If a gaming referendum is approved in the Nov. 5 election, a Vigo County casino is to pay distributions to local government from two taxes, plus pay annually into a local development agreement, with its disbursement to be negotiated.
The largest payment is from a wagering tax — estimated to be about $4.6 million. This will go to the city of Terre Haute, if a casino is inside the city limits.
A Vigo County casino is estimated have an adjusted gross income of $100 million, said John Keeler, vice president and general counselor for Spectacle Entertainment, a company that seeks to place a casino in Vigo County.
The second payment to local government is a supplemental wagering tax, which previously was known as the admissions tax on each person entering a casino. For the Vigo County casino, that is estimated at more than $2.6 million.
The more than $2.6 million would be divided among:
• The city of Terre Haute is to receive 40 percent, or more than $1 million.
• Vigo County government at 30 percent, or more than $780,000.
• Vigo County School Corporation at 15 percent, or more than $390,000.
• West Central 2025, a regional economic development effort through the Terre Haute Chamber of Commerce, at 15 percent or more than $390,000.
The third component is a local development agreement, to be negotiated with local government on what and how funds are spent. That is estimated at $2.7 million.
State Sen. Jon Ford, R-Terre Haute, who co-authored a bill in the state Senate that eventually became part of House Enrolled Act 1015, said he would like to see those funds go into a foundation, with appointed board members. That way, Ford said, funds can be distributed as grants to impact local issues, rather than locked into specific categories such as roads or streets.
“That way it can go to constantly changing issues,” Ford said, such as for the homeless or to address drug abuse. “Issues can change every few years or every 10 years,” he said. “I think that would be awesome if that can get done.”
Additional revenue to local government is to come from property taxes and income taxes. By law, a casino cannot receive property tax abatement.
A casino in Terre Haute could create 650 full-time jobs and 140 part-time jobs and have more than 819,000 gaming visits annually, according to a study from the Innovation Group, prepared for and released this week from the Casino Association of Indiana. Terre Haute and Vigo County obtain nearly an equal distribution annually from income taxes.
How it breaks down
Breaking the numbers down, a wagering tax is distributed based on location. House Enrolled Act 1015 states Vigo County or Terre Haute will receive the riverboat wagering tax. Simply put, if a casino is in the city limits, wagering taxes will go to the city. Likewise, the wagering tax would go to the county, if a casino is located outside of Terre Haute city limits.
Greg Gibson, vice president of Spectacle Entertainment, in May acknowledged he favors a lot north of the eastside Home2 Suites by Hilton as his ideal planned location, in the midst of commercial development along the U.S.40/Indiana 46 corridor adjacent to Interstate 70.
Spectacle Entertainment expects to compete for a Vigo County license should voters give the green light in the Nov. 5 referendum vote. Full House Resorts also has expressed interest in operating a Terre Haute-area casino. The Indiana Gaming Commission will decide which potential operator submits the most attractive application. The Indiana Gaming Commission will accept applications for a Vigo County casino operation until December 1.
The percentage for wagering tax collections was amended in this year’s session of the Indiana General Assembly. Tax collections will be paid from two categories: casinos with less than $75 million adjusted gross receipts and those with more than $75 million. Terre Haute’s casino is estimated to be a $100 million casino, said Spectacle’s Keeler.
The changes are effective July 1, 2021. Terre Haute’s casino, if approved in a referendum, is estimated to start in mid 2021 early 2022. The changes call for a 10 percent wagering tax to be paid on the first $25 million, then 20 percent on adjusted gross receipts between $25 million and $50 million, Keeler said.
The wagering tax rate jumps to 25 percent on adjusted gross receipts from $50 million to $75 million, then 30 percent on over $75 million up to $150 million, Keeler said.
“It is just like income tax, where you pay a certain amount in the first tax bracket and more in higher brackets,” Keeler said.
Another legislative change is the deduction amount for “free play,” which are vouchers offered in specific amounts that can be used for free playing at a casino. It a marketing tool to attract people to a casino. That deduction was increased to $9 million effective in 2021. It permits a casino to deduct up to $9 million before a wagering tax and a supplemental wagering tax rate is applied, Keeler said.
The state of Indiana keeps 75 percent of the wagering tax and returns 25 percent back to either the city or county.
Based on a Terre Haute casino revenue of $100 million, the wagering tax would generate more than $18.5 million, with about $4.6 million going to the city or county.
Housed Enrolled Act 1015 sets a supplemental wagering tax for a Vigo County casino at 2.9 percent. At $100 million, with deductions, it is estimated to provide $2.6 million split among the city, county, school corporation and West Central 2025.
Lastly, local agreements are different, yet the estimated average payment for a local agreement is a rate of 3 percent of adjusted gross receipts of the casino. Using that average, the payment for a Vigo County casino is about $3 million.
Costs for licensee
If a casino is approved, Vigo County would not receive a portion of $33 million wagering taxes the state distributes currently to 84 counties that do not have a casino. Vigo County receives about $640,000 of that annually. That payment would stop once a casino starts in Vigo County.
A casino in Vigo County also has costs to whichever company is approved by the Indiana Gaming Commission.
The new casino must pay the state of Indiana $5 million for its gaming license.
The potential Vigo County casino licensee would also pay three annual payments to the city of Evansville. Housed Enrolled Act 1015 specifies, assuming that gaming operations begin in 2021, Evansville would receive $1.2 million in 2021, $900,000 in 2022, and $600,000 in 2023.
Additionally, a Vigo County casino licensee would pay 0.5 percent of annual adjusted gross receipts to the city of Gary for 10 years. At $100 million, that is about $500,000 annually.
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