Indiana Slots Bill Progresses With Higher Fees

A bill that would allow slot machines at Indiana’s two pari-mutuel racetracks was endorsed by the Senate Tax and Fiscal Policy Committee March 20 and heads to the full Senate. Though the bill has advanced further than any previous slots measure, there are significant changes: fewer machines at each location and a higher licensing fee.

Republican Sen. Luke Kenley, who chairs the committee, introduced an amendment that cut the number of slot machines that could be installed at Hoosier Park and Indiana Downs from 2,500 to 1,500 each. In turn, the licensing fee each track would pay to operate slots quadrupled from $100 million to $400 million.

Operators would pay taxes on slots revenue based on a sliding scale; 25% on the first $100 million in gross revenue, 30% on the next $100 million, and 35% on revenue exceeding $200 million. In addition, the two tracks would pay a 2% tax to Madison and Shelby counties, where they are located. They would also pay a 1% tax that would be used to subsidize a casino located in French Lick.

The licensing fee is not only a sizable up-front investment for the opportunity to operate slots but would set a new standard in the industry. In Pennsylvania, racetracks paid a $50-million one-time slots licensing fee for the right to operate slots.

The original language in the Indiana legislation called for a $75-million licensing fee; that was changed to $100 million before it left the House. Both tracks are anything but flush with cash as each has operated at a loss for the last several years.

“From what I heard today, it’s still open for discussion, but $400 million is just a huge, huge number,” Hoosier Park president and general manager Rick Moore told the Anderson Herald-Bulletin. “It’s higher than any license fee I’ve seen for a racino.”

Regardless of the licensing fee, supporters argue slots are imperative to providing the industry with firm financial footing. Currently, Indiana’s racing industry receives a $27-million subsidy from riverboat casino admission tax revenue. Despite the subsidy, horsemen and breeding operations are leaving the state for greener pastures.

“They go where the money is,” Republican Sen. Robert Jackman told the committee March 20. “If we’re going to allow the industry to grow and flourish, we have to get in the gate. I think every time another state approves alternative gaming it’s a slap to Indiana’s face.”

The legislation would provide substantial revenue for the state. If both tracks were to apply for slots licenses, $200 million would be allocated for property tax relief this year, while the remaining $600 million would be earmarked for an Indiana Life Sciences Fund to promote university research. Previous projections, based on 5,000 machines operating in the state, estimated as much as $185 million in annual tax revenue.

Previous to the 9-3 Senate committee vote, slots legislation had not advanced in the Senate. In 2004, a slots measure passed the House by a 53-39 margin, but subsequently died in a Senate committee after it failed to receive a hearing.