Legislators to reconsider aid for struggling casinos

September 13, 2014

Indiana legislators were lukewarm to assistance for casinos in 2013, but two years of declining revenue and new leadership on the issue could change their minds.

Casino tax revenue was a boon to Indiana until bordering states caught on to the trend. Indiana collected $685.6 million in wagering tax for the fiscal year ended June 30, down 16 percent from $796.8 million in 2009.

Rep. Tom Dermody, R-LaPorte, said he’s been visiting casinos around the state, and he’s ready to tackle the issue of how to make them more competitive with out-of-state rivals. Dermody, chairman of the House Public Policy Committee and of an interim study committee due to meet Sept. 25, said he hopes to overcome the in-state turf battles that bogged down discussion in the past.

When considering possible remedies such as allowing land-based casinos, Dermody said he’ll ask, “Does it make sense as a whole in Indiana?”

Lawmakers can see the full effect of cross-border competition in the winnings at Penn National Gaming’s Hollywood Casino in Lawrenceburg, which was a robust revenue generator until Caesars Entertainment’s Horseshoe Casino opened in Cincinnati in March 2013.

Hollywood’s total win dropped from $29.7 million in February 2013 to $28.8 million that March, and by last month, it was $17.8 million, according to figures released by the Indiana Gaming Commission on Sept. 9.

August marked the 24th month in a row with a year-over-year decline in statewide winnings, according to the gaming commission. The total win, which is the casinos’ gambling revenue after payouts, was $199.5 million, down 4.7 percent from August 2013.

Total gambling taxes were $38.5 million, down 13.2 percent from last August, the commission reported.

Even central Indiana’s racetrack casinos, both owned by Indiana-based Centaur Gaming, are seeing declines, despite the fact that they’re somewhat buffered from out-of-state competition.

The August win at Hoosier Park in Anderson was $18.6 million, down slightly from a year ago.

Indiana Grand in Shelbyville brought in $20.8 million, down from $21.8 million a year ago.

Centaur will ask lawmakers once again in 2015 to allow the racinos, which have only slot machines, to add live table games, said John Keeler, vice president and general counsel. Although that would put the racinos in direct competition with Indiana’s riverboat casinos, Keeler said Centaur hopes to show that it would mean a net gain for the state.

The racinos don’t rely as heavily as the riverboats on out-of-state players, but Keeler said they are feeling some effects from the proliferation of video lottery terminals in Illinois. Pulling from the east, the Columbus, Ohio, area has several racetracks with video lottery, which is akin to playing slots.

Plus, Keeler said, “The economy, for a lot of our customers, hasn’t come roaring back.”

Multiple facilities were due to open in Ohio, and Illinois and Kentucky were considering casinos when the Indiana-based industry asked lawmakers for looser rules and tax breaks during the 2013 General Assembly.

Lawmakers gave no serious consideration to allowing live table games at the racinos, or to allowing riverboat casinos to build on land. A late-session compromise allowed casinos to deduct free-play coupons from taxable revenue and created a tax break for the smallest riverboat casinos.

Conservative lawmakers and Gov. Mike Pence don’t want to see an expansion of gambling, but Dermody said the casinos employ hundreds of people. French Lick Resort, which includes a casino, is the major employer for eight or nine surrounding counties, Dermody said. “Those are real jobs we can’t ignore,” he said.

Dermody in 2013 was appointed chairman of the public policy committee, which deals with always-contentious alcohol and gambling legislation. The last session wasn’t ripe to reintroduce aid for the gambling industry, Keeler said, but he’s optimistic about next year, partly because of Dermody.

“I think he’ll be more receptive to ideas that are more favorable to the industry,” Keeler said.•


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