Indiana weighs changes to combat out-of-state casinos

December 13, 2009

State lawmakers are weighing possible changes to state gambling laws at a time when growing competition from out-of-state casinos threatens to cut into business at Indiana's 11 riverboat casinos.

In Michigan, two tribal casinos have opened just north of the Indiana state line.

Ohio is building casinos in Toledo, Cincinnati, Columbus and Cleveland, and Kentucky is close to allowing slot machines at racetracks.

Meanwhile, Illinois is facing a $13 billion budget deficit and could finally authorize a Chicago casino.

Altogether, Indiana stands to lose more than $700 million a year in gambling revenue if it does nothing, the Legislative Services Agency recently reported.

And it's not just the casino industry at risk. State and local governments stand to lose some of the more than $1 billion a year in taxes and fees they take in from Hoosier casinos.

State Sen. Luke Kenley, R-Noblesville, said the threat from surrounding states is real.

"We've put together a pretty solid industry that actually employs over 16,000 people in the state of Indiana," Kenley said. "Are we going to do things that are going to keep it so that they can continue to operate and keep those people employed ... or are we going to turn our backs on them and create problems for them?"

Gambling, including the Hoosier Lottery, is the state of Indiana's third-largest source of revenue after income and sales taxes. Local governments reap more than $200 million a year from casinos.

The state Legislature's Gaming Study Committee released a list of 17 findings earlier this month — actions the General Assembly could approve to stay ahead of the other states.

Those include helping casinos save millions of dollars by eliminating the mandate that riverboats that never move must still have working engines and a sailing crew.

The committee also suggested restructuring the way slot machines at Indiana horse tracks are taxed, but perhaps the most significant was the finding that Indiana's riverboat casinos be allowed to move to land-based gaming.

When Indiana legalized riverboat gambling in 1993, the idea was that if it didn't work, boats would be easier to get rid of than buildings.

But now that casinos contribute so much to the state in terms of taxes and jobs, "the basis by which they were placed on water seems not to have much weight at this point in time," said Ernie Yelton, executive director of the Indiana Gaming Commission.

Gary Mayor Rudy Clay, whose city is home to two casinos, said it's time that Indiana move out of the "dark ages" and "Rip Van Winkle" era of confining casinos to riverboats.

"It's time to move forward here with land-based casinos and match these other states that are getting ready to put them up," Clay said.

While the Gaming Study Committee recommended many changes sought by the gaming industry, it said Indiana should keep its $3 per person casino admission tax and a wagering tax that ranges up to 40 percent of revenue — one of the nation's highest.

Since July, state revenue has come in $450 million below forecast, leading to state agency budget cuts and nearly 100 state worker layoffs.

"Every dollar we give away is a dollar we don't have for K-12 and higher ed," said state Rep. Jeff Espich, R-Uniondale.


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