Caesars Entertainment emerged from bankruptcy just last month with more cash to spend, and it’s interesting that its first post-bankruptcy acquisition is the company that owns Indiana Grand and Hoosier Park in central Indiana.
The $1.7 billion deal seems to be great news for the racetrack-based casinos. Caesars is one of the most respected casino operators in Indiana. It already owns Horseshoe Southern Indiana along the Ohio River and Horseshoe Hammond on Lake Michigan—two of the three highest-revenue casinos in the state. And the confidence in the Indiana industry comes at a good time.
Since casinos opened in Ohio five years ago, Indiana’s gambling industry has taken a huge hit, with revenue down by half at some of the operations near Cincinnati. That’s meant falling tax receipts for the state, which has relied on gambling revenue for years to help fund its general budget.
Despite the struggles, Hoosier Park in Anderson and Indiana Grand in Shelbyville appear to be good bets. The racinos have only slots and electronic table games for now but will get live dealers in 2021. In addition, their locations near Indianapolis mean they’ll be less affected by competition from other states.
It seems likely that Caesars will have little trouble winning approval from the various agencies—including the Indiana Gaming Commission and Indiana Horse Racing Commission—that will review the deal.
But we encourage regulators to take an extra bit of time to consider the ramifications of the proposed acquisition.
If the deal goes through, Caesars will own four of the state’s five highest-revenue casinos. It will generate roughly 54 percent of the tax revenue casinos pay to state and local governments. That’s $324 million in annual taxes that will be generated by one company to fund government.
And while that equals just 2 percent of the state’s annual $16 billion budget (and not every penny of gambling tax goes to the state), it’s enough to make lawmakers take notice. After all, Republicans boasted last year of increasing education spending by almost that exact same amount.
We don’t think lawmakers meant to give one company so much power. They voted initially to limit ownership to just one casino per company. Later, they loosened it to two.
But when lawmakers voted to let the horse tracks add slot machines, they did so in a different part of the law, which means the casino ownership restrictions don’t apply. That’s why Caesars will be able to own four of the state’s 13 casinos—but more than half the market share.
We think that’s a somewhat troubling development. It will take real discipline on the part of lawmakers and regulators to stand tough against Caesars when it’s trying to throw that weight around—and discipline is not something state officials have always shown when dealing with casinos.
There might be nothing in state law that gives regulators the opportunity to say no to the Caesars deal. And we’re not sure they should, anyway. But competition is important in any industry, especially one as powerful as gambling. So we call on lawmakers and regulators to give this deal a thorough review.•
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