Evansville Courier & Press staff and wire reports
INDIANAPOLIS - As the Indiana Gaming Commission continues its investigation of a complaint into Casino Aztar, the commission itself is getting a hard look from state lawmakers, who suggested the state agency overstepped its legal bounds in other areas of its regulation of the gambling industry.
A committee of lawmakers Wednesday criticized new agency rules that require the state to consider seeking money or other benefits from those seeking to sell their interest in a casino or horse track. Democratic Rep. Scott Pelath of Michigan City, Ind., who chaired the hearing, also questioned why the commission allowed two riverboat casinos to proceed with expansions to become more like buildings instead of boats.
Some lawmakers are irked at emergency rules adopted by both the Indiana Horse Racing Commission and the Gaming Commission that let the state seek "windfall" money before allowing ownership interests to be sold. For example, LHT Capital recently decided to sell its minority interest in the Indiana Downs horse track in Shelbvyille, Ind., and must pay the state $9 million that will be used for property tax relief.
Gaming officials are seeking to make permanent the new rules, which also apply to riverboat casinos.
Lawmakers complained the rules are vague as to how much gaming interests would have to pay the state in windfall payments or to what agency. Rep. Dennie Oxley, D-English, summarized previous testimony.
"'It depends on the applicant, they don't have to do it, they may do it, we don't know where the money's going, we don't know who's responsible for the money.' I mean, that's basically what you're saying," Oxley told Gaming Commission executive director Ernest Yelton at the end of a testy exchange between the two during the hearing.
Yelton described how casino interests could propose windfall payments when the commission approved a sale. Yelton later said he didn't mean financial consideration, but the concept troubled Sen. Lindel Hume, D-Princeton.
Hume warned that such unspecified fees should be written into state law, otherwise they could create the perception of unfairness if one company was required to pay and another was not.
"That is not only questionable but it is on the borderline of extortion," Hume told Yelton. "And since we don't say for sure where that money is going to go, (it) could possibly be illegal."
He suggested the commission repeal the rule and the Legislature pass a state law to address windfall payments.
Hume added he was not questioning the integrity of Yelton.
"All I'm saying is, that creates something that the public could look at and feel there would be some possible hanky-panky going on; and we certainly don't want that," Hume said.
"Rest assured, I totally understand," Yelton replied, saying the commission would discuss it.
Layoff investigation
Wednesday's hearing by the Administrative Rules Oversight Committee comes as the Gaming Commission continues its investigation into layoffs of more than 70 Casino Aztar employees by the riverboat's new owner, Columbia Entertainment. Evansville Mayor Jonathan Weinzapfel lodged a complaint in March, alleging Columbia Entertainment reneged on its earlier employment promises when the commission transferred the casino license last year.
Weinzapfel, who was traveling through Indianapolis on other business, stopped in briefly at the committee's meeting Wednesday, but did not testify.
Originally, the commission was to hear the Aztar investigation Sept. 13, but gaming agents were unable to secure interviews with Columbia Entertainment CEO William Yung until Oct. 25. The commission will hear the Aztar report Nov. 8.
"And we shall see what we shall see," said William Barrett, chairman of the Gaming Commission. "I can tell you that we have been pursuing it as diligently as we are able, and there have been scheduling issues."
Former commission member Donald Vowels of Evansville had opposed granting Columbia Entertainment the Aztar license and was an outspoken critic of the company's actions. But when the commission finally hears the Aztar complaint, Vowels won't be on the panel: His term expired last month and Gov. Mitch Daniels did not reappoint him.
Daniels proposed the change in the windfall rules after the Legislature enacted a law this year allowing each of the state's two pari-mutuel horse tracks to have 2,000 slot machines in exchange for a $250 million payment. Daniels has said he did not think Indiana government was getting enough money for the racetrack slot licenses, and rules should be created to ensure the state benefits if track owners get a windfall for selling their interests. He said the law prohibits majority track owners from selling their interests for five years.
Yelton said he agreed with Daniels' philosophy behind the rules - that the state should benefit if a casino or track owner makes a significant profit for selling its ownership.
But Pelath said it violated legislative powers.
"I'm absolutely certain we didn't delegate taxing authority to the Gaming Commission, and it wouldn't even be constitutional if we did," he said.