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. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.

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