Kasich’s sneaky “juice job”

This just in (thanks in large part to a timely Tweet from Howard Stutz of the Review-Journal) …

One of Ohio Gov. John Kasich‘s costly casino consultants just got caught with its hand in the cookie jar. While Kasich piously claims to be seeking a better deal for taxpayers than the one for which they voted in 2008, he’s not averse to working some crony capitalism into his crusade. A big chunk of any additional casino taxes or upfront fees would be funneled into the pockets of Moelis & Co., up to $13 million. What? $200K a month wasn’t a good enough gig, especially when they could stretch it out literally for years? (The financial ramifications of a tax/fee hike are the subject of a fascinating analysis that places Ohio’s situation into context.)

It’s not clear how Moelis had this much mojo with Kasich but it was able to negotiate a deal whereby it gets 3.25% of “incremental value.” In a an e-mail sent to the Ohio Department of Administrative Services on (how apropos!) April 15, it advised the administration it would be possible for Ohio to extract more $$$ from Penn National Gaming and Caesars Entertainment/Rock Ventures … and that Moelis would be happy to shake down the casinos in return for this slush fund success fee. “Moelis’ relationships with the casino operators should aid in coming to a mutually beneficial agreement with the licensees,” was its oily advice to the state.

Moelis also stands to benefit it racinos are approved in the Buckeye State, making this one of the most “juiced in” deals S&G has ever stumbled across. A department spokesman rationalized the payola thusly: “To make certain that taxpayers get the maximum benefit out of these contracts, the bulk of the consultants’ pay is tied to whether or not they produce results.” In other words, 10 grand a day just isn’t enough incentive for Moelis to get out of bed in the morning and do its job.

The other consultancy, Spectrum Gaming Group, is evidently untainted by the scandal. Its role is to counsel the administration on how to set up a regulatory apparatus — a process that suffered a setback when Kasich canned all of his predecessor’s apppointees to the gaming commission. Of course, by slowing the development-and-regulatory process to a snail’s pace, Kasich gives his hired goons at Moelis more time and leverage for putting the squeeze on casino developers. (“Gosh, things sure might move faster if you’d give us another $50 million — minus my cut — to help expedite all that paperwork. Damned shame, isn’t it?”) The four Ohio casino projects may be reduced to snail speed but the slime trail leads to the steps of the governor’s mansion.