In 2014, Indiana’s 13 casinos and racinos brought in 0 million in tax revenue, the lowest total since 2002. Legislators are trying to help the industry compete against new Ohio competition and gain ground from the recession with a variety of provisions. State Rep. Tom Dermody,chairman of the House Public Policy Committee, said, “Anything we can do, if people think we are going to have revenues back to where they once were, is long gone. We have to look at if we can we stop the free fall over the past couple of years.”
Dermody has sponsored a bill that would allow riverboats to move onto land within their footprint and permit live dealers at the state’s racinos in Anderson and Shelbyville. In answer to Governor Mike Pence’s stance that he would veto any “expanded gambling” measure, Dermody said the only thing his bill expands is the industry’s ability to compete. “We’re just addressing things that are currently being done in a different manner. We’re not talking about adding boats or land base. We’re talking about switching out facilities,” he said.
Co-sponsor state Rep. Terri Austin said the provision for live dealers at the state’s racinos is not expanded gambling and could create 600 jobs. “That brings people to work, brings in income tax and helps Indiana pay down its unemployment tax,” Austin says.
State Senator Phil Boots also questions Pence’s meaning. “I’ve asked for a definition of expansion of gaming and not gotten it,” he said. Boots is the author of Senate Bill 455, measure recently heard in the Senate Public Policy Committee, that would allow an estimated 1,500-3,000 bars and fraternal halls to have an average of five machines, or up to 15,000 video games, bringing in $42-$167 million in fiscal year 2017 when fully implemented. About 40 percent of the wagering tax would go to local units of government in counties that have not prohibited video gambling.
Don Marquardt, president of the Indiana Licensed Beverage Association and owner of Timbers Steakhouse and Seafood in Angola, said, “It’s working pretty well in Illinois. Taverns along the Illinois border, especially in the Lake County area, are really pushing to bring this back to life. The casinos are also asking the legislature for breaks. They need some help. We’re saying help us too.”
Marquardt pointed out that state-sanctioned lottery terminals are set up in stores throughout the state. “Every time I hear ‘expansion of gaming’ I cringe. We have gaming everywhere in this state. We’re already pregnant,” he said.
Under Boots’ bill, the electronic games, including poker, blackjack and others, will not directly dispense coins or cash. They would award free games or credits that winners could redeem for cash. Bars and social/fraternal clubs would be allowed to install five machines and truck stops could offer up to 10. Supporters of the bill acknowledged it probably would not pass, but they’re laying the foundation for future consideration.
Not every casino operator is thrilled with every aspect of the proposed measures, especially those most impacted by Ohio casinos, where 11 casinos and racinos have opened since 2012. Revenue at Ohio casinos increased 36.14 percent to $1.45 billion last year, compared to Indiana’s 8.3 percent drop. Revenue at the Horseshoe Southern Indiana casino in Elizabeth, located just across the state line from Cincinnati, fell 3.15 percent compared to 2013. General Manager John Smith said, “It’s very easy for people to go east on Interstate 71 and head to Ohio, so that’s definitely impacted us.”
Smith said his priority is a reduction in free-play taxes but he’s also concerned that legislators are “sort of picking winners and losers in the way they’re doing it, and so if you’re trying to help the whole industry of Indiana and you’ve got some 13 casinos, why would you do legislation that just helps a few and shifts revenue between the state and not grow it overall? That’s what we’re concerned about. So we’re just hoping that they’ll come to their senses and focus on actions that’ll affect everybody positively, not just a few.”
For example, he said the proposed measure allowing riverboats to move ashore may not be the happy ending some are hoping for. Smith said, “I don’t think everybody’s in a position to invest a lot of capital just to come off of the vessel. While some expenses would be cut, you’ve got to outlay a lot of capital if you don’t have existing space. At a time when we’re seeing revenue decline, I’m not sure how attractive that is to a majority of casinos.”
Also, some casino owners argue that allowing live dealers will lead to more competition among Indiana casinos. For example, Rising Star Casino Resort, 40 miles from Cincinnati, earned $160 million at its peak, then profits started declining in 2006. Now Rising Star ranks dead last among the state’s casinos, taking in $60 million last year. Chief Executive Officer Dan Lee said, “This was built here as the first casino in the tri-state area. It made a lot of money in those days. We’re sitting here now with it, trying to cover the payroll.”
Lee noted an advantage his casino has over the racinos are live table games, but that could change with Dermody’s bill. “A significant chunk of our revenue also comes from Indiana behind us, and we’re trying to figure out how to compete and bring more people from Kentucky and Ohio. But if we all of a sudden get ambushed from behind, meaning Shelbyville, it’s like I can’t fight a battle in both direction,.” Lee said.
At French Lick Resort, President Steve Ferguson said the addition of slot machines in 2008 and electronic table games in 2010 at Indiana racinos hurt both his casino and Rising Star. Ferguson said French Lick’s revenue dropped $30 million since the racetracks became racinos. But he said new legislation allowing live dealers will not help his situation. “If you’re going to do something that will hurt me, leave it the way it is. If you’re going to start doing things that moves gamers around and away from French Lick, then I think I need help,” Ferguson said.
Past legislation tried to help smaller casinos through lower tax rates. But Dermody’s bill does not include any measures to specifically reduce the impact on the state’s casinos. However, Dermody said his bill focuses on all casinos, and adjustments to help the smaller ones could come later.
The House Public Policy Committee will take up the bill, and if it passes it will move to the House Ways and Means committee before heading to the floor.
