Indiana is making a serious attempt to come to grips with the new cross-border competition that characterizes the gaming industry in the 21st century. Indiana’s gaming revenue is down 30 percent since casinos began opening in Ohio in 2012. The impact of the Ohio casinos on those in Indiana mirrors the impact of Pennsylvania casinos on Atlantic City. Atlantic City was the first major jurisdiction to be so dramatically harmed by casinos in a neighboring state. Because the phenomenon was undocumented and debated, it took a long time before the governor, legislators and regulators were willing to come to the aid of the city and the casinos.
Now however, the phenomenon is well understood and as a result, the casinos in Indiana are not struggling to explain their plight. It is easy to demonstrate how drastically conditions have changed since gaming was legalized in Indiana in 1996. The original casinos opened with no competition except each other. Now, the lawmakers and the governor all realize something needs to be done to save the state’s casinos and protect the tax revenue.
Gov. Mike Pence admits he has been working behind-the-scenes to shape gaming legislation moving through the General Assembly. “I recognize that these businesses in Indiana that have been a part of the fabric of our state now for more than a generation, are facing new business pressures. I am open to common-sense reforms in business practices that allow these businesses to remain competitive.” Dan Carden, Northwest Indiana Times, 2-26-15
Everyone agrees that something must be done, but they do not agree on what to do. Even the casinos are divided on the issues; the potential mitigating legislation might include a reduction in the tax rate, allowing the casinos to build on land and permitting the race tracks to add table games with live dealers. The governor says live dealers would constitute an expansion of gaming and he is sworn to prevent expansion. The smaller casinos are also opposed to live dealers. The casinos do agree on taxation, particularly the $3 per person entry fee.
The Indiana House has delayed action on casino legislation amid concerns that it would deliver a crushing financial blow to local casino communities…The delay follows a legislative report that shows local governments in communities that are home to Indiana casinos would lose more than $200 million over three years. Tony Cook, Indianapolis Star, 2-24-15
Gov. Mike Pence is expressing his opposition to a provision that would allow live dealers at the state’s two racinos. “He’s been pretty clear about that,” House Speaker Brian Bosma said. Tony Cook, Indianapolis Star, 2-24-15
A rally against proposed tax cuts for Indiana casinos could be voted on Tuesday and Wednesday at the statehouse in Indianapolis. Among the officials planning to attend is Ron Meer, the mayor of Michigan City, who estimated his city collects about 15 million dollars a year from Blue Chip Casino. Meer said $900,000 a month goes into the city coffers just from a local revenue sharing agreement. Stan Maddux, WSBT-TV, 2-24-15
The elimination of the admissions tax would cost the city of Evansville and Vanderburgh County each about $2 million in revenue per year. But casino operators say the $3 admissions tax they pay every time a patron steps onto a facility places them at a competitive disadvantage. Chelsea Schneider, Evansville Courier & Press, 2-24-15
The proposals to reduce taxation meet the governor’s intent to help the industry without permitting any expansion. However, the current level of taxes is important to the state’s budget and the local communities depend heavily on the entry fees; reducing that money has a great deal of opposition. The proposal to allow the casinos to build on land has very little opposition, but it is always packaged with either dealers for the race tracks or reduced taxes and both of those do have significant opposition. In the final bill, the house dodged the tax issue and stayed with the issue that had the most support – allowing the riverboat casinos to relocate on land. However, the bill also includes the table games for the racinos and the governor is very much against it. Regardless of the governor’s opinion, it passed and now moves on to the senate.
A proposal to ease Indiana’s gambling laws by permitting riverboat casinos to move onto land and allowing live dealers for table games at the two horse track casinos won approval by a wide margin Wednesday in the Indiana House. The bill that supporters say is needed to help Indiana’s casinos as they face growing competition from neighboring states cleared the House in a 76-19 vote despite word of Gov. Mike Pence’s opposition to the live dealer provisions, which he considers an expansion of gambling in the state. Tom Davies, Associated Press, 2-26-15
The senate will be more difficult; many gaming bills have died in the senate over the years. And even with the approval of both houses, the governor has to agree. The governor is holding his cards close to his vest, so it is anyone’s guess as to what will be in the final legislation or when that might be.
The debate and its details are really specific to Indiana, but the problem is a national one. Many states are going to be forced into the same debate. The issues will vary in each jurisdiction. The constituents and the advocates will change with economic and political conditions. . But, the debate will take place. The first hearings on the issue are already scheduled in Pennsylvania. Ohio, Michigan, Illinois, Connecticut, Maryland and eventually even New York and Massachusetts will be discussing the impact of external competition and the need to lighten the tax and regulatory burden. Unlike Indiana, live table game dealers and moving casinos onto the shore will not be terribly important in other states, but in every location, the cost of regulation and the level of taxation will be very important.
