfront license fees from the four casinos. These funds will be directed toward job training and work-force development. A bipartisan commission will be funded by the casino tax revenue to develop rules for casino gaming in Ohio, to license operators and to regulate and ensure the integrity of operations. (E-11.10.10)

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