Indiana Slots Bill Clears Another House Committee

Legislation that would allow 5,000 slot machines at Indiana’s two pari-mutuel racetracks cleared a second hurdle Feb. 20 when it passed out of the House Ways and Means Committee by a 14-8 vote.

House Bill 1835, which could provide much-needed stability to the racing industry, will more than likely move to the full House for review.

The bill, authored by Rep. Trent Van Haaften, would allow Hoosier Park and Indiana Downs to each operate up to 2,500 slot machines. According to estimates provided by Will Cummings of Massachusetts-based Cummings Associates, 5,000 machines at Indiana tracks could generate up to $533 million in annual revenue, with 15% of the total--roughly $80 million--earmarked for purses.

The bill previously advanced out of the House Public Policy Committee by a 9-3 vote.

States with slots are prospering, Larry Smallwood, chairman of the Indiana Horse Racing and Breeding Coalition, recently said. “If something doesn’t happen along these lines, I think in a few years it will be irrelevant because the industry will be done,” he said. “It’s to that point.”

If approved, each track would pay a $75-million franchise fee to obtain a 10-year license. The franchise fees would be deposited into the state’s health insurance fund. Once operational, each track would pay a 32.5% wagering tax on the first $150 million in revenue generated by slots. After adjusted gross receipts exceed $150 million, the wagering tax would increase to 37.5%.

Hoosier Park and Indiana Downs are struggling to stay viable while annually posting operating losses. Hoosier Park has operated in the red since 2003, while Indiana Downs has failed to turn a profit since offering its first full season of racing that same year, according to reports. Each track receives a portion of the $27-million annual subsidy from riverboat admission tax revenue, but that has only helped to lessen the hemorrhaging.

In 2004, slots legislation was approved by the House in a 53-39 vote. It later died in the Senate after failing to receive a hearing. Since then, slot bills have struggled to progress through the Indiana General Assembly. Last year, similar legislation died in committee without a hearing.