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Competition cuts profits of Indiana casinos
Question of the Day
INDIANAPOLIS (AP) - Increased competition is cutting into the profits of Indiana’s casinos and into the tax revenues they produce, leading lobbyists to look for the General Assembly to help.
Gambling revenues in Indiana were down $242.5 million in Indiana the past 11 months because of increased competition from a casino opening in downtown Cincinnati and two racinos - horse tracks with gambling machines - opening in Ohio. And more competition is coming soon from Illinois, Kentucky, Michigan, and even from inside Indiana, The Indianapolis Star reported (http://indy.st/1uuiEwj ).
It’s a problem for Indiana, where taxes from the casinos for the past 11 months brought in $592 million, down from $687 million for the same period a year ago.
“Our world has changed,” said Mike Smith, president of the Casino Association of Indiana, gambling’s lead lobbyist at the Statehouse.
Legislators, including some who prefer tax breaks and some who prefer an expansion of gambling, are examining the issue this summer. But at least one economist believes the gambling money will continue to dwindle no matter what the state does.
Smith contends state-of-the-art, land-based casinos will draw back out-of-state customers and lure more Indiana gamblers.
The sharp drop in gambling money started in March 2013 when the $400 million Horseshoe Casino opened in downtown Cincinnati, less than an hour’s drive from three casinos in Indiana. Then in December, one racino opened near Cincinnati and another in Dayton, dealing Indiana casinos another blow.
This May, for the first time since Indiana riverboat casinos opened near Cincinnati in 1996, more metro-area gambling dollars were spent in Ohio than in neighboring southeast Indiana, according to an analysis conducted by the Cincinnati Enquirer. The Ohio casino revenue reports showed $33.9 million spent in May at the casino and racinos accounted for nearly 54 percent of the money played in the southwest Ohio region.
The three southeast Indiana riverboats took the rest, or 46 percent of local gambling dollars.
When gambling came to Indiana in the 1990s, the state chose to bunch the majority of its riverboat casinos around major cities in other states, namely Chicago, Louisville and Cincinnati. Now, Illinois is adding 15,000 virtual gambling machines at local bars and taverns, and horse tracks in Kentucky have been permitted to install machines. And in Michigan, the Four Winds Casino opened in 2007 near the state line with Indiana and has since opened two satellite locations.
In Indiana, the racinos in Anderson and Shelbyville - the only gambling operations in Indiana to post revenue increases in the last 11 months - want to add live gambling.
Mike Hicks, a Ball State University economist, said he doesn’t believe the state should help the casinos.
“If these companies are going to fail as a consequence of competitive pressure, then they are going to fail,” he said. “They opened up with the complete expectation that Ohio would open casinos. That’s commerce. The Legislature ought not to be insulating any company from competitive pressures.”
Information from: The Indianapolis Star, http://www.indystar.com
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