Sunday, January 11, 2004

States face big decisions on gaming's big money

By Patrick Crowley
The Cincinnati Enquirer

When Pete Rose wanted to lay down a legal bet in Greater Cincinnati 15 years ago, he could only play the horses, buy a lottery ticket or visit a church festival or bingo.

What a difference 15 years can make.

Ohio: Fueled by horse racing interests, lawmakers will once again be asked to approve race-track "racinos" later this year. But the bill has died in past sessions and passage is uncertain.

Kentucky: Lawmakers will decide by late March on legislation that would let voters decide the issue of legalized casino gambling. But conflicts between supporters of racinos and land-based casinos and opposition from key leaders could bury the bill for the third straight year.

Indiana: In the spring, state gaming officials will choose the operator of what will be the state's 11th casino in French Lick. Racinos are also being pondered in the state legislature.

Options for legalized gambling have exploded in the region and around the country - from the Internet and multistate lottery games to riverboats and casinos at tracks dubbed "racinos."

One has to travel just 20 minutes from downtown Cincinnati to see the unprecedented growth in gambling. In just 71/2 years, Southeastern Indiana and its three riverboat casinos have become the nation's ninth-largest gambling market, industry experts say.

Even more changes could be coming to the gambling scenes in Ohio, Kentucky and Indiana.

Lawmakers in the three states are debating proposals and legislation that would either introduce or expand casino gambling operations.

It won't be easy, especially in Ohio and Kentucky where resistance among lawmakers is stiff. But it is not inconceivable that casinos, "racinos" at horse tracks or a combination could open next year on both sides of the Ohio River.

"There's no question we have to take a look at the tax dollars gambling could generate," said Kentucky House Majority Caucus Chairman Jim Callahan, D-Wilder.

There's one simple reason why that examination is happening: money. Legislators are trying to balance budgets - in Kentucky's case, they're staring at a $700 million deficit - and avoid tax increases and service cuts.

Officials in Ohio and Kentucky also are frustrated with estimates that billions of dollars from their states are being pumped into casinos and racinos in Indiana, West Virginia, Michigan and Illinois.

More Ohio gambling?

"I've seen estimates where we have lost $30 billion in spending to surrounding states that have gambling," said Ohio Rep. Tyrone Yates, D-Cincinnati.

Yates said he would favor putting a constitutional amendment on the state ballot that could bring racinos to Ohio's seven horse tracks and casinos on the Cincinnati riverfront and the Lake Erie shoreline in Cleveland.

"As long as it's highly regulated, controlled and limited, we should be able to capture some of that income from people who want to have fun gambling," Yates said.

But Sen. Mark Mallory, D-Cincinnati, does not see support for gambling - even though many Democrats favor it as a way to raise money for schools.

"It will probably come up again, as it has over the past few years," Mallory said. "But I'm not sure it will ever happen because it is very complicated, very controversial and very political."

Kentucky casinos?

The same is true in Kentucky. For the past few years, the state's thoroughbred horse industry has pushed for racinos.

But developers, including Kentucky Speedway's Jerry Carroll and Bill Yung of Northern Kentucky, have said the state needs land-based casinos if it is going to permit any form of gambling.

Various legislative proposals are being floated. All would require a vote of the people, but then the effort is splintered between advocates for racinos and those wanting casinos.

House Speaker Pro Tem Larry Clark, D-Louisville, is trying to craft a compromise. But without agreement between the horse industry and casino backers, "it won't happen," he said last week.

Gov. Ernie Fletcher has said he would not stand in the way of any bills, but he will not support them, either.

Indiana: Another boat planned

Gambling has generated billions of dollars at Indiana's 10 riverboat casinos - and state officials hope another boat to open in 2005will yield even more.

The Indiana market is split between north and south. There are five casinos along the Ohio River in southern Indiana, including three within 40 minutes of Cincinnati: Argosy in Lawrenceburg, Grand Victoria in Rising Sun and Belterra Casino and Resort in Switzerland County.

The other five are on Lake Michigan outside of Chicago.

In 2002, Indiana's casino industry generated $2.1 billion in revenue, employed 16,555 and paid $544.7 million in taxes.

With those tax dollars, Kentucky could practically wipe out its $700 million budget deficit.

Southeast Indiana alone has grown into the nation's ninth-largest of the 49 gambling markets identified by the American Gaming Association. The local boats posted $841.7 million in revenue in 2002:

Through November, revenue at the southeast Indiana casinos was running ahead of 2002, according to figures filed with the Indiana Gaming Commission.

Though hardly content with the money it is bringing in - and perhaps concerned about competition in Ohio and Kentucky - Indiana continues to grow its market.

Last year, local voters approved the state's first inland casino in French Lick about three hours from Cincinnati.

State regulators will decide on an operator in the spring and construction will begin later this year. The casino is to open in 2005.

But as in Ohio and Kentucky, Indiana's horse racing industry is hungry for a piece of the action. Legislation is expected this year for racinos at the state's two tracks, Hoosier Park in Anderson and Indiana Downs in Shelby County.


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