Proposal Calls for Auction of Racetrack Slots Licenses

Could licenses to operate slot machines at Indiana’s two pari-mutuel racetracks go up for auction to the highest bidder? If it were up to Republican Sen. Luke Kenley, the plan could become reality.

Kenley, who serves as Senate Tax and Fiscal Policy Committee chairman, floated the idea April 19 after a conference committee meeting to discuss legislation that would allow slots at Hoosier Park and Indiana Downs.

In a story published on the Indianapolis Star Web site, Kenley suggested slots licenses be auctioned off by the state if both tracks are unable to pony up the $400 million required to obtain a license. Originally, the bill passed out of the Indiana House with language calling for a $100-million licensing fee. Once the measure moved to his committee, Kenley added amendments that quadrupled the license fee and slashed the number of machines at each track from 2,500 to 1,500.

“The legislature has a fiduciary obligation to the citizens of the state to get as much as we can for the license,” Kenley said in the story. “If we’re not comfortable that the current holders of the facilities at the track are going to give us a reasonable license fee, then we just need to auction it off. That protects us from an integrity standpoint with the public, because then if it’s a public auction, then we get whatever we get.”

The slots legislation passed the full Senate by a 27-21 margin March 29. The bill then moved back to the full House for consideration. There, Democratic Rep. Trent Van Haaften, author of the bill, dissented from the Senate version of the legislation April 2, sending it to conference committee. Van Haaften and Republican Rep. Matt Whetstone were appointed to the committee, along with Kenley and Democratic Sen. Tim Lanane.

In the first meeting of the conference committee, which is charged with hammering out a compromise on the House and Senate versions of the bill, the licensing fee and number of machines at each track proved to be the biggest obstacle. According to the Star story, Centaur Inc. representatives told legislators they could pay no more than $125 million for a license to operate slots at Hoosier Park, and would require 2,000 machines. Centaur completed the purchase of a 62% majority share from Churchill Downs Inc. March 30.

Slots legislation has been at the center of debate during the current session of the Indiana General Assembly. Revenue generated by slot machines is very appealing to lawmakers looking to find much-needed funding without tax increases.

If the bill has any chance of becoming law, the conference committee must issue a report that is adopted by both the House and Senate before it can advance to the governor for consideration.