Saturday, February 24, 2007

Will Slots At Tracks Kill French Lick?

The Star's Mary Beth Schneider and Theodore Kim put out of a puff piece today for Indiana's horse race tracks and their bid to be transformed into land-based casinos overnight equipped with more slot machines than any of Indiana's existing riverboats. Their story speaks to a bill passed by a 54-39 vote yesterday in the House:

In the House, the bill drew bipartisan support from lawmakers who view slots as a financial panacea for Indiana's horse-racing and breeding industries and a help in balancing state costs elsewhere.

In addition, supporters said slots would inject money and life into the two struggling horse tracks being targeted: Hoosier Park in Madison County and Indiana Downs in Shelby County. Rep. Sean Eberhart, R-Shelbyville, urged lawmakers to support the bill to give the tracks "a fighting chance for survival."

Van Haaften's legislation has drawn resistance from gambling opponents like Rep. Chet Dobis, D-Merrillville.

One of the votes Dobis said he most regrets in his 37 years in the General Assembly was one early in his career to allow the horse tracks.

Now, he said, the facilities are struggling and coming to the state for a bailout.

"Northwest Indiana has been devastated because of the demise of the steel industry," Dobis said. "I didn't see anyone stand up in this state and say the steel mills are in trouble, let's go bail them out and subsidize."

Van Haaften told legislators not to kid themselves. The bill, he said, represents an expansion of gambling. But, he said, the money raised would help communities statewide, and he urged lawmakers to view it that way.

The state Legislative Services Agency estimates the machines eventually might gross the state at least $85 million in tax revenue each year, based on adjusted gross revenues of at least $225 million annually when both slots operations are running. A recent study done at the behest of the track owners estimated much higher adjusted gross revenues: $534 million a year. The agency's tax revenue estimates came before lawmakers this week agreed to a higher wagering tax.

The bill would require the slot operators at each track to pay the state a $100 million up-front franchise fee.

The legislation also would prohibit the operators from selling or transferring those slots licenses for at least 10 years. If they are sold or transferred after that, the state would get half of any profits beyond the first $100 million in the transfer.

Completely missing from the Star story is any mention of the legislation's impact on existing riverboat casinos and, in particular, the newly-opened French Lick casino. Fortunately, the IBJ does the critical analysis left out of the Star article. The IBJ writes:

The owners of French Lick Resorts & Casino always expected a narrow profit margin. So there’s no sign of panic yet over indications the place already is struggling, less than four months after its launch. But the threat of unexpected competition from Indiana’s two horse tracks is something else entirely. The casino’s owners are downright terrified legislators soon will allow both tracks to become “racinos” and add up to 5,000 slot machines.

One-armed bandits at Hoosier Park in Anderson and Indiana Downs in Shelbyville could attract a significant share of French Lick’s clientele—possibly enough to break its bottom line.

“We are such a lowmargin business, trying to support the resorts with a very small casino in a remote location,” said Mark Bommarito, vice president of sales and marketing for French Lick Resorts & Casino. “It doesn’t matter if it’s 100 machines or 2,500 machines [at each track]. Anything’s going to have some impact.”

In its 1920s heyday, French Lick was a magnet for tourists across the Midwest. But when cars replaced trains, highways to the rural region never followed suit. For decades, the palatial French Lick Springs and nearby West Baden Springs hotels qui- etly deteriorated. Both are historic landmarks.

Economic developers hope a $382 million restoration project and the state’s 11th casino license will return the hotels—and the area’s economy—to their former glory. But their luck may have soured. On Feb. 15, legislation that would allow slots at the tracks cleared a House committee 9-3. The measure now advances to the full House.

Legislators this year are looking for money to fund a slate of expensive new programs—including full-day kindergarten. Many see racetrack slots as a palatable way to raise millions of dollars in new tax revenue. On the day of the vote, Orange County residents clad in orange shirts gathered at the Statehouse to argue against the bill. The casino earlier had organized a town meeting to rally concern. They may have good reason to fret.

Since French Lick Resorts & Casino opened in late October, it has become the region’s largest employer, with 1,560 workers. And when renovations on the West Baden Hotel are complete in a few months, it will hire even more. The next-largest local business is woodworking firm Paoli Inc., whose 750 employees face increasingly stiff overseas competition. Thanks to the casino, Orange County’s unemployment rate has fallen to 6.4 percent. That’s a full percentage point below its rate a year ago—but still well above Indiana’s 4.7-percent average.

In the Star story, Rep. Chet Dobis is quoted as saying the bill was carefully crafted by gambling lobbyists intent on maximizing private profits. Rep. Van Haaften is quoted as responding that he, not lobbyists, crafted the bill and that he had "no horse in this hunt." Neither track is in his district. I'm sure Rep. Van Haaften is sincere in what he says about his legislation, but this idea is nothing new. When I lobbied the legislature back in the 1990s, lobbyists for the horse racing industry were fast at work then trying to craft a plan to convert horse race tracks into casinos. Both from personal observation and published news media reports, the horse racing industry earned a pretty sleazy reputation for its lobbying efforts at the State House.

If this legislation becomes law, the legislature will be increasing the value of these licensed horse race tracks by many times. With so much money at stake for a hand full of individuals, the potential for corrupt influence on the legislature is very real. Hopefully, the feds are keeping a close watch on what's happening under our State House dome. The legislature would also do well to take a close examination of the impact these land-based casinos situated so close to Indianapolis would have on the riverboat casinos.

For the legal buffs who are always amused by the conflict checks, according to Indiana Lobby Registration Commission records, Ice Miller lobbies for both riverboat casinos and Hoosier Park race track.


Anonymous said...

AI, someone should take a close look at the proposed Indiana Commerce Connector toll road route and its proximity to both horse race tracks. Ice Miller is lobbying for the new toll road too.

Wilson46201 said...

I recall when all this gambling started again in Indiana, it was justified as an extreme economic development measure for Lake County which was devastated by the collapse of the U.S. steel industry. "Riverboats" that had to cruise out into Lake Michigan were required to avoid polluting Indiana's fair shores with gamblers strolling around.

Gambling has since expanded and grown to the point we now have off-track betting on horses within a block of our State Capitol Building. Pitiful!

Anonymous said...'re full of surprises today, AI. Wilson is against gambling downtown. Who knew?

Chet Dobis has reconstructive memory. He's a gasbag, and always has been...the difference, Mr. Dobis, is that steel mills were private enterprises not licensed by the state. Duh. And he's one of the leaders of the House. Lord help us.

So Ice Miller whores around again. Huge surprise. Ask the water ratepayers in Lawrence how IM whored around the water company deal, then, when caught with hands in the cookie jar, claimed not to have represented anyone at all while representing everyone...they merely provided "scrivener's notes." Uh-huh.

Which is a much more polite legal term for whoring around. Those were pretty expensive "notes," billed at the hourly rate of partners providing legal assistance. Not notes.

Some things change, some things never change. Ice Miller follows the money. They have zero principles. The very classic definition of whores.

This is one more example of what you get when the legislature regulates lobbyists themselves.

Anonymous said...

Rep. Jerry Denbo from French Lick voted for the slots at the tracks bill. He was either paying back IOU's or believes that 5000 slots in central Indiana won't hurt his casinos. My money says the bill won't make it out of the Senate but anything's possible with the old guard like Borst and company gone now. All comes down to $$ in the end just like every other bit of legislation that gets passed in our General Assembly.

In the long run I do not see the slots at the tracks helping what I fear is a dying industry and I once owned standardbreds and stabled/trained them at the State Fairgrounds.

Anonymous said...

If the horse race tracks can't make a go of it, then close them down. The state has no obligation to ensure their profits. This is just of way of going through the back door to get a casino license. If that wanted a gaming license, they should have applied for one when everyone else did.

Anonymous said...

And the illegal gambling has grown into a source of income for our elected officials. thats why the pea shake houses are allowed to exist.

hey keep the poor balck folks, poor.
they put money into the rich democrat elected officials pockets.

Bart and his people have kept the poor blacks at the poverty level while they keep getting richer and give false promises of hope.
Wilson Allen supports this because he is a rcist , just like bart Peterson is!

garyj said...

As long as the gamblin is legal, it's OK.
The illegal pea shake houses should be either shut down or legalized to pay taxes.

Las Vegas has a fair share of crime as well, what about the tax rate for the citizens? Whats that like.? The unemployment rate?
How has LEGALIZED gambling benefitted that city?

I agree with 1/2 of 729.. Pea shakes keep the poor people, poor!
bart does give false hope to ALL the citizens in this city, not just the blacks.
I appeared that Wilson is against the gambling industry! Never heard of him being at a Pea Shake, or any other gambling establishment!

I disagree with Wilson a lot as well, but 739 should read whats written

Wilson46201 said...

I mentioned the beginning of gambling as being from Lake County - Senator Earline Rogers was the major proponent at the Legislature. She needed employment for her constituents. Gary was desperate!

I've never been to a peashake house - I dont gamble. As I understand the economics, peashakes offer better odds to the gambler than the State-controlled gambling entities. Rational capitalism and market economics keep the peashakes going - the customer gets a better deal!

Anonymous said...

Interesting that the horse tracks are pleading poverty to get slot machines, but they don't blink an eye at $100 million for a casino license.

Anonymous said...

Whats the fiscal impact of closing the organized illegal cherry masters, pea houses, & bingo on state tax collections?

I suspect legal gambling revenues and tax collections would sky rocket.

Anonymous said...

Will the states tax base really increase with slots at horse tracks in central Indiana?

Any economist would tell you that expanding gambling into central Indiana just recirculates "old" money from Hoosier residents that would have spent their entertainment dollars at other venues in our state anyway.

Only "new" money from people who would not spend money in our state truly increases Indiana tax revenues to benefit our citizens. That is why every Indiana casino with the exception of French Lick is on our state border across from large metros like Chicago IL, Louisville KY, and Cincinnati OH.

Anonymous said...

"Gambling has since expanded and grown to the point we now have off-track betting on horses within a block of our State Capitol Building. Pitiful!"

Let me guess. You think: Pea shakes good, horse tracks bad. Maybe it is because the Pea Shakes have lost money over the last decade or so as their customers choose safe and clean places to play games!! My guess is that with slots so close to Indy now, the Pea Shakes folks are very upset. Less pea shake money means less money for political hacks from Center Township areas.

Wilson46201 said...

Wrong! Guess again...

Cheap political potshots are so easy to make when hiding behind a fake name...

Anonymous said...

I went to French Lick this weekend to view the remodeled hotel and the new casino.

This was a good day, I was told Sat. while overlooking the casino. Which was 90% empty.

The hotel is beautiful. Breath-taking detail and attention to historically accurate reproductions.

The blackjack and PaiGow poker dealers were completely without customers for hours on end.

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