Anderson racino seeks relief from high licensing fee, tax rate

aleasha.sandley@heraldbulletin

ANDERSON - If Hoosier Park Racing and Casino doesn't see some form of relief from a crushing licensing fee and tax rate, it could be forced to resort to one of a variety of options to maintain its profitability, including bankruptcy.

Hoosier Park General Manager Jim Brown did not want to speculate on the options the racino could take, but in a message to media outlets on Friday, Indiana Gaming Commission Director Ernie Yelton said without relief, bankruptcy was imminent.

"I was repeating what representatives of (Hoosier Park parent company) Centaur (Gaming) have been suggesting to particular legislators," Yelton said. "We don't take a position one way or another."

Brown said Indiana's $250 million licensing fee was the highest in the country; the next highest is Pennsylvania with $50 million.

"Kentucky is headed into a special session to look at gaming," he said. "They are looking at significantly lower license fees and tax rates for any gaming facilities in the state of Kentucky."

Brown said Hoosier Park and Indiana's other racino, Indiana Live in Shelbyville, were not even on the same playing field as riverboat casinos in Indiana.

"There are 11 riverboat casinos in the state of Indiana, and they did not pay any license fee and they had a gaming tax rate of 20 percent," he said. "We paid $250 million, and our tax and fee rate as a percentage of our revenue is almost 50 percent. We are seeking the ability to be on a more level playing field with our competitors in Indiana."

State Rep. Scott Reske, D-Pendleton, said any gaming legislation put forth in this General Assembly's current special session would have to be careful not to harm other casinos in its attempt to help the two racinos.

"Whatever the Legislature does to Hoosier Park and Indiana (Live), it's not isolated," he said. "What you have to make sure is that there's no detrimental negative effect to the other casinos throughout the state. Whatever solutions there are to correct for the governor's licensing fee being too high, the solution has to be one that does not have a domino effect for other gaming facilities."

Still, Reske said the licensing fee was too high to begin with and that local legislators cried out two years ago for the fee to be lowered.

"Everybody that analyzed this all said $150 million should be (the fee)," he said. "(Gov. Mitch Daniels) insisted $250 million and everybody told him it was way too high and it would create a debt service to the casinos that was too high.

"The governor was wrong and now Madison County is paying the price."

Daniels spokeswoman Jane Jankowski said the $250 million licensing fee was not Daniels' idea, but rather that it had originated with the Legislature.

"I believe that the governor suggested that the licenses be auctioned, and the Legislature decided to set a flat fee," she said.

Jankowski would not comment on why Reske might have said Daniels was responsible for the $250 million fee. She said Daniels did not have plans to present any gaming proposals in the special session.

Rep. Jack Lutz, R-Anderson, said he expected Rep. Charlie Brown to amend a bill concerning Indianapolis' Capital Improvement Board today to also include items about gaming.

"I think some things that (casinos) are asking for that might be introduced tomorrow would be worthy of consideration," Lutz said Monday.

He said solutions to the casinos' problems could include the reduction of required payments on their adjusted gaming revenue and allowing local governments that benefit from casinos to deduct what they pay the horse industry before paying the state gaming tax.

"They're asking for some help, just as the CIB in Indianapolis is asking for some help," Lutz said. "At least let Madison and Shelby counties be given the tools to help the situation."

Brown said bringing slot machines to Hoosier Park and incurring the $250 million fee really was not a choice on the part of Centaur Gaming.

"The racing industry has declined over the years, and Hoosier Park was not making money prior to the slot legislation and Hoosier Park at that time received a subsidy from the riverboats," he said. "With the passing of that legislation, the subsidy was going to go away."

Brown said without the high licensing fee or tax structure, the casino would be operating fine.

"It has placed a tremendous financial burden on us absorbing the cost of this," he said. "It was done on speculating what revenue there would be that could handle the cost incurred of the $250 million license fee and any interest in borrowing money. Now, a year later we're seeing that revenue levels produced don't match the burden of a license fee that high and ongoing tax and fee structure."

Yelton said no one could predict what kind of bankruptcy Hoosier Park could go through if it came to that. Historically, though, both Indiana casinos and those in other states have gone through reorganization bankruptcies.

"In all those cases, gaming didn't skip a beat," he said. "Doors were always open, jobs were always secure."

Anderson Economic Development Director Linda Dawson said without an operating Hoosier Park, the city would lose 900 jobs and $2.5 million to $3 million in annual revenue.

"Without that revenue, it would result in drastic cuts in city services," she said. "If those millions of visitors would disappear, it would have a drastic effect on the service industry.

"For a city to be accustomed to having a casino operating and considering the recent House Bill 1001 effect of reducing income to the city, the Hoosier Park casino could easily be classified as a lifeblood to the city at this point."

Dawson said Hoosier Park had not received tax abatements from the city and city officials could do nothing to help the casino's financial situation.

"There's only one way of alleviating this concern, and that's for the state to step up to the plate and admit that the original gaming fee of $250 million was extraordinarily high compared to anyplace else in the nation and the percentage of taxes they're charging to the racinos was extraordinarily high," she said.

"They're financing a huge portion of the state on the backs of the two racinos."