By Dan Shaw, Evansville Courier & Press
When Casino Aztar opened in Evansville, it siphoned off 35 percent of Ellis Park's business, according to the owner of the horse track.
Now a proposal to allow video slot machines at Kentucky tracks is raising fears that Ellis may take some of that business back.
Kentucky lawmakers begin meeting today in a special session. Among issues on the agenda is a proposal to allow slot machines at the state's tracks. Supporters say Kentucky is losing horses and race patrons to states where slot gambling brings in more money.
Ron Geary, who owns Ellis Park, estimates the purses at two Indiana tracks are three times greater than those at his track. The difference, he says, shows the advantage of slot machines.
The competition has led Geary to reduce Ellis' days of horse racing from 48 to 23 this year. He also has threatened to cancel the 2010 season altogether.
Though slot gambling promises benefits for Ellis Park, the effect may be nearly opposite for Casino Aztar, where revenues have just begun to recover after taking a plunge under a former owner.
Robert "Tom" Dingman, an attorney-in-fact who manages Aztar, said Kentucky's proposal is certainly of concern.
Casino Aztar now enjoys a great advantage: Neither of the two states to the south - Kentucky and Tennessee - allows gambling. The casino's place on the border of Indiana has helped it attract patrons from both.
But Ellis Park, with slot gambling, would be poised to intercept them.
"The fact that Ellis Park is located on (U.S.) 41, which is the main arterial coming from Kentucky to our property, that would obviously impact our business," Dingman said.
Yet Casino Aztar still would offer several amenities that Ellis Park can't claim, he said, noting the hotels, restaurants and games other than slots - such as poker and blackjack.
"That would continue to give us a competitive advantage," Dingman said.
Meanwhile, Indiana legislators are considering changes to their state's gambling laws.
At the same time that Kentucky track owners eye their Hoosier competitors with envy, those same competitors are asking for government aid.
A group of Democratic lawmakers have raised the possibility of giving tax breaks or other benefits to a couple of Indiana tracks: Indiana Downs in Shelbyville and Hoosier Park in Anderson. The proposals are up for discussion in a special budget session convened last week.
Ed Feigenbaum, the editor of the publication Indiana Gaming Insight, said the Indiana tracks are in trouble largely because of the $250 million in licensing fees each paid the state a couple of years ago.
That money was used to lower property taxes in 2008.
Compounding the tracks' difficulties is a revenue stream that has failed to flow as quickly as expected. Feigenbaum said the weak economy contributed greatly to the disappointing results.
But the race tracks haven't been the only ones harmed. So why, Dingman asked, should tax breaks or other benefits be extended to one gambling operation but exclude others?
"Evansville isn't doing as well as we used to, but we don't get a tax break," Dingman said.
Since coming to Aztar in 2008, Dingman has led a recovery in the casino's fortunes, though revenues there still are below what they were two years ago.
He was appointed to Casino Aztar after the former owner, William J. Yung III, lost a license to run the Tropicana casino in Atlantic City, N.J. Yung's troubles with New Jersey regulators raised the possibility of license revocations in Indiana and other states where he had properties.
Those troubles led Tropicana Entertainment, the current owner of Aztar, to declare bankruptcy in May 2008. The company emerged from Chapter 11 protection last month.
A group led by billionaire investor Carl Icahn won a bid Friday to buy the Atlantic City casino for $200 million. Icahn Partners LP also is the majority stakeholder in Tropicana Entertainment, which owns Casino Aztar.