Indiana Casino operators watch as legislators play their hand

The main bill moving through the Indiana House of Representatives, authored by Rep. Tom Dermody, R-LaPorte, would allow live-dealer table games at horse racing tracks, or "racinos", as well as continue casinos' tax deduction for the promotional credits it gives to gamblers and finally, create tax incentives for capital investment.

Other proposed legislation would address replacement of the admission tax casinos pay each time a patron enters the gaming floor.

Casinos do not all agree on which of these measures is best for maintaining their competitive positions.

The Public Policy Committee approved the law, House Bill 1540, last week by a vote of 10-2. It is scheduled for a Ways and Means Committee hearing on Feb. 19 where that committee's members can propose amendments.

The proposed changes are motivated by a drop in casino revenue in recent years brought on in part by increased competition in neighboring states. Declining revenue has meant declining tax receipts for state and local governments as well.

During the budget year that ended on June 30, 2014, wagering and admission taxes brought in $653.3 million for state and local governments. During the last budget year, tax revenues from gambling fell by $99 million, about 13 percent.

With the casinos' different needs and goals, proposed legislative fixes draw cautious, and often critical, reactions.

For some casinos, allowing table games at racinos, and allowing casinos to move onto land, are perceived to be market-disrupting moves.

House Bill 1540 "appears to be assisting certain casinos at the detriment of others," said Dan Nita, regional president and general manager for Horseshoe Casino in Hammond.

Seven years ago, Horseshoe made a $500 million bet on its lake-based casino by investing in an all-new boat with a 2,500-seat theater and gaming floors unlike anything yet built in the state.

Ameristar Casino's parent company expressed opposition to land-based casinos and to live-dealer table games at racinos in testimony before a legislative study committee last year. Schuffert echoed the concern about market-changing reforms in a recent written statement.

"We are hopeful that any changes that are made will be favorable and benefit all Indiana casinos," he said.

Horseshoe and Ameristar are among the eight gambling businesses that make up the Casino Association of Indiana, which commissioned a report that recommended lowering taxes on casinos, preserving and gradually increasing the promotional-play deduction from gambling revenue, formulating a replacement for the admission tax, and stimulating capital investment.

The study, by Spectrum Gaming Group, was published in August and limited itself to issues on which its members agree unanimously.

But land-based casinos lead the list of recommendations from some casinos, including Gary's Majestic Star.

"This change is necessary to address the declining competitiveness of the gaming product and aging riverboat vessels," the company wrote in its submission to a legislative study session last year.

Majestic estimated a land-based casino similar in size to its water-based facilities would mean a construction project in the range of $95 million to $135 million and would generate an additional $35 million in gaming taxes.

Majestic's two boats were built in 1996 and 1997, and are nearing the end of their normal life-span, according to the statement Majestic Star presented to the committee.

Meanwhile, Michigan City's Blue Chip Casino has experienced strong competition from the Four Winds Casino in New Buffalo, Mich., leading it to put tax relief at the top of its agenda.

Blue Chip would like to see the wagering tax on promotional play eliminated, the admissions tax eliminated or replaced, and table game revenue exempted from taxation.

"Table games are quite popular among younger players," said David Strow, director of corporate communications for Blue Chip parent Boyd Gaming Corp. "But the current tax system creates little incentive to increase table game revenue."

Strow said "non-gaming amenities" are also increasingly popular among younger patrons.

Extension, and possibly expansion, of the promotional tax break is generally supported as a way to aid casino operators in building slot machine play.

"We can't market like Michigan and Ohio can, because we pay taxes on marketing," Nita said.

Meanwhile, admissions tax reform, while agreed on in principle, is tricky in practice and is not yet a part of the main House bill.

The most common proposal is to replace the admissions tax with a supplemental wagering revenue tax, but that would shift the burden from a flat $3 per patron tax to a percentage-based system that would draw more revenue from casinos whose patrons gamble more.

"It's a challenge to think about eliminating (the admission tax)," Nita said.

Meanwhile, local government, as well as the state, have come to depend on casino tax revenue. And hanging over all this is Gov. Mike Pence's opposition to the "expansion" of gambling in Indiana. What constitutes expansion isn't clear, leaving a cloud of uncertainty over the entire enterprise.