By Robert Anglen
The Cincinnati Enquirer

Indiana gambling boats brought in $96 million less in taxes than state officials anticipated last year under new dockside gaming laws that allow customers to come and go from casinos as they please, instead of waiting for specific boarding times.

State budget analysts projected that Indiana would reap $641million in tax revenues as part of a new graduated tax structure based on casino earnings that accompanied dockside gambling approval.

GAMING DETAILS

An analysis of Indiana gaming numbers for 2002 shows: • State taxes were $96 million less than projected. • Revenues spiked, then fell after the state switched to dockside gaming, which allowed customers to come and go from boats at their leisure. • For the first time, all five Ohio River gambling boats posted revenues more than $100 million. • Combined casino revenues at the Ohio River boats were up by $114. 3 million over 2001. • The only Ohio River boat to pay less state taxes in 2002 than in 2001 was Grand Victoria in Rising Sun.

They are now blaming the shortfall on the 2002 recession.

"It is clear that allowing dockside did not produce the kinds of increases in the tax base that was expected," Bob Lain, the state's assistant director of taxes and revenue, said Tuesday. "We have brought our forecast down by $96 million."

The tax money is used to pay for significant improvements in counties where casinos are located. Those include roads, money for schools and other community enhancements.

Casinos still generated significant tax revenues for the state, with all 10 boats bringing in about $545 million in 2002 - and most posting record revenues

Mr. Lain said the state based its projections on Illinois, which has similar dockside laws and a sliding tax structure that gets gradually higher as casino revenues go up.

"Illinois allowed dockside gaming in much better economic times than we did," he said. "We were in a recession. We have never been in a recession with our riverboats."

The new tax structure, approved by legislators in July as a condition of dockside gaming, imposes a tax based on casino earnings rather than a flat percentage.

Gaming numbers released Tuesday by the Indiana Gaming Commission show that the bigger, more profitable boats have increased their payments to the state while some of the smaller boats are paying less.

The state's most profitable boat, The Argosy Casino in Lawrenceburg, paid $102.6 million to the state in 2002 compared to $91.6 million in 2001. That is a 12 percent increase in taxes.

Argosy Casino revenues, however, increased by about 8 percent.

Casino revenues spiked in August, the month after dockside gaming went into affect. But in September the numbers dropped dramatically and then bounced back to the same levels they were before the law changed.

One exception was the Grand Victoria Casino in Rising Sun, which saw revenues drop steadily from September through December.

"We were ecstatic to see a 5 percent increase over last year," Grand Victoria General Manager Larry Buck said. "We actually thought we might see a decrease in gross revenues."

When the state went to dockside gaming, Grand Victoria was the only casino opposed. But when the state's nine other casinos adopted the new rules, Mr. Buck said his casino had no choice but to follow.

"The customers demanded it. We had to do it," he said.

Grand Victoria was one of three casinos to generate less taxes in 2002 than it did in 2001, bringing in $33.1 million for the state last year compared to $34.2 million the year before. The other two gambling boats - The Majestic Star and Trump Casino - are both in Gary.

Mr. Buck said that before dockside gaming, the casino could count on spillover in customers from the Argosy.

He said that the Grand Victoria purposely scheduled "cruise times" 30 minutes after the Argosy to catch customers who missed the earlier boat.

Under the old laws, customers might have had to wait two hours for the casino's next cruise.

The Grand Victoria is about 25 minutes south of Lawrenceburg

"We believe that a lot of our customers drove past the Argosy," he said.

But not anymore, according to some Cincinnati gamblers.

"If I go to Indiana casinos, I go to Argosy," said Nick Sunyak of Anderson Township. "It's closer."

He said one casino is no different than another, but he does appreciate dockside gaming.

"I don't play slots, and one table game is as good as another table game," Mr. Sunyak said. "When I go to gamble, I go to gamble. I don't go to wait in line."

Debra Vitt of East Price Hill also approves of dockside gaming.

"My life is too hectic and I don't like to wait in line for anything," she said. "I go to the Argosy because it is just closer and easier."

For the first time, all five Ohio River gambling boats won more than $100 million, posting combined revenues of $996 million.

The casinos' win is the amount customers lost and accounts for gross gaming revenue - the money a casino takes in before it pays salaries, taxes and other expenses.

One of the biggest increases in win from 2001 to 2002 was at the Belterra Casino, which is halfway between Cincinnati and Louisville.

A prostitution scandal that caused state regulators to shut down the casino for two days and impose a $2 million fine, but the casino saw its win increase by 21.3 percent over 2001.

"We changed a lot of our programs," Belterra General Manager Alain Uboldi said. In the last two months of 2002, Belterra for the first time posted higher revenues than Grand Victoria.

Mr. Uboldi said the casino went after a "completely different market" with highly focused ad campaigns to lure weekend gamblers.

The biggest increase in revenue of the five boats was at Caesars Indiana, across the river from Louisville, which was up by 22.9 percent.

E-mail ranglen@enquirer.com