INDIANAPOLIS | The Indiana Gaming Commission, by a 6-0 vote on Thursday, approved a new local development agreement that could mean more money for the city of East Chicago in the long term and keep money flowing to the Foundations of East Chicago.
The approval came despite a plea from East Chicago Mayor Anthony Copeland to direct all local development money, about $10 million per year, to the city government to spend on economic development.
"The boats have brought $400 million into the city of East Chicago," Copeland said of the total the casino has paid out in development funds and taxes since the mid-1990s. "But walk down our streets and tell me if you can find it."
Copeland was backed by Indiana Attorney General Greg Zoeller, who told the commission all the money should go to the city to win back the trust of the people of East Chicago.
The Foundation's lawyer, Peter Rusthoven, of Barnes and Thornburg, argued just as vigorously the Foundations always had been a trustworthy recipient and would continue to be so in the future.
Ameristar, in a statement, said it was forced to submit a proposal when settlement talks broke down among the casino, the city, the Foundations and the for-profit Second Century Inc.
The local development agreement has been the subject of more than half a decade of litigation between the for-profit Second Century Inc., the city, the Foundations and Zoeller's office. The Gaming Commission ordered Ameristar at its March meeting to present a proposed agreement if issues between all the parties could not be resolved.
The new agreement would not resolve the numerous lawsuits that have tied up more than $30 million in development funds being held in escrow. It will be up to the courts to release that money.
Under the development agreement for Ameristar, approved by the commission, the percentage of adjusted gross receipts the casino drops into local development funds would drop to 3.25 percent from 3.75 percent.
The city of East Chicago and the Foundations of East Chicago would split that 3.25 percent of gross revenue 50-50.
The 1.625 percent of gross revenue for the city actually would be more than the 1 percent it reaps from the current agreement. The Foundations of East Chicago would see its take drop to 1.625 percent from its current 2 percent.
But a caveat in the agreement states the city of East Chicago actually will receive only 0.5 percent of gross revenues until the courts allow the money now being paid into escrow accounts to be paid to the city and the Foundations.
People were not eager to give estimates as to when that might be, but Rusthoven thought with a little good fortune it could be done by year's end. Or a settlement might be reached with all parties. But he also admitted it could take longer.
Zoeller argued the city should get 3.75 percent of adjusted gross receipts. He said that is the amount directed to all groups in the original development agreement, and the full amount still should be paid but to the city only.
"The history of problems that have plagued the previous agreements have been to the detriment of the economic development of the city of East Chicago," Zoeller said. "East Chicago has never seen the full 3.75 percent of the licensee's adjusted gross revenue intended for economic development, and it needs those revenues now more than ever."
The for-profit Second Century would get nothing under the agreement, as stipulated by a new law passed in the last session of the General Assembly barring for-profit companies from receiving casino development funds.
Under the 1994 development agreement with Showboat, the original owner of the casino, the for-profit Second Century Inc. is to receive 0.75 percent of gross revenues at the boat.
But since 2006, the 0.75 percent for Second Century has been deposited in an escrow account as the Indiana attorney general continues to investigate how the company spent the millions of dollars it received in more than a decade of collections. There is now $11.1 million in that escrow account.
Since 2007, the 2 percent donated to the Foundations of East Chicago also has been placed in an escrow account by court order while a lawsuit brought by the Foundations is litigated. There is now more than $21.1 million in that account.