Indy Parlor Denied, But Rule Change a Possibility

by James Platz

The Indiana Horse Racing Commission denied Indiana Downs' petition for a Marion County off-track betting facility Aug. 20, but it left racetrack officials optimistic another rule change could be negated in the coming months.

Commissioners voted 3-2 to deny the Shelby County track's request to amend a condition to its permit which states construction of an Indianapolis OTB parlor would be granted only when the General Assembly passes alternative gaming. Indiana Downs officials were hoping to gain access to the state's largest market to aid them in competing against Hoosier Park for riverboat casino admission tax revenue.

Indiana Downs representatives originally filed the petition as a result of changes in the distribution of riverboat tax revenue. Attorney Tom McCauley said when the track was first built, the allocation was set for distribution on a 50/50 basis. When the rule was changed to an allocation based on business generated by each permit-holder, officials believed they could not compete with Hoosier Park unless they secured an off-track wagering location in Indianapolis. Several commissioners sided with Indiana Downs.

"This is the most difficult decision I've had to make since I've been on the commission," Clay Smith said. "We should adhere to (the order), but I think we should revisit the riverboat subsidy."

Joe Gorajec, executive director of the racing commission, issued a staff report in June that stated a second Marion County OTB facility would do little to increase total wagering. Combined with testimony heard earlier this summer, commission chairman Richard Darko said there was no implication of an unserved market in central Indiana.

"We have an obligation to the industry as a whole, as well as the associations," Darko said. "There is not enough change in the market to demand a change in the condition. However, we do, at some point, have to revisit the (allocation) issue."

McCauley said current allocation rules promote anti-competitive behavior between both tracks. The rules state half of the riverboat casino admission tax revenue will be divided equally, while the other half will be distributed based on a purses-generated model. With only one OTB parlor in place and no presence in Indianapolis, Indiana Downs officials said they can't compete with Hoosier Park in a purses-generated scenario.

The racing commission could meet as early as September to review the current allocation rules.