IBJOpinion

EDITORIAL: State can't rely on gambling revenue

 IBJ Staff
October 24, 2009
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IBJ Editorial

When Hoosiers approved a 1988 referendum to create a lottery, only gambling critics were warning of mission creep, of a state becoming addicted to the revenue.

Well, we’ve arrived. State and, to some extent, local government has come to rely on the revenue for much more than capital projects. And now that neighboring states are launching a competitive assault on Indiana casinos, it’s time to get back to the original intent before the revenue shrivels and leaves necessary government services high and dry.

Gambling revenue was originally billed as a supplement to traditional taxes. It was to be used to build public buildings and for other capital projects—never for operating costs. The uncertain nature of the business would make it too risky to rely upon, went the thinking two decades ago.

Now, though, $600 million a year flows from riverboat casinos into the state’s general fund. Taxes on retail sales, income and motor fuel generate more money, but casino revenue is near the head of the pack, topping even corporate taxes as a source of state revenue.

But gambling revenue could be headed south.

Gamblers have cut spending as the economy soured; if they continue to put their personal financial houses in order, casinos and other venues won’t be sending big payouts to the state till for a long time to come. Hoosier Park, the horse track in Anderson, is desperate to restructure $400 million in debt, and isn’t the only site struggling to survive.

The other problem is rising competition. On Oct. 19, a Legislative Services Agency analyst told lawmakers on the Gaming Study Committee the state could lose $250 million in casino taxes if casinos planned for just across state lines in Kentucky and Ohio make it out of the ground.

Ohio voters are deciding the issue in November, and Kentucky Gov. Steve Beshear continues to call for slot machines or casinos at racetracks.

Most Indiana casinos aren’t exactly inconvenient for Buckeye and Bluegrass gamblers, so it’s understandable why the neighboring states would want to persuade their residents to keep their money at home.

Indeed, the study discussed projected that Horseshoe Indiana Casino near Louisville could see 40 percent of admissions wither. The casinos near Cincinnati would see hits nearly as great.

Indiana legislators have been aware of these concerns for more than a year, and they should take action during the upcoming session to reduce reliance on gambling revenue to fund schools, courts and other core services. If they don’t want to take on the topic during a short session, they should lay groundwork for 2011, when they are charged with writing a new two-year budget.

The Kentucky and Ohio threats won’t appear overnight. Even if they’re approved, the venues probably wouldn’t be able to attract their first patrons for more than a year.

Still, this is the time to prepare. It would be a shame if Indiana services were left with too little money because lawmakers were shortsighted.•

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To comment on this editorial, write to ibjedit@ibj.com.

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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