Tuesday, May 12, 2009

Does Funding CIB Bailout With Gambling Dollars Make It Different?

If bailing out the CIB is a bad idea, why should it make any difference if it is funded with new gambling dollars? That seems to be an increasingly popular view among some lawmakers as the legislature prepares for a special session to approve a new state budget. Although there are several gambling expansion ideas floating around, the one specifically intended as a trade off for bailing out the CIB is allowing the racinos at Shelbyville's and Anderson's horse race tracks to have table games in addition to their slot machines. The horse race tracks have been complaining that they aren't making as much money as they originally anticipated. During the regular session, the horse race tracks sought tax breaks worth tens of millions. The Star's Bill Ruthhart writes today of the plan:

Central Indiana's two racinos are looking for help, too.

Indiana Live in Shelbyville and Hoosier Park in Anderson have insisted they overpaid in 2007 when each gave the state $250 million for licensing fees to bring slots to their horse tracks. Both say they have struggled to pay down loans for the fees and have not ruled out laying off workers, reducing hours or even closing.

During the regular session, the racinos pushed for nearly $75 million in tax breaks to help pay their bills. The proposal passed the House, but it died in the Senate.

Rep. Sean Eberhart, R-Shelbyville, said the proposal likely is dead for the special session, too, because the state already is dealing with revenue shortfalls. But Eberhart is offering another solution: table games.

He said allowing the racinos to have games such as blackjack could generate $80 million to $90 million in additional revenue for the two facilities. As part of the deal, Eberhart proposed using the $20 million-plus in new tax revenue the games would produce to help plug the Capital Improvement Board's projected $47 million shortfall for 2010.

The struggling Indianapolis sports board has sought help from lawmakers to keep it afloat, another task the legislature likely will tackle in the special session.

"All of the other gaming facilities in Indiana have table games, and this would kill two birds with one stone," Eberhart said. "You're helping (the racinos), and you're helping solve a major problem for Indianapolis. I think it's a great idea."

It's an idea, however, that would qualify as an expansion of gambling, which Daniels and other legislative leaders have opposed.

But Rep. Terri Austin, D-Anderson, said she agrees with Eberhart that something should be done for the two racinos, especially if lawmakers help the CIB. Austin said she is still hopeful about granting the two facilities tax breaks.

General managers for Hoosier Park and Indiana Live casinos could not be reached for comment.

To me, a bailout is a bailout whether it's being funded with higher taxes or new gaming revenues. The mismanaged CIB is being rewarded for its bad behavior without any investigation to get to the bottom of its ten years of deficit spending.

Meanwhile, a report on BleacherReport.com suggests that the owner of NHL's Vancouver Canucks is making a play to buy the Pacers from the Simons and move the team there. Tell me why I'm not surprised to read about this rumor at this time. Hat tip to Indiana Barrister.

Rumors are starting to spread that Francesco Aquilini, owner of the NHL’s Vancouver Canucks, is reportedly expressing interest in purchasing the Indiana Pacers and moving the team to Vancouver, B.C.

Pacers co-owner Herb Simon are working as hard as they can to work out a new arena deal with the Indianapolis Capital Improvement Board and says he doesn’t want to see Indy without an NBA team.

Simon, could be using Aquilini as leverage against the Indianapolis Capital Improvement Board.

But former Sonics owner Howard Schultz also used Clay Bennett as leverage against the Washington State Legislature. And now the Sonics no longer exist.

11 comments:

Unigov said...

Thank you for pointing this out !

When the new Colts stadium was being talked up and the restaurant tax was implemented, Blue Crew types famously explained that if anyone didn't want to pay for the stadium, they could stop eating out.

As if tax monies weren't interchangeable.

Patriot Paul said...

You have a point from a secular-economic viewpoint, but I don't see enhanced gambling as the fiancial cure-all. I would prefer the city just sell bad investment properties and get out of risky business pursuits altogether. Their bumbling of the water deal, utilities, and tripping over themselves using the bond bank at taxpayers' expense ad nauseam is indictment enough. Has anyone put a pen to what we would gain by selling off these white elephants to private enterprise?

Paul K. Ogden said...

PP,

The city gets 0% of the revenue off of the building. And with Lucas, the city gets only a fraction of the income off the building, not nearly enough to cover operating costs. Why would a private business venture assume the city's position with these two buildings? There certainly is no profit in doing what the city is doing.

Gary, I agree. I hate it when people jump to gambling as the "solution" to the CIB's problem. The problem is the CIB is fiscally irresponsible. How does just handing the CIB more money cure the problem?

Unigov said...

A corollary to the gambling suggestion is when government considers a tax increase and says it's for a good cause. For example, a tax on soda to fund health care:

http://online.wsj.com/article/SB124208505896608647.html

A tax on soda doesn't fund anything in particular, cause the government can allocate money however it sees fit. All a tax on soda does is increase taxes...if such a tax raises $10 billion a year and the government wastes $10 billion a year on various things, the better solution is to cut the waste to fund health care. Not raise taxes.

Government is no longer government, it is a self-serving economic entity unto itself. Think of government in those terms and suddenly the CIB and the "life sciences" initiatives make sense.

Eclecticvibe said...

Gambling is often considered a tax on the poor anyway, as poorer less educated people are more likely to spend larger percentages of their income at casinos.

Flipper said...

I wonder if maybe the downtown casino idea isn't coming from the insiders.
First
Rex Early has an ownership stake in Indiana Live and the Indiana Downs. Pat Early's son Barton Early recently hired on at Indiana Live in a management position.
Also, if Indiana Live didn't respond to calls you can call Mark Hemmerle the general manager at 392-7777 or cell 421-8201

Advance Indiana said...

Don't forget that CIB Board member Craig Huse owns stock in Centaur, the owner of the Anderson horse race track. Another CIB Board member, Doug Brown, lobbies for Indiana Downs.

HOOSIERS FOR FAIR TAX said...

So the CIB insiders have gambling interests, huh? Why doesn't that surprise?

I know said...

Ogden for Mayor

Shorebreak said...

Here's a suggestion - set up one-armed-bandits in place of parking meters downtown and raise the minimum fee to $1. Folks pay more to park, but they get a chance to win something too. Plus it'll help out area businesses. People will be pouring out of the woodwork to park on a downtown street. They'll be coming in on public transportation just to feed the meters.

Mike Kole said...

It is awfully convenient that the owner of the Canucks creates a beneficial rumor for the owners of the Pacers. Sports owners are their own fraternity, aren't they?