INDIANAPOLIS | Region communities and the state of Indiana could lose up to 15 percent of their gaming tax revenue if Illinois Gov. Pat Quinn signs pending legislation permitting new casinos in Chicago and the south suburbs.
That's according to Mike Hicks, an associate professor of economics at Ball State University who studies the tax and economic effects of casino openings.
Hicks believes the proposed Illinois casinos could attract up to half the gamblers who currently cross the state line to play in Indiana -- taking local tax revenue and some of the thousands of region jobs supported by gaming back to Illinois.
About 70 percent of players at Northwest Indiana casinos live in another state, nearly all in Illinois, according to the nonpartisan Indiana Legislative Services Agency.
If Hicks is correct, the potential lost tax revenue is significant -- costing Hammond up to $4 million a year, East Chicago $1.5 million and Gary $1 million.
Casino funds paid to Lake County that are distributed to other cities and towns and used to support tourism and the area police academy also could be reduced by up to $3 million a year. State gaming tax revenue could decline by up to $50 million a year.
Hicks also expects at least one Northwest Indiana casino to close as a result of the new competition, likely Majestic Star in Gary, which shuttered a gaming floor and laid off 50 employees this month.
"It's been a really bleak time for casinos through the recession, but if you're having difficulty making ends meet during a recovery, that points, I think, to a very real problem with viability," he said.
Not everyone shares Hicks' outlook.
Mike Smith, executive director of the Casino Association of Indiana, whose membership includes most region casinos, doubts that new facilities across the state line would force an Indiana casino out of business.
"Quite honestly, we can compete with anybody," Smith said. "From a property standpoint, from management and the companies that are here -- we can hold our own."
But Smith said Indiana could improve casino viability and add jobs and economic development by reducing state and local tax rates on casino wagers and admissions, which top 40 percent at some locations.
"Every dollar they take from us in taxes is a dollar that we can't use for payroll or some other thing that's going to generate more business," Smith said.
Ernie Yelton, executive director of the Indiana Gaming Commission, believes it is too soon to estimate what impact new casinos in Illinois may have on Indiana facilities and tax revenue generated by gaming.
Northwest Indiana casinos have faced competition across a state line before.
In 2007, Four Winds Casino opened in New Buffalo, Mich., just 10 miles away from Blue Chip Casino in Michigan City.
Blue Chip immediately lost about 30 percent of its revenue and saw 750,000 fewer people a year coming through its doors. In response, the casino made its property a destination resort by adding a 22-story hotel and spa, and attendance has stabilized.
Yelton said Four Winds is not directly comparable to Illinois, however, because, as a Native American casino, it does not have the same tax burden as new Illinois casinos would and was able to spend money on marketing that otherwise would have gone to taxes.
State Sen. Earline Rogers, D-Gary, said she hopes expanded gaming in Illinois finally will prompt the Indiana General Assembly to allow Hoosier riverboat casinos, especially Majestic Star, to relocate on land at sites better able to attract players.
"If the competition is there, then I think it will not be as hard of a sell as when we were anticipating that the competition would be there," Rogers said.
Illinois lawmakers narrowly approved the casino expansion bill in May, but Quinn has said he may use his amendatory veto power to strike some of the new sites from the proposal.
In response, Senate President John Cullerton, D-Chicago, put a parliamentary hold on the legislation, keeping it in legislative limbo and off Quinn's desk for now.