Indiana lawmakers are considering House Bill 1350, which would remove riverboat casinos’ per-person admissions tax and replace it with a supplemental tax of up to 3.5 percent on adjusted gross receipts. State Rep. Todd Huston, the author of the bill, said his goal is to “attract more casino business” and create a regulatory structure recognizing “we’re no longer in a position where we can tax casinos at a disproportionate rate than we tax other industries. We also, frankly, have to make sure our operators are competitive against other states where they could be making investments,” Huston said.
Due to intense competition from neighboring states, from 2007 to 2016, revenue at Indiana’s 13 casinos has dropped by 30 percent to $600 million and admissions fell by 40 percent to 16.7 million. Lawmakers said they must balance helping the $2.2 billion industry remain successful while maximizing revenue to state and local governments. Casino employment also fell from 16,040 people in 2008 to 14,524 people in Indiana in 2016, according to the American Gaming Association.
Senate Appropriations Chairman Luke Kenley said, “We’re in essence partners with this industry whether we like it or not. We want to keep them healthy, but we want them to pay a lot of taxes to the state of Indiana.”
Kenley said proponents of dropping the $3 admissions tax are “making a fairly good case.” Industry experts said the tax is outdated, a relic from the days when the boats actually cruised. John Chaszar, general manager of the Tropicana Casino & Resort in Evansville, said venues frequently are taxed multiple times for the same individual’s admission in a single visit, for example when the person goes back and forth from the hotel room to the casino.
Also, lawmakers are considering phasing out the so-called casino “add-back tax.” Currently casinos must pay tax on every dollar of revenue they receive–even a dollar used to pay other taxes. Matt Bell, executive director of the Casino Association of Indiana, said the add-back tax is a “huge disincentive for investment and growth in Indiana.” However, according to the nonpartisan Legislative Services Agency, eliminating the add-back tax could reduce casino tax revenue to the state by $10- $18 million annually. Kenley has proposed extending the phase-out period. “I don’t know we’re at the point yet that casinos are so crippled where we have to give them that extra privilege,” Kenley said.
In the meantime, Kenley and others believe local communities and Indiana itself are too dependent on gambling tax revenue. Kenley said, “If the revenues are going to go down, the locals need to share in the reduction of revenues.”
Michael Hicks, director of Ball State University’s Center for Business and Economic Research, said state government “is going to have to figure out who’s going to take the biggest haircut in this. That comes down to who’s benefited the most. Casinos eviscerated hotels and motels and restaurants in existing communities” and largely moved economic activity, as opposed to creating new activity, he stated.
Numerous legislators said eventually the state has to be more aggressive to help the casino industry and deal with declining revenue. State Senator Jon Ford said lawmakers have “been slow to make changes to help our casinos become more competitive. If we are not going to have the stomach to make changes to gaming, I think we’ll have to resign ourselves to the fact that the revenues will continue to go down.”
