The state's portion of gambling revenue slumped last month as Indiana's 13 casinos took advantage of a new law that allows them to reduce their tax burden.
Total tax receipts from casinos fell nearly 18 percent last month compared with May of last year, according a report released Monday by the Indiana Gaming Commission.
Jenny Reske, deputy director of the commission, told The Indianapolis Star that much of that drop resulted from casinos deducting coupons that they use to attract gamblers by letting them play for free, as allowed under a law passed by this year's General Assembly.
The new law allows casinos to deduct up to $5 million a year on the coupons. However, the state's fiscal year doesn't start until July 1, so lawmakers allowed casinos to deduct half that amount last month. Six casinos deducted the entire $2.5 million, and all but three deducted more than $1.5 million, the report said.
The tax break is intended to help Indiana casinos compete on the same basis as those in neighboring states such as Ohio and Michigan, where the coupons aren't taxed.
"Our ability to have a more level playing field with other states is something that will help us in the long run," said Daniel Nita, regional president and general manager for Horseshoe Casino in Hammond. "It allows businesses to remain competitive without having to take other measures."
Four new casinos have recently opened in Ohio, including one in Cincinnati, less than an hour's drive from three riverboat casinos in southeast Indiana.
But Reske pointed out the new Ohio casinos are owned by Caesar's Entertainment Corp. and Penn National Gaming, which also own casinos in Indiana.
The industry asked the General Assembly to allow land-based gambling for riverboat casinos and live dealers at the state's two racinos, but the tax break was about the only one casinos got. Gov. Mike Pence and several Republican legislative leaders have opposed expanding gambling, and the portion of state revenue from casino taxes has dropped significantly in recent years.
Despite the relief, casino revenues dropped 5.8 percent from May 2012.
Reske said the gaming commission will study over the next two years whether the free-play deductions benefit state in ways by increasing casino revenue or employment.
"That will be important in considering now how to move forward," she said.