Indiana racinos raise concerns with lawmakers

Officials with casinos at Indiana’s two pari-mutuel horse racing tracks told lawmakers today that taxes imposed on them
are too high and are threatening their viability.

Officilals with Indiana Live Casino near Shelbyville and Hoosier
Park Casino in Anderson told a legislative committee on gambling issues that their initial licensing fee of $250 million each
was excessive. They argued the tax structure puts them at a disadvantage with the state’s riverboat casinos.

"It’s
becoming clear that the model does not work," said Jim Brown, general manager of gaming for Hoosier Park. "We’d
like to see that opportunity to survive. Right now we see a dead-end road with the first payment and ongoing payments."

The testimony came during the first meeting of the committee, which is studying legalized gambling in Indiana and
recommendations on ways to keep the industry competitive. Lawmakers say it’s especially timely because of new or possible
expansions of gambling in neighboring states.

Illinois, for example, has made it legal to bet on video-poker machines
found in many bars, restaurants and truck stops. Ohio is moving to put slot machines at seven of its pari-mutuel tracks.

Democratic Rep. William Crawford of Indianapolis, co-chairman of the Gaming Study Committee, said casinos have been
a boon for economic development in Indiana. Casinos and the lottery bring in about $1 billion a year in state and local tax
revenue.

"I think it’s important to sustain that economic engine," Crawford said.

The General
Assembly passed legislation in 2007 allowing Hoosier Park and Indiana Live 2,000 slot machines each at their pari-mutuel venues.

Track officials said revenue from the slots was needed to keep their tracks and horse racing viable in Indiana. They
agreed to pay $250 million each over two years to get the slots, and spend at least $100 million each to build the new casinos.

The state imposed a graduated tax on revenue from slots at the so-called "racinos," which opened in the
summer of 2008.

Besides the graduated income tax on revenue, the casinos must pay 15 percent of their adjusted
gross revenue — the amount they get after paying out winnings — mainly to prop up horse racing purses. They have
another 3-percent local tax and 1-percent tax to help subsidize a casino in southern Indiana’s French Lick.

The
racinos said they should not have to pay taxes on money they are not allowed to keep — including that for purses —
saying it amounts to double taxation not imposed on riverboat casinos. Revenues from the slots are coming in below original
expectations as well, and both racinos were saddled with paying the licensing fees.

Both operations said they were
losing money as a result. Indiana Live said it has lost $50 million since its racino opened. Hoosier Park officials did not
provide a figure, but said they were losing significant money.

Ross Mangano, chairman of the board of Indiana Live,
said lawmakers should not only lower taxes, but allow table games at the racino just like other casinos.

Sen. Luke
Kenley (R-Noblesville) and the other co-chairman of the interim committee, said lawmakers do not want the racinos to fail.

But, he said, "We need to remember that they voluntarily entered into this agreement and all of the terms and
conditions were known at the time they did that."