Indiana's casinos have pumped billions of dollars into state coffers since they first opened in the mid-1990s, growing so fast that gamblers spent more money there than any state but Nevada or New Jersey.
But with revenue declining rapidly because of out-of-state competition, some Indiana lawmakers say they're ready to let the casinos try to survive on their own. They cite concerns about expanded gambling and say they're willing to reduce the state's reliance on casino money at a time when other tax revenues are improving.
Republican House Speaker Brian Bosma said Indiana has "lived high on the hog" from casino money for the past two decades but now should be able to stand on principle and let go.
"I'm not prepared to engage in a massive expansion of gaming just to keep revenues up," Bosma said. "I don't want to see us get any deeper."
Proposals from casino advocates have included seeking some $100 million in tax reductions, allowing live table games at two horse-track casinos, and permission to move other operations along Lake Michigan and the Ohio River from boats onto land. They have largely stalled as the Legislature nears Friday's expected end of this year's session.
The state's budget planners are anticipating a 20-percent drop in casino tax revenue in the coming years. That loss has drawn little discussion in the Statehouse while legislators negotiate a state budget healthy enough to possibly include hundreds of millions of dollars in cuts for individual income tax rates and inheritance taxes.
Taxes from Indiana's 13 casinos made up nearly $680 million, or about 5.5 percent, of the state tax revenue in the 2010 budget year, according to state figures. That revenue already dropped to $632 million last year and is forecast to reach $506 million in 2015, making up about 3 percent of state revenue.
The casino bill approved by the House last week would grant less than a fifth of the tax breaks first proposed in the Senate. It also doesn't permit live table games, such as blackjack and roulette, at the horse track casinos in Anderson and Shelbyville where only electronic versions of those games are now allowed.
Republican Gov. Mike Pence also has resisted gambling expansion, as do many Republican leaders in the Legislature.
But Democratic Rep. Terri Austin, whose district includes Anderson's Hoosier Park casino, said legislative inaction could cripple an industry that has some 15,000 workers. Austin said the arguments about a gambling expansion ring hollow when the Hoosier Lottery is using a private company to boost its sales without any legislative oversight.
"There are a lot of jobs at stake," Austin said. "We need to find a way to make sure that the jobs that are still here have a chance to stay strong."
The newest competitor for Indiana's casinos came in March when Horseshoe Casino Cincinnati opened in that city's downtown. The two Indiana casinos closest to Cincinnati saw their business drop by about one-fourth during that month.
Sen. Phil Boots, R-Crawfordsville, said he believed more of the tax changes and other provisions that were in his original bill needed to win approval in order to truly help the Indiana casinos.
He said the big drop off from the Cincinnati casino's opening should be an eye-opener for the future since the state's most successful riverboats have been those closest to Chicago, Cincinnati and Louisville.
"I see that as a pre-courser for things to come if we don't do anything," Boots said.
Casino officials have argued that Indiana casinos face a severe tax disadvantage against some of their competitors, with the Indiana sites facing an effective state tax rate topping 30 percent, while a tribal casino just across the state line in Michigan pays less than 8 percent.
Scaling back the state taxes could lead to more capital investments and hiring at the Indiana casinos, said Mike Smith, president of the Casino Association of Indiana.
"It would be better if the whole idea shifted to jobs, opportunity, economic development and away from just how much government is going to take in the form of taxation," Smith said.
Rep. Bill Davis, R-Portland, is among the House and Senate negotiators working this week to reach a compromise version of the legislation, after the House Public Policy Committee he leads removed provisions construction of facilities on in-land sites near the current riverboats for the additional live table games.
Davis said he believed the state should deal with the casinos much as it does with other businesses.
"We all have to be able to withstand competition in our businesses and to find better ways to treat our customers and attract more business," Davis said. "I don't think this industry is that much different."