hoosier lottery

It is a huge bet: $1 billion dollars a year and 16,000 jobs. That is what's on the line as state lawmakers consider changing Indiana gaming laws to compete with new casinos in neighboring states.

In Michigan, two tribal casinos have opened just across the Indiana border. Ohio is building casinos in Toledo, Cincinnati, Columbus and Cleveland. Kentucky is close to allowing slot machines at racetracks. And Illinois, facing a $13 billion budget deficit, could finally authorize a Chicago casino.

Added together, Indiana stands to lose more than $700 million a year in gaming revenue if it does nothing, according to a Legislative Services Agency report.

The threat from those states is real, said state Sen. Luke Kenley, R-Noblesville.

"We've put together a pretty solid industry that actually employs over 16,000 people in the state of Indiana," Kenley said. "Are we going to do things that are going to keep it so that they can continue to operate and keep those people employed ... or are we going to turn our backs on them and create problems for them?"

It is not just the casino industry at risk. State and local governments, which take in more than $1 billion a year in taxes and fees from Hoosier casinos, also stand to lose from new competition. Gambling, including the Hoosier Lottery, is the third-largest source of revenue for the state of Indiana after income and sales taxes. Local governments reap more than $200 million a year from casinos.
Last week, Indiana put some skin in the game.

The state Legislature's Gaming Study Committee released a list of 17 findings -- actions the Indiana General Assembly could approve to stay ahead of the other states. They include helping casinos save millions of dollars by eliminating the mandate that riverboats that never move must still have working engines and a sailing crew; authorizing casinos to conduct off-boat tournaments and award alcohol as prizes; and restructuring the way slot machines at Indiana horse tracks are taxed.

NWI pins hopes on land

Perhaps most significant was the finding that Indiana's 10 riverboat casinos be allowed to move to land-based gaming. When Indiana legalized riverboat gaming in 1993, the thinking was that if it didn't work, boats would be easier to get rid of than buildings.

Now that casinos contribute so much to the state in terms of taxes and jobs, "the basis by which they were placed on water seems not to have much weight at this point in time," said Ernie Yelton, executive director of the Indiana Gaming Commission.

Gary may be the first city to see its casino go on land. State Sen. Earline Rogers, D-Gary, said she will introduce legislation in January allowing the two Majestic Star Casinos to move from Lake Michigan into a new building on land adjacent to the Borman Expressway near Interstate 65. That move could lead to at least $11 million in new casino revenue, according to a state report. Gary Mayor Rudy Clay said it's long past time Indiana move out of the "dark ages" and "Rip Van Winkle" era of confining casinos to riverboats.

"It's time to move forward here with land-based casinos and match these other states that are getting ready to put them up," Clay said.

But Indiana isn't going "all in" for Hoosier casinos.

While the Gaming Study Committee recommended many changes sought by the industry, the committee also said Indiana should keep intact its $3 per person casino admission tax and a wagering tax that ranges up to 40 percent of revenue -- one of the nation's highest.

Mike Smith, executive director of the Casino Association of Indiana, said the 12 casino members of the association understand it's hard to cut taxes when Indiana is in dire financial straits. Since July, state revenue has come in $450 million below forecast, leading to state agency budget cuts and nearly 100 state worker layoffs. "Every dollar we give away is a dollar we don't have for K-12 and higher ed," said state Rep. Jeff Espich, R-Uniondale.

While there was no major tax recommendation this time, Smith said the committee's report "opens the door for looking down the road when things get a little bit better in the economy."

What about Chicago?

While new casinos in Michigan and Ohio may hurt Indiana casino revenue overall, the threat to Northwest Indiana casinos has always been the possibility of a casino in the city of Chicago.

Earlier this year, the Illinois Senate approved legislation authorizing a Chicago casino. That measure got amended out of existence in the Illinois House in November. Any new proposal for a Chicago casino would have to start over at the beginning of the legislative process.

Nevertheless, 2010 may be the year Illinois finally approves a Chicago casino. Given the state's multibillion-dollar budget deficit and politicians' fears of raising taxes in an election year, expanded casino gambling might be seen as an easy way to bring in more revenue. Hammond Mayor Thomas McDermott Jr. said he's not worried about the effects of a Chicago casino on the Horseshoe Casino in Hammond, Indiana's largest.

"That's not a happy day for Horseshoe Casino if that happens, but we're still the big boy," McDermott said. "They're going to have to compete with us."

The Illinois Senate legislation would have allowed for a maximum of 2,000 gaming positions at tables and slot machines at a Chicago casino. The Horseshoe Casino in Hammond has 4,239 gaming positions with no maximum limit.