UPDATED: Amended gambling bill requires competitive bidding process for Terre Haute casino

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The owner of two casinos now located on Lake Michigan in Gary would still be allowed to move one of them to a more convenient interstate location under changes to a gambling bill lawmakers made Tuesday—but only if the company gave its other license back to the state.

The House Ways and Means Committee added that caveat to Senate Bill 552 and set up a competitive bidding process to determine how a newly created license would be used to open a casino in Vigo County, where Terre Haute is located. The changes made on Tuesday mean the Gary casino relocations are no longer tied to the potential casino in Terre Haute.

The committee also reduced the fee that Spectacle Entertainment—which recently acquired Gary casinos Majestic Star I and Majestic Star II—would pay to move one casino to the interstate location within the city. The fee would be $50 million, down from $100 million.

Members of the Ways and Means Committee amended the bill Tuesday morning and then voted 17-6 to send it to the full House for consideration.

The new version of SB 552 would allow Spectacle to open the new casino in Gary, with 2,764 gaming positions. That's significantly more than the 1,684 positions now at the two Gary casinos combined. 

If all of the gaming positions were utilized—and most casinos do not use all of the gaming positions allowed by the state—it would be the largest casino in Indiana, a fact that drew concerns from other casino operators.

John Hammond, a lobbyist for Penn National Gaming, which owns casinos in Lawrenceburg and East Chicago, told lawmakers they should reconsider that amount because it would significantly change the competitive environment. 

“That's a very, very large casino operation,” Hammond said.

To open the new Gary casino, Spectacle would have to pay $50 million to the state in two installments—$25 million once the Indiana Gaming Commission approved the plans and another $25 million exactly one year after that.

That fee is lower than the $100 million the House Public Policy Committee inserted into the bill last month.

Spectacle has proposed opening a $300 million casino along the Interstate 80/94 corridor in Gary and closing the existing casino boats in Buffington Harbor.

Indiana currently has 11 casinos and two horse-track racing casinos, and under the amended bill, the state could theoretically end up with 13 casinos. That’s if Spectacle chooses to operate the two Gary casinos as they are now rather than consolidating the gaming positions into one new casino and a new casino in Terre Haute opens.

If the Gary casinos are consolidated and a Terre Haute casino opens, the state would have 12  casinos and two horse track casinos.

“We’ve separated the Terre Haute discussion from the Spectacle discussion,” House Ways and Means Committee Co-Chairman Todd Huston said. “If the operator in Gary wants to move, that’s their decision based upon the parameters that we provide within the legislation.”

If Spectacle does proceed with the new Gary casino, the second license would be surrendered to the state and essentially dormant. Any future use of that license would require approval from the Indiana General Assembly. 

The bill would create a Vigo County advisory board that would evaluate the companies interested in using the newly created license to open a casino in Terre Haute and, with the help of the Indiana Gaming Commission, select three that would be eligible to bid. The legislation sets the minimum bid at $25 million.

If there aren’t three bidders interested, then the advisory board and the gaming commission could choose to move forward with two proposals. If there is only one proposal, the process starts over.

“There has to be more than one bidder,” Huston said.

The number of games that would be allowed at the new Terre Haute casino is not addressed in the bill, as currently written. Huston said that is still something they are discussing, but the average is about 2,000 games.

Spectacle would be allowed to bid on the Terre Haute license, regardless of what it decides to pursue in Gary. The company has already expressed interest in doing so and has proposed opening a $100 million to $150 million casino in Terre Haute.

Despite the overall increase in the number of potential casinos and gaming positions in the state, Huston declined to classify the bill as an expansion of gambling.

“I think it’s in the eye of the beholder,” Huston said.

The committee also added a 9.5% tax rate for sports wagering, which would be legalized starting in September. That rate is higher than some states, such as Nevada and New Jersey, where the rates are 6.75% and 8.5%, respectively. But it’s lower than others like Mississippi or West Virginia, where the rates are 12% and 10%.

The committee did not reinsert language to allow mobile sports betting, which Is something advocates for sports wagering have said is key in making legal sports betting viable. That’s because a significant portion of illegal sports betting is happening on smartphones. As currently written, the bill only authorizes sports wagering at casinos, racinos and satellite facilities.

“I would expect those discussions regarding mobile to continue throughout the legislative session,” Huston said. “I am fine with mobile gaming. That has not been an issue with me.”

Despite some amendments offered by Democratic lawmakers, the committee also did not reinsert provisions to provide financial support to communities surrounding Gary, including Hammond and East Chicago, that are concerned about the negative impact the new Gary casino could have on their areas.

The bill is authored by Republican Sens. Mark Messmer of Jasper and Jon Ford of Terre Haute. It heads to full House for consideration, and if approved, would return back to the Senate to consider changes.

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