Ohio gambling referendum threatens Hoosier Park and Indiana casinos

brandi.watters@heraldbulletin

ANDERSON - An Ohio gambling referendum passed Tuesday could be detrimental to Madison County's most renowned destination and the towns that depend on its tax dollars.

Ohio voters approved a referendum during Tuesday's election to open four casinos in the state. It passed with 53 percent approval.

The casinos will be located in Cincinnati, Columbus, Cleveland and Toledo.

"This is the most serious competitive threat that we've seen in Indiana since gaming started," Jim Brown of Hoosier Park said Wednesday.

"A little over 5 percent of our business right now comes from Ohio," he said.

When Ohio casinos open, he said, Hoosier Park could stand to lose 10 percent of its business due to Hoosiers living on the border choosing Ohio over Indiana.

The casino was already struggling under the weight of a $250 million licensing fee imposed by the state.

In late October, news broke that Hoosier Park's parent company, Centaur LLC, defaulted on one of its loans.

The company also filed voluntary bankruptcy petitions on two of its Pennsylvania casinos.

An analysis by the Legislative Services Agency, or LSA, predicts that Indiana could see a $269 million drop in gaming revenue when the Ohio casinos open.

About $9 million of that would come from losses at Hoosier Park.

Indiana casinos account for about $900 million in tax revenue for state and local entities annually.

The LSA report indicates that an Ohio presence in the gaming industry could cause the Hoosier state to lose $100 million in tax revenue.

Madison County Council President Bill Savage watched Ohio's Tuesday election closely, realizing that the vote would have a ripple effect on Indiana. "When I saw it pass, I knew it wasn't a good thing for Madison County," he said.

A recent tourism report revealed that Hoosier Park accounted for $109 million in tourism spending in the county in 2008.

"The concern is all the way around, jobs affected possibly and the people working at Hoosier Park and the tourism dollars coming in. It's not a good thing," Savage said.

The county is also dependent on Hoosier Park's tax revenue.

By June, Anderson had collected about $2.5 million in tax revenue from the casino.

Any threat to the gaming revenue would affect tax revenue collected by area entities, Brown confirmed.

"Any reduction in revenue makes you worry about your budget," Madison County Commissioner Paul Wilson said.

Despite its significance, Brown said the biggest threat to Hoosier Park is not from Ohio, but from the Indiana State House.

"Going forward, it is more than out-of-state competition, more than any challenges we face at the present time. It is our tax structure that is the most inhibiting to our growth and level of success."

Hoosier Park has been fighting to make lawmakers reconsider the $250 million licensing fee imposed on Indiana racinos.

Even Ohio won't charge their casinos that much.

Brown said Ohio casinos face a $50 million licensing fee, a 33 percent tax rate and a mandate that they invest $250 million in their own facilities.

The Ohio deal is appealing, Brown said.

"We would gladly do it and we would have a grander, more destination-oriented facility."

Instead, Hoosier Park and Indiana Downs pay a 47 percent tax rate on top of the $250 million licensing fee.

Brown hopes news of Ohio's plans for its casinos will help lower the Indiana taxes on casinos. "We are cautiously optimistic that our state legislature will take some action to level the playing field for us on an ongoing tax basis."

Although times are tough, Brown said the casino will remain open. "I do not under any conditions expect that we will face in the future whether Hoosier Park survives. The level of success, our ability to expand our facility and create more jobs, that would be a more difficult task without a change in the tax structure."

Savage hopes the state reconsiders its tax position now that Ohio has become a competitive threat. "I think the state needs to be proactive and give them the better tax structure."