Arts & Entertainment, etc. and Legislature and Gambling and Tourism & Hospitality

Chamber of Commerce explores casino recommendation

September 25, 2006

To shore up local government's enormous financial shortfalls, the Greater Indianapolis Chamber of Commerce has begun investigating whether it wants to push for a downtown casino--a politically explosive idea that would face widespread opposition.

"We're shopping the ... concept around," said Chamber President Roland Dorson. "We recognize that the city and county are in terrible shape fiscally, with billions of dollars in obligations. For this budget, we bonded for operating expenses. You can't continue to do that."

The idea is clearly a long shot.

Massive debts for unfunded police and fire pensions, unpaid juvenile incarceration bills, the escalating cost of public safety, child welfare and a shrinking tax base all threaten Indianapolis' future, Dorson said. So the Chamber is researching major sources of new revenue. The Chamber will decide next month whether to recommend a downtown casino. In theory, it could yield a jackpot.

But the list of opponents is as long as the line at an all-you-can-eat Las Vegas buffet.

The existing riverboat casinos on Indiana's borders fear losing customers. Legislators in the General Assembly would have to overturn policies they've upheld statewide for years. And local politicians like Mayor Bart Peterson, a Democrat, are reluctant to fight what they perceive to be a losing battle.

"It's going to be a really tough sell for the Chamber," said Indiana Gaming Insight Publisher Ed Feigenbaum. "I hate to be flip about this, but it might be more advisable for Roland Dorson to buy a Powerball ticket when the jackpot tops $200 million."

House Ways and Means Committee Chairman Jeff Espich, R-Uniondale, for example, questioned the very concept that Indianapolis needs a major new source of revenue. Espich is also reluctant to do anything for Indianapolis that can't be applied equally to the rest of the state.

"Indianapolis has to ask itself why it needs to rely on gambling when other cities are not," he said. "What's so unique about Indianapolis that they need major new sources of revenue? It's not been proven to me their problems are any different than anybody else's."

Qualified support

A downtown casino isn't the only new revenue option under study at the Chamber. But it's on the table, Dorson said, because alternatives, such as a regional sales tax, are at least as divisive. And he said the amount of money local government needs to fund growing debt service is enormous.

"These are big numbers," he said. "There aren't many places to go to get big numbers. The options are limited."

Some are willing to at least consider the idea of a downtown casino. Julia Watson, Indianapolis Downtown Inc. vice president of marketing, said IDI would be most concerned about the project's specifics: Where exactly would it be built? How well would it be integrated with the rest of the Mile Square? How would it affect local traffic?

"[Gambling] activity occurs in a lot of areas throughout the U.S. People enjoy it," she said. "[IDI could support it] as long as it's a good, vibrant, well-maintained, positive destination that's a good neighbor."

Advocates of a downtown casino most frequently suggest Union Station as the best place to develop it. But some of their assumptions may be faulty.

For example, Indianapolis Local Public Improvement Bond Bank Executive Director Barbara Lawrence challenged the common perception that Union Station is underutilized. With over a dozen occupants, 276,725 square feet of Union Station has now been leased. That's only 3,305 less than the total square footage available. And the last of Union Station's current leases won't expire until 2013.

Since 2000, Lawrence said, the city has reduced its annual subsidy payments for Union Station 75 percent, from $1.1 million to $300,000.

"Union Station has actually done incredibly well over the last few years," she said. "We've really turned the property around."

Indianapolis Convention & Visitors Association spokesman Bob Schultz debunked the notion that a downtown casino would entice a host of new travelers to the city and create a major economic impact. ICVA's CEO Bob Bedell was previously president of the St. Louis Convention Bureau, Schultz said. Although St. Louis has five casinos, he said Bedell's research showed that 90 percent of patrons were locals and most of the other 10 percent visited St. Louis primarily for another attraction.

"It's a relative non-factor in regards to tourism," Schultz said, adding that ICVA would still support a downtown casino if the Chamber's study shows proceeds would significantly improve the city.

Lesson learned

Politics are arguably the largest obstacle. Two years ago, Peterson proposed a downtown casino as a potential source of money to build the new Lucas Oil Stadium for the Indianapolis Colts, but rolled snake-eyes when he asked for approval in the General Assembly. Peterson's spokesman Justin Ohlemiller said the mayor won't bet on a sure loser again.

"I think we've been down that road before and it was unsuccessful," Ohlemiller said. "It's not going to be something that will be part of our plan."

If the Democrats manage to retake the Indiana House of Representatives, the November elections could make a downtown casino slightly more viable. But even that scenario wouldn't affect the fundamental political obstacles.

All 10 of Indiana's existing casinos were built on the state's borders specifically so they'd draw the bulk of their gambling revenue from residents of other states. But Feigenbaum said the casino industry knows a great number of its patrons live in central Indiana.

"The casinos do not want to see their clientele cannibalized," he said. "And that's what an Indianapolis casino would do."

State law also has required the casinos to be built on riverboats, which at one time were required to leave shore on short excursions. Gamblers could stay aboard only during the excursions. Now that casinos can operate while docked, gamblers are free to stay as long as they want.

Casino Association of Indiana Executive Director Mike Smith said allowing Indianapolis to build a land-based casino would be unfair to the existing casinos, which now must pay crews and captains to keep the boats seaworthy. On the other hand, Smith speculated that some casino operators might shift to support an Indianapolis casino if they had the chance to bid on it.

In any case, the gambling debate moves at a glacial pace in the General Assembly.

"If you look at French Lick, it took 10 years just to move that license, and it was one that had been granted in the original legislation," Smith said. "I'd think it would take a considerable amount of time to move [an Indianapolis casino] through the Legislature."

The Chamber has likely anticipated the long odds against a downtown casino. But its aim may not be the short term. By beginning the debate now, the Chamber could slowly build support and reap results in several years.

"We want to engage the community in a serious conversation about this very important subject," Dorson said. "[Otherwise], I think you'll have a fiscal earthquake."

Forever is a mighty long time. Even Espich refused to close all bets on whether a casino will ever be built in downtown Indianapolis.

"Only a fool says never, in my opinion," he said. "Who knows what kind of issues could come up?"

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