Arts & Entertainment, etc. and Indiana Gaming Commission and Indianapolis Airport Authority and Indianapolis International Airport and State Government and Gambling and Government & Economic Development and Transportation, Distribution & Logistics

Could airport gambling idea take off?

October 12, 2013
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Two gambling-industry lawyers see untapped potential in Indianapolis International Airport, which they argue is the ideal place to roll out wireless gambling technology and rake in revenue to support more nonstop flights, like the one United Airlines will launch in January to San Francisco.

Phil Sicuso and Joe Champion at Bingham Greenebaum Doll LLP don’t represent the airport but floated the idea in an article for the firm’s quarterly newsletter after following developments at Minneapolis/St. Paul International Airport, which is the first outside of Nevada to offer gambling.

Michael Wells Wells

Indianapolis could set up 21-and-older lounges in its terminals where travelers could play any number of games on hand-held devices connected to a central server, said Sicuso, a former general counsel for the Indiana Gaming Commission. Such a setup would blend into the Indianapolis airport’s quiet Midwestern atmosphere, he argues, and it wouldn’t compete with existing casinos because it would serve only ticketed travelers.

“That’s part of the reason we thought it was palatable,” he said. “It’s a completely new customer.”

As much as Indianapolis Airport Authority President Mike Wells would like a new source of revenue, he said he can’t foresee the Indiana Legislature’s allowing gambling in the airport.

State lawmakers have been loathe to expand gambling, even though new competition from surrounding states is threatening to drain Indiana’s once-lucrative casino industry. Last session, they rejected a number of changes the industry argued would have made it more competitive—and possibly preserved a large source of general tax revenue. The Legislature nixed moving riverboat casinos to land-based facilities and allowing live table games at central Indiana’s two racetrack-casinos, Indiana Grand and Hoosier Park.

“It’s a clever idea,” Wells said of airport gambling. “I just think it’s highly unlikely.”

The airport worked for years trying to add nonstop service to Silicon Valley. A deal finally came together this year after the Indiana Economic Development Corp. offered to back up United’s venture with a $1.5 million revenue guarantee.

There are other destinations to which the airport would like to add or improve service, Wells said, but officials aren’t looking to subsidize just any route. The airport is focusing only on those that have a chance of becoming profitable after an airline gives it a trial run, he said.

And the airport can’t directly provide the subsidy because federal regulations prohibit favoring one airline over another. So even if Indiana approved airport gambling, the money would have to flow to a state entity, Wells said.

It takes a lot to persuade an airline to experiment with new service, said airline trend tracker Terry Trippler, owner of ThePlaneRules.com.

“Why would an airline want to use up an aircraft to break even?” he said. “Airlines are making money.”

Sicuso and Champion figure it will take “millions” more in subsidies to beef up the nonstop service to Indianapolis International Airport. It’s not clear, though, that gambling would bring in as much cash as they envision.

Minnesota hoped offering electronic pull-tabs at the airport would generate $3 million for a new Vikings football stadium (full price tag: $975 million), but travelers spent less than $34,000 in the first six months of this year, the Minneapolis Star-Tribune reported in August. Part of the problem was a delay in rolling out the system.

Six of the airport’s bars and restaurants are offering patrons the chance to play pull-tabs on house-provided iPads. Pull-tabs are a type of low-stakes instant win game.

Sicuso thinks Minnesota left money on the table by limiting itself to pull-tabs. Indiana already allows casinos to offer a full range of games on mobile devices, which must function only within an area approved by the Indiana Gaming Commission.

Indiana casinos haven’t yet taken advantage of the mobile-gambling option, but Indianapolis-based Centaur Holdings is considering it for Hoosier Park in Anderson and Indiana Grand in Shelbyville, Vice President and General Counsel John Keeler said.

Centaur already offers patrons of Hoosier Park and the downtown Indianapolis off-track-betting facility the option to place their wagers through FastBet Mobile. Patrons can use one of the devices provided in-house, or download an app to their smartphones. The technology works only within the confines of the facility, Keeler noted.

As the casino operator closest to Indianapolis International, Centaur has no opinion on the idea of adding gambling to the airport, spokesman Grant Scharton said.

Mike Smith, president of the Casino Association of Indiana, doubted that his members would view airport gambling as competition because it would cater to a captive audience.

The notion of lonesome travelers gambling at an airport made Smith wonder whether they would spend as much money as a traditional casino crowd.

“When I go, I want to go and have a good time with my wife and friends and enjoy the atmosphere,” he said. “I’m not sure you get that at an airport.”

Chicago officials have wanted to put slot machines in their airports for several years, but a Chicago Tribune analysis of the returns at McCarran International Airport in Las Vegas suggest airport gambling isn’t as lucrative as some people assume.

McCarran’s 1,271 slots generated $25.6 million in 2010, or about $55 per machine per day, according to the Tribune. That was less than half the average of $118 per day generated by slots in Las Vegas casinos.

Illinois came close this year to approving gambling legislation that would have allowed a casino in downtown Chicago, as well as the option to install slots at O’Hare and Midway international airports.

Seeing how quickly Ohio has embraced gambling, Sicuso said he wouldn’t be surprised if Cincinnati/Northern Kentucky International Airport became the next airport to add mobile gambling.

“They were up and running with four mega-casinos two years after they authorized their bill,” Sicuso said of Ohio. “I just don’t think it’s too far off that they would consider something like this in any of their regional airports.”

Indiana’s budget forecasts have figured a decline in gambling revenue for the past several years. That’s a certainty now that Horseshoe Cincinnati Casino competes directly with three Indiana casinos in the region—Hollywood Casino in Lawrenceburg, Rising Star Casino in Rising Sun, and Belterra Casino in Florence. The state took in $128.3 million in gambling taxes this year through September, a 16-percent decline from the same period last year.•

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