INDIANA GAMING

A Short History Pre-1989 Constitutional Prohibition

Indiana Constitution, Article 15, Section 8

Section 8. No lottery shall be authorized; nor shall the sale of lottery tickets be allowed.

2 Pre-1989 Prohibition--Indiana Criminal Code

• Gambling was a crime • Unlawful gambling (IC 35-45-5-2) • Professional gambling (IC 35-45-5-3) • Promoting professional gambling (IC 35-45-5-4)

3 Prohibition Mindset

• TITLE 35. CRIMINAL LAW AND PROCEDURE • ARTICLE 45. OFFENSES AGAINST PUBLIC HEALTH, ORDER, & DECENCY • Chapter 1. Offenses Against Public Order • Chapter 2. Intimidation and other Offenses Relating to Communications • Chapter 3. Littering and Pollution • Chapter 4. Indecent Acts and Prostitution • Chapter 5. Gambling • Chapter 6. Racketeer Influenced and Corrupt Organizations • Chapter 7. Loansharking

4 1988 Constitutional Amendment

• SJR 1 (P.L. 377-1987) approved April 2, 1987 • Proposed amendment to strike Article 15, Section 8 approved by the voters November 8, 1988

5 Legal

• • Pari-mutuel Horse Racing • Charity Gaming • Riverboat Gaming • Slot Machines at Horse Racing Tracks • Pull Tabs, Tipboards, and Punchboards in Taverns

6 1989 Hoosier Lottery

• State Lottery Commission (IC 4-30 ) • “Body politic and corporate separate from the state” • “should function as much as possible as an entrepreneurial business enterprise.” (IC 4-30-1-2) • Tickets primarily sold by private retailers on behalf of the Commission • Now managed by a private contractor

7 1989 Pari-mutuel Horse Racing

• Indiana Horse Racing Commission (IC 4-31 ) 1994 Hoosier Park opens in Anderson 2002 Indiana Downs opens in Shelbyville Pari-mutual Wagering Tax (2% on live racing and simulcasts at the racetrack) Satellite facility tax (2.5% on wagering on simulcasts at satellite facilities) Admissions tax ($0.20 per paid admissions)

8 1990 Charity Gaming

• 1990 IC 4-32 enacted placing Secretary of State in charge of administering bingo and other charity gaming events • 1992 IC 4-32 amended to transfer the administration of charity gaming to the Department of State Revenue • 2006 IC 4-32.2 enacted to transfer the administration of charity gaming to the Indiana Gaming Commission • Volunteer operated, “grass roots” gaming • License fees & a 10% excise tax on pull tabs, punchboards, and tipboards collected by manufacturers and distributors

9 1993 Riverboat Gaming

IC 4-33 authorized the Indiana Gaming Commission to issue 11 riverboat licenses for riverboats operating on , the , and Patoka Lake Cruising requirement eliminated in 2002 with legislative approval of “dockside” gaming (IC 4-33-6-21) French Lick casino authorized 2003 by legislation to locate the casino with the historic hotels in French Lick and West Baden instead of on Patoka Lake French Lick Resort is managed under an operating agent contract rather than an owner’s license (10 remaining owner’s license locked into present locations per IC 4- 33-6-1)

10 Indiana Riverboats Open

Tropicana Evansville 12/18/1995 Majestic Star Gary 06/11/1996 Majestic Star II Gary 06/11/1996 06/29/1996 Rising Star Rising Sun 10/04/1996 Hollywood Lawrenceburg 12/31/1996 Ameristar East Chicago 04/18/1997 Blue Chip Michigan City 08/19/1997 Horseshoe Harrison County 11/20/1998 Belterra Switzerland County 10/27/2000 French Lick Resort French Lick 11/01/2006

11 2007 Gambling Games at Racetracks

• IC 4-35 authorizes slot machine gaming at the Anderson (May 29, 2008) and Shelbyville (June 6, 2008) horse racing tracks • Administered by the Indiana Gaming Commission • $250,000,000 license fees • $100,000,000 minimum investment • Part of the casinos’ adjusted gross receipts must be used to support horse racing • A variety of fees and taxes are imposed (IC 4-35-8, IC 4-35-8.5, IC 4-35-8.7, and IC 4-35-8.8)

12 2008 Pull Tabs in Taverns

• IC 4-36 authorized taverns to sell pull tabs, punchboards, tip boards, and raffle tickets, which are collectively known as Type II gaming in the Indiana Code • Administered by the Alcohol and Tobacco Commission • Taverns must be licensed to participate • Prize amounts are limited to $5,000 per game and $599 per ticket • Tickets may not cost more than $1

13 National Trends

28 states have Indian gaming 17 states have commercial casinos 14 states have commercial racinos Massachusetts is in the process of licensing its first commercial casino Indian casinos compete with commercial casinos or racinos in • Nevada, South Dakota, Iowa, Michigan, New York, Florida, Louisiana, Mississippi, Oklahoma, Colorado, Kansas and New Mexico

14 Commercial Casinos & Racinos Nationally Pre-2001

• Before 1988 Nevada & New Jersey • 1989 Iowa, South Dakota • 1990 Colorado, Illinois, Mississippi • 1991 Louisiana • 1992 Rhode Island • 1993 Indiana, Missouri • 1994 Delaware, West Virginia • 1996 Michigan • 1997 New Mexico

15 Commercial Casinos & Racinos 2001-present

• 2001 New York • 2004 Maine, Oklahoma, Pennsylvania • 2006 Florida • 2007 Kansas • 2008 Maryland • 2009 Ohio • 2011 Massachusetts

16 Electronic Gaming Device Facilities

7 States have authorized neighborhood electronic gaming device facilities Illinois, Louisiana, Montana, Nevada, Oregon, South Dakota, West Virginia

17 States with no Casino Gaming

10 States have no legalized form of casino gaming Hawaii, Utah, Arkansas, Georgia, South Carolina, Tennessee, Kentucky, Virginia, Vermont, New Hampshire

18 Regional Comparisons

• Casinos in Indiana, Illinois, Michigan, and Ohio • Racinos in Indiana and Ohio

19 Casino Gambling Revenue Streams

Indiana Illinois • Admission Tax $3 • Admission Tax $3 • Wagering Tax 15% - 40% • Wagering Tax 15% - 50% • Local Development Agreements

20 Casino Gaming Revenue Streams

Michigan Ohio • State Wagering Tax 8.1% • Gross Casino Tax 33% • Detroit Wagering Tax 10.9% • State Services Fee $10M+ • Municipal Services Fee $4M

21 Racino Revenue Streams

Indiana Ohio • Wagering Tax 25% - 35% • Wagering Tax 33.5% • Gaming Integrity fee $250,000 • Problem Gambling fee $500,000 • County Wagering Fee 3% • Capped at $8M

22 Summary

• Gambling was totally illegal in Indiana before 1989 • In 1993, Indiana was 7th or 8th state since 1989 to join Nevada & New Jersey as casino gaming states– 13 additional states have entered the market since 1993 • Legal gaming is regulated by the Indiana Gaming Commission, Indiana Horse Racing Commission, Alcohol and Tobacco Commission, and the State Lottery Commission • Gambling outside of the 6 regulated forms of gaming remains illegal • Nine separate taxes are imposed through legalized gaming

23 Resources

• Indiana Handbook of Taxes, Revenues, and Appropriations Fiscal Year 2013, Indiana Legislative Services Agency • 2013 State of the States: The AGA Survey of Casino Entertainment, American Gaming Association • FY 2014 Annual Report, Indiana Gaming Commission • Indiana Horse Racing Commission, Annual Reports http://in.gov/hrc/2335.htm

24 Resources

• Illinois Gaming Board • http://www.igb.illinois.gov/RiverboatFAQ.aspx • Illinois Compiled Statutes • Michigan Gaming Control Board • State Notes, July/August 2004, Michigan Senate Fiscal Agency • http://www.michigan.gov/mgcb • Ohio Casino Control Commission • http://casinocontrol.ohio.gov/ • http://www.legislature.state.oh.us/constitution.cfm?Part=15&Section=06

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