Arts & Entertainment, etc. and Casinos and Horse Tracks and Legislature and State Budget and Madison County and Regional News and Gambling and Government & Economic Development and Shelby County

Legislature snubs casinos, but forms study committee

July 6, 2009

Indiana's struggling gambling industry didn't get the relief it sought during the special session of the Indiana General Assembly. But embedded within the budget bill approved June 30 is a provision creating a gambling summer study committee.

The committee will conduct the first comprehensive review of the industry since riverboats debuted in 1994. Its recommendations, due by Dec. 1, may make or break several of Indiana's casinos.

"We, as a state, need to look at our gaming industry as a whole," said state Rep. Trent Van Haaften, D-South Bend, who will serve on the committee. "We've seen over time how one change can impact another operator and, in essence, impact the whole industry."

Together, Indiana's 13 casinos and the Hoosier Lottery provide the state's fourth-largest source of tax income, after property taxes, individual income taxes and corporate taxes. In the last 15 years, Indiana has added French Lick Resort Casino and a pair of horse track "racinos" to the fleet of 10 riverboats on its borders.

The recession has affected every casino--though some, like the Lawrenceburg-based Hollywood Casino outside Cincinnati, are doing well. Formerly known as Argosy, it just debuted a $335 million expansion. But as a result, the Grand Victoria riverboat just 13 miles away in Rising Sun is expected to lose much of its business.

Meanwhile, the Hoosier Park racino in Anderson and the Indiana Live racino in Shelbyville are struggling to repay debt they took out to pay $250 million slot-machine license fees to the state. New York-based debt rating agency Standard and Poor's worries either one could default, and rates both with a negative outlook.

Outside Chicago, the two Majestic Star riverboats are in even worse shape. Their Las Vegas-based owner already has missed debt payments.

Individual casino owners sought their own concessions this year, but none hit the jackpot.

The racinos wanted relief from their license fees. Some casino owners would like to see Indiana eliminate a requirement that they maintain working engines and crews, since their riverboats never leave the dock. But other riverboats, which already have invested in upgrades that include engines, say it's unfair to change the rules now.

Every casino is worried about increasing competition from Ohio and Kentucky, which are expected to eventually introduce their own casinos. They've seen how the Native American Four Winds Casino in New Buffalo, Mich., encroached on Michigan City's Blue Chip Casino, just 11 miles across the border.

Blue Chip's owner, Las Vegas-based Boyd Gaming Corp., had to invest $130 million in a hotel and spa expansion to keep up with the competition.

"We can't fool ourselves into believing Kentucky and Ohio will not have gaming, probably within the next five years," Van Haaften said.

In northern Indiana, a movement is afoot to shift one of the Majestic Star licenses to Fort Wayne. And the casino in the southern Indiana town of French Lick wants the state to change the way it counts admissions tax. Unlike customers of the riverboats, patrons of the French Lick casino can shuffle freely between it and the rest of the resort.

All the casinos want tax relief, claiming Indiana's rates are the highest in the nation. They also want to start getting tax breaks and incentives for investments in non-gambling facilities, such as hotel rooms or concert stages. They say it's the only way for a saturated industry to keep growing.

Eight lawmakers and two fiscal analysts will serve on the committee. All the industry appeals they hear are sure to hit on a common theme: that gambling is a responsible, established industry that needs help to grow, the same way utilities, manufacturers or other industries do.

Otherwise, Indiana's biggest cash cow may someday run dry.

"Most sessions, we just go in asking that nobody hurts us. Leave us alone and let us do our job," said Mike Smith, president of the Indiana Association of Casinos.

"The summer committee will be a good opportunity for a process where legislators can take some time and really take a look at where we are and where we're going to need to be five or 10 years down the road from now." 

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