CHICAGO - The effort to legalize casino gambling in Ohio advanced last week when the state Supreme Court rejected a challenge to a ballot proposal that would allow casinos in the state's four largest cities.

If voters approve the measure in November, it could lead to a major reshaping of the regional gambling industry, Moody's Investors Service said in a report on Ohio's gaming initiative released last week.

The casino proposal would allow a private company to set up four casinos in the state's largest cities: Cincinnati, Columbus, Toledo, and Cleveland. Under the proposal, 33% of the gaming revenue would be collected by the state and most of it would be distributed among Ohio's 88 counties.

In a unanimous ruling, the Ohio Supreme Court said casino opponents failed to prove their case that the petition to qualify the issue for the ballot contained a large number of false signatures.

The challenge came from a gambling company with operations in both Pennsylvania and West Virginia, which also owns horseracing tracks in Ohio. Penn National Gaming Inc. and Cleveland Cavaliers owner Dan Gilbert are sponsors of the casino proposal.

The casino debate comes as Democratic Gov. Ted Strickland issued an executive order allowing video slot machines at the state's seven horseracing tracks. Together the gambling initiatives could bring in more than $2 billion in revenue over the next few years, according to proponents.

While boosting Ohio's tax revenue, the gambling expansion would likely mean a big blow to neighboring states' gaming revenue, Moody's said in its report, "Legalized Gambling in Ohio Could Raise Stakes for Nearby States."

Gambling in Ohio could "ultimately alter the entire region's gambling landscape, with out-of-state businesses struggling to keep Ohio-based customers," Moody's analyst Jacques Ouazana wrote in the report,

Ohio residents spend nearly $1 billion annually at casinos in neighboring Michigan, Indiana, West Virginia, and Pennsylvania, Moody's said. Detroit, located less than 60 miles from Toledo, would also be negatively affected by the expansion, while West Virginia would likely suffer the most, according to Moody's.

"Demand might not manage to absorb what could become a significant increase in the region's gaming supply," Ouazana said, predicting "intense competitive challenges in the regional gaming industry over the next few years.

Strickland is opposed to the casino proposal, and Ohio voters have defeated four gambling ballot proposals since 1990. However, recent polls show strong support - up to 75% - for the casino proposal.

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