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Ohio high court ruling puts racetrack slots on hold

COLUMBUS, Ohio — Racetrack slots in Ohio were sidelined by a high court decision Monday, potentially throwing the state budget off balance by nearly $1 billion and short-circuiting preparations that were well under way.

The ruling means video lottery terminals expected to raise $850 million to $933 million for public schools could be on hold until a vote is taken. The governor also has the option of using his executive power to authorize the machines without legislative approval.

Kentucky racetracks, which also want expanded gambling, have watched the case closely because of the possibility of increased competition from Ohio purses fattened by video slots.

In Monday's 6-1 ruling, the high court ruled in favor of LetOhioVote.org, a committee of three private citizens that seeks to put the question on the November 2010 ballot. The group challenged Secretary of State Jennifer Brunner's rejection of its petitions.

The court ordered Brunner to accept the group's petitions, allowing the referendum process to go forward.

Spokesman Carlo LoParo said petitions would be resubmitted Monday. The court froze slots implementation as described in the state budget for 90 days to allow the group to collect the necessary number of signatures — 6 percent of voters in the last gubernatorial race — to go to the ballot.

If they succeed, the machines could be on hold until voters decide the question. LoParo said he is virtually certain enough signatures can be gathered by the deadline.

"There are millions of Ohioans that deserve a right to vote on this issue, and today's Supreme Court action provided them with an opportunity to weigh in on whether gambling should be expanded," LoParo said.

In their decision, justices overrode language that state law makers had attached to the slots plan that sought to shield the slots from such a vote. Gov. Ted Strickland authorized the machines by executive order, and the legislature included their proceeds as part of the state budget which now faces a nearly $1 billion shortfall.

In a statement, Strickland said he was disappointed by the ruling and was evaluating what to do next.

The Ohio Lottery Commission held off its scheduled vote Monday on the rules of implementing slots. A deadline for track owners to submit their first vendor payments to the states passed last week, and two companies had already paid.

"It's a little early to say right now what the impact will be," Lottery Director Kathleen Burke said. "We're looking at it, obviously disappointed in the ruling and we'll see what happens. But we haven't reached any decisions yet."

The court rejected the state's argument that the slots revenue was an "appropriation" that, by definition, is shielded from the referendum process.

In writing for the majority, Justice Terrence O'Donnell noted that the passages in the budget bill that describe the video lottery terminal plan are separate from the line item in the bill that directs money from the Ohio Lottery Commission to education.

The court said budget provisions can't "merely relate" to appropriations and be shielded.

"The exception is for appropriations for the current expenses of the state government — not for enactment of laws (other than tax levies) designed to generate revenue that can be appropriated," the decision said.

The ruling specifically noted that it is not up to the court to worry about the effect of its decisions on the state budget.

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