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Slots at horse-racing tracks may boost meeting space: Hotels in long-term plans if 'racinos' are successful

April 7, 2008

Two thousand slot machines at each of Indiana's two biggest horse tracks should attract hordes of Hoosiers willing to try their luck on the one-armed bandits. But, ultimately, owners want to add meeting and convention space to capture other business as well.

Legislation approved by the General Assembly in 2007 permits the slots at horse-racing facilities Hoosier Park in Anderson and Indiana Downs in Shelbyville. The law paves the way for the creation of what many are calling "racinos"-casinos that offer betting on slot machines and onsite and offsite horse races, but don't allow other forms of gambling, such as table games.

Hoosier Park owner Centaur Inc., based in Indianapolis, is investing more than $100 million in its casino, which should be ready in June. At the same time, Oliver Racing LLC of South Bend is sinking $160 million in its casino at Indiana Downs, set to open in January. A temporary facility opening in May will make do in the interim.

The groups each paid the state $250 million in licensing fees to add the slots.

Hotels in the future?

The investments could grow even larger, however, if owners pursue the development of hotels and market the casinos as overnight destinations.

But will companies, organizations and trade associations host their events at locations in which gambling is the main attraction? Absolutely, said Ed Feigenbaum, publisher of the Indiana Gaming Insight newsletter.

"Unless you're the United Methodist Church of Indiana," he said, "it's a big plus to have those entertainment options."

Most of the 10 casinos operating in Indiana already have some meeting and convention space, ranging in size from 5,000 square feet to as large as 42,000 square feet in French Lick.

There, a $500 million resort includes the French Lick Springs Hotel, the West Baden Springs Hotel and the 2-year-old, 42,000-square-foot French Lick Casino. And in Michigan City, Las Vegas-based Boyd Gaming Corp., owner of the Blue Chip Casino, is building a 300-room hotel featuring 20,000 square feet of convention space.

Indeed, the trend among new casinos is to build accompanying hotels to promote longer stays, said Holly Thomsen, spokeswoman for the Washington, D.C.-based American Gaming Association.

"You are seeing more and more, that when racetrack casinos do open, they are including these other elements, because they do attract additional business," she said. "They attract people who don't even like to gamble."

Numbers on the rise

Nationwide, the number of racinos is climbing. In 2006, the most recent year available, 36 track casinos in 11 states generated $3.6 billion in revenue, a 16-percent increase from the previous year, according to the Washington, D.C.-based American Gaming Association.

New casinos in Florida, Maine, New York, Pennsylvania and Oklahoma spurred growth, as well as lodging options available to overnight visitors.

In Indiana, both tracks lobbied heavily for the addition of slots, trumpeting them as a remedy for their financial woes. In its 2006 annual report, the most recent available, the Indiana Horse Racing Commission noted the two posted millions of dollars in losses during the year.

Upon completion of its casino, Centaur in Anderson will begin evaluating the needs of its patrons to determine how best to proceed, said Jim Brown, the track's general manager of gaming. That could include developing a hotel equipped with meeting space.

"There have certainly been conversations about what we might do in the future," Brown said, "and that is absolutely a possibility."

The city of Anderson is projecting the 92,000-square-foot casino will attract 7,000 additional visitors a day, said Linda Dawson, deputy director of economic development. Those numbers could climb, however, if the city can shed its rust-belt image and appeal to businesses and trade associations.

The park currently contains multipurpose meeting space that can accommodate groups of up to 500 people. But the presence of an upscale hotel would cast the city in an entirely new light.

"We do feel like it would definitely define Anderson in attracting a segment that we currently do not have the facilities to accommodate," Dawson said. "I think it would be a very popular destination for small conventions and meetings."

The city is extending a road that runs adjacent to the casino property to provide access to additional land that could be used to build hotels and restaurants.

Hoosier Park employs a sales department to book large groups. Those desiring overnight accommodations will be steered toward the eight hotels within a mile of the track, Brown said. It also is developing relationships with Indianapolis hotels.

Complementing Indy

Both tracks are within 30 minutes of the city. Yet, the Indianapolis Convention & Visitors Association welcomes more meeting and convention space, and views the casinos as complements to the existing choices in central Indiana, ICVA spokesman Bob Schultz said.

"The addition of meeting space could stimulate overnight business for the area hotels," he said, "and that business is good for all."

Indiana Downs will open a temporary, tent-like casino first, followed by a 233,000-square-foot permanent facility slated for completion in January. The facility will be called Indiana Live Casino. Among the amenities will be a restaurant operated by celebrity chef Wolfgang Puck. The Austrian-born Puck opened his first restaurant in Indiana in 2005 at the Indianapolis Museum of Art.

Shelbyville Mayor Scott Furgeson told IBJ last month that he hopes the restaurant and the entire project make his city a bona fide tourist attraction. A hotel could help that become reality.

The master plan includes hotel and meeting space, said Mark Hemmerle, general manager of the casino, but ownership needs to complete the first phase before determining how to proceed.

Dan Theobald, executive director of the Shelby County Economic Development Corp., is optimistic but cautious about the possibilities. While he hopes such a project comes to fruition, he's not about to wager much on the outcome.

"I'll put a $2 bet on it," he said, "but not a $10 bet."

The track currently has space on the second floor of its clubhouse that can accommodate 1,000 people. Further, the 60,000-square-foot temporary structure that will house the casino until the permanent facility is finished might be converted to meeting or convention space, Hemmerle said.

In French Lick, a meeting and event center, as well as a spacious ballroom, were built to lure visitors to the southern part of the state. Whether owners are pleased with the results is unclear, as representatives did not return calls to IBJ.

The Orange County Convention & Visitors Bureau is developing a marketing strategy to promote the amenities, though, said Teresa Anderson, a consultant who is serving as the bureau's interim director of marketing and communications.

"I know they have high expectations, and they certainly have the facilities," she said. "I just don't know if they're meeting their projections yet."

At any rate, the two new casinos could stimulate the economies of both areas, particularly Madison County, which has lost thousands of jobs in recent years, due in part to the exodus of manufacturers such as General Motors Corp. and Guide Corp.

As of January, the most recent month available, the county's unemployment rate was 6.8 percent, among the highest in the state. The number of unemployed in Shelby County, 4.8 percent, was slightly lower than the state average of 5.1 percent.

The conversion of the tracks to racinos is expected to create more than 500 jobs at each venue.
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