Prepared for the Interim Study Committee on Public Policy Office of Fiscal and Management Analysis, Legislative Services Agency September 25, 2014 1988 2012 • Repeal of Constitutional •Evansville OTB closes. Prohibition
1989 2008 1997 • Lottery legalized 1998 • Racinos open: Anderson, • Pari-mutuel Wagering legalized • Casinos open: E. Chicago, Michigan City • Casino opens: Harrison County Shelbyville • Hoosier Lottery begins • Pull tabs at taverns legalized
1990 1996 2000 2007 • Casinos open: Gary, Hammond, • Casino opens: Switzerland • Charity Gaming legalized Rising Sun, Lawrenceburg County •Racinos legalized
1992 1995 2002 • Casino opens: Evansville 2006 • Pari-mutuel Wagering at OTBs • Dockside Gaming • OTBs open: Merrillville, Ft. • Casino opens: French Lick legalized Wayne, Indianapolis • Racetrack opens: Shelbyville
2003 1993 1994 2004 • French Lick Casino legalized • Riverboat casinos legalized •Racetrack opens: Anderson •OTB opens: Clarksville • OTB opens: Evansville
Hoosier Pari-mutuel Charity Riverboat Racino Gaming in Lottery Wagering Tax Gaming Gaming Gaming Bars and Taverns
State - 25% - 35% Admissions - of 91.5% of racino 10% Excise Tax on 10% Excise Tax on $3.00 per GGR price of gaming price of gaming admission to cards cards casino Counties - 3% of $0.24 per $1.00 of 2.0% - 2.5% of racino GGR up to $8 million annually ticket sales to wagers on live or state funds simulcast races
Wagering – Supplemental - 1% 15% - 40% of of racino GGR until casino GGR License fee on July 1, 2012 License fee on (A lower tax organizations and taverns and game bracket of 5% game suppliers suppliers instead of 15% based on revenue Additional 15% of threshold) GGR to Horse Racing Industry (presently 10% to 12% of GGR) Type of Gaming FY 2014 Since Inception Hoosier Lottery $226.3 $4,562.0 Horse Racing 2.1 79.8 Charity Gaming 5.4 113.3 Riverboats and Racinos 694.8 12,181.2 Type II Gaming 0.4 2.3 Total $929.0 $16,938.6
Note: The table above does not include: (1) The license fees paid by the suppliers, operators, or owners of riverboats and racinos (e.g., $500 million paid by the racinos). (2) The share of racino GGR (15%) distributed towards purses and racetracks. The shares distributed to state funds are included above. (3) Revenues received under the Local Development Agreement by the local units. Revenue Source State Share Local Share
Hoosier Lottery $226.3 $0.0 Horse Racing 2.1 0.0 Charity Gaming 5.4 0.0 Riverboat and Racino 478.5 216.2 Type II Gaming 0.4 0.0 Total $712.8 $216.2 Revenue Source State Share Local Share
Hoosier Lottery $4,562.0 $0.0 Horse Racing 79.7 0.2 Charity Gaming 113.3 0.0 Riverboat and Racino 8,665.0 3,516.2 Type II Gaming 2.3 0.0 Total $13,422.2 $3,516.4 Fund or Unit FY 2014 Since Inception
State General Fund $346.5 $5,362.2 Build Indiana Fund 81.3 2,497.0 Other State Funds 25.9 567.7 State Breed Funds 23.0 143.4
Property Tax Reduction Fund 0.0 49.3
Indiana Gaming Commission 1.9 45.4
Local Units with Casino or Racino 183.2 3,135.5
Revenue Sharing-Nonriverboat counties 33.0 380.7 Total Distribution $694.8 $12,181.2 $1,000
900
800
700
600
500
400
300
200
100
0 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Riverboat Wagering Tax Riverboat Admissions Tax Racino Wagering Tax
Number of Number Total Admission of Gaming Gaming in FY 2014 Hotel Casino Owner Location County Opening Sq Ft Positions (in M) Room Tropicana Tropicana Entertainment Inc. Evansville Vanderburgh 12/18/1995 38,360 1,191 1.1 339
Majestic Star I Majestic Star Casino LLC. Gary Lake 6/11/1996 40,720 1,242 1.1 0
Majestic Star II Majestic Star Casino LLC. Gary Lake 6/11/1996 37,300 1,058 1.1 300
Horseshoe Caesar’s Entertainment Corporation Hammond Lake 6/29/1996 108,000 4,067 4.3 0
Rising Star Gaming Entertainment LLC. Rising Sun Ohio 10/4/1996 40,000 1,398 0.8 294
Hollywood Penn National Gaming Inc. Lawrenceburg Dearborn 12/31/1996 142,000 2,972 1.9 295
Ameristar Ameristar Casino LLC East Chicago Lake 4/18/1997 54,000 2,165 2.4 290
Blue Chip Boyd Gaming Corporation Michigan City LaPorte 8/19/1997 65,000 2,296 2.3 486
Horseshoe S. IN Caesar’s Entertainment Corporation Harrison Co. Harrison 11/20/1998 86,600 2,404 2.1 503
Belterra Belterra Resorts Indiana LLC. Switzerland Co. Switzerland 10/27/2000 48,000 1,543 1.2 608
French Lick CFC INC. and Other Owners French Lick Orange 11/1/2006 49,719 1,276 0.8 686
Hoosier Park Centaur Holdings LLC. Anderson Madison 5/29/2008 54,000 1,925 N/A 0
Indiana Downs Centaur Holdings LLC. Shelbyville Shelby 6/6/2008 83,800 2,005 N/A 0 Total 847,499 25,542 19 3,801 8,000,000 1
0.9
0.8 6,000,000 0.7
0.6
4,000,000 0.5
0.4
0.3 2,000,000 0.2
0.1
2001 Recession FrenchBegins Lick Great Recession Begin Racinos Operation 0 0 96-3 97-3 98-3 99-3 00-3 01-3 02-3 03-3 04-3 05-3 06-3 07-3 08-3 09-3 10-3 11-3 12-3 13-3 Events Statewide Casino Admissions
The data shown is 4-Quarter Moving Average. Racino’s admissions are not reported and they have been estimated. $ 800
700
600
500
400
300
200
100
0 97-1 97-4 98-3 99-2 00-1 00-4 01-3 02-2 03-1 03-4 04-3 05-2 06-1 06-4 07-3 08-2 09-1 09-4 10-3 11-2 12-1 12-4 13-3 14-2
Southern Indiana 6 Casinos Lake Michigan 5 Casinos 2 Racinos 800 1
700
600 Begins
500 Begins
400 Expansion 0.5
Operations Operations Recession
300 Racino
in in
Racinos Opening Racinos VGT VGT
200
The The Great French LickCasino Opening Four Winds Casino Opening Indiana Cline Avenue Closure DesRivers Plaines, Il, Opening Casino Casino/ Ohio Illinois 100
0 0
06-1 07-1 08-1 09-1 10-1 11-1 12-1 13-1 14-1
Southern Indiana 6 Casinos Lake Michigan 5 Casinos 2 Racinos Video Gaming Commercial Commercial Tribal Terminal Charity Horse Casino Racino Casino Locations Lottery Gaming Racing
Indiana 11 2 NO NO YES YES YES
Illinois 10 NO NO 4,464 YES YES YES
Michigan 3 NO 23 NO YES YES YES
Ohio 4 7 NO NO YES YES YES
Kentucky NO NO NO NO YES YES YES •60 Casinos and Racinos •4,464 Video Gaming Terminal Locations in Illinois Statewide Number of Statewide Statewide Gross Gaming Statewide Effective Casinos and Gaming Floor Number of Revenue Gaming Gaming Tax Racinos Space (Sq Ft) Slot Machines (in $ M) Employment Rate
Indiana 13 847,499 20,464 2,459 12,543 29.7%
Illinois 10 366,250 29,275 * 1,810 * 7,687 35.0%
Michigan 26 1,457,000 33,050 2,804 20,515 13.7%
Ohio 11 937,000 11,275 1,264 10,000 28.8%
Kentucky N/A N/A N/A N/A N/A N/A
Note: The count of slot machines and gaming revenues for Illinois includes the impact from Video Gaming Terminals. The information reported is for latest available year. Tribal casino figures are estimated when not available. • Gaming Floor (in square feet): Region - 3.6 million Indiana - 847,499 • Electronic Gaming Devices: Region - 94,000 Indiana - 20,464 Population 21 and above 14.2%
Personal Income 13.6%
Gaming Floor Square Footage 23.5%
Number of Slot Machines 21.8%
Gross Gaming Revenue 29.5% $ 9,000 35%
8,000 30%
7,000 25%
6,000 20%
5,000 15% 4,000
10% 3,000
5% 2,000
1,000 0%
0 -5% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Illinois GGR Michigan GGR Indiana GGR Ohio GGR Annual Growth 30.0%
25.0%
20.0%
15.0%
10.0% Regional Growth Rate 5.0% ANNUAL GROWTH RATES GROWTHANNUAL National Growth Rate
0.0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
-5.0%
-10.0% Indiana Growth Rate
-15.0% Rivers, Dockside Dockside Smoking Tax Rate Tax Rate Des VGT Gaming Impact Ban Increase Decrease Plaines, Begins Illinois Begins Continued Imposed Begins Detroit Detroit Casino Casino Tribal Tribal Tribal Addition, Addition, Casino Casino Casino Tribal Tribal Michigan Addition Addition Addition Casino Casino Addition addition Dockside French Racino Begins; Lick Gaming Tax Rate Casino Indiana Begins Increase Begins Casino / Casino / Racino Racino Ohio Addition Addition 1995
2014 RECENT MARKET COMPETITION The Impact of Four Winds Casinos in Southwest Michigan
Four Blue Chip, Winds, Four Michigan New Four Winds, Winds, City Buffalo Hartford Dowagiac Year Opened 1997 2007 2011 2013 Distance from Blue Chip - 12 Miles 52 Miles 48 Miles Gaming Square Foot 65,000 135,000 52,000 27,000 Number of Slots 1,890 3,000 560 300 Number of Hotel Room 486 415 0 0 2013 GGR $ 159.7 M $ 365.6 M The GGR Impact of Four Winds Casinos Growth Over Prior Year
15.0% 1
10.0% 0.9
0.8 5.0%
0.7 0.0% FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 0.6 -5.0% 0.5 -10.0% 0.4
-15.0% 0.3
-20.0% 0.2
-25.0% 0.1
Blue Chip and HorseshoeandChip Blue Investments
Blue Chip Investment Chip Blue Four Winds Opening Winds Four -30.0% Opening CasinoRivers 0 Investment Competition Lake County Casinos Blue Chip Casino Four Winds Opening GGR Loss to Indiana Riverboats
$1,800
1,600
1,400
1,200
1,000
800 HOTEL, HOTEL,
600 NEW FACILITY NEW
400 FLOOR INVESTMENT
RIVERS CASINO, CASINO, RIVERS DES
PLAINES ILOPENING PLAINES
FOUR WINDS, FOUR NEW
BUFFALO BUFFALO OPENING BLUE CHIP CHIP OPENED NEW BLUE
200 CHIP MAKES BLUEGAMING HORSESHOE HORSESHOE HAMMOND OPENS 0 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
LAKE COUNTY CASINOS BLUE CHIP CASINO FOUR WINDS CASINOS
Based on observed data, Four Winds casinos resulted in a loss of $60 M to $80 M in GGR annually to the Blue Chip casino. This is 25% to 30% of Blue Chip casinos’ then GGR and 15% to 20% of Four Winds Casino’s GGR. Blue Chip was also impacted by the opening of Fire Keepers in 2009. In FY 2014 Blue Chip casino is down 46% from FY 2007. It should be noted that other Indiana casinos in the region were also impacted by the opening of Four Winds Casino and Fire Keepers Casino. The Impact of RIVERS CASINO, Des Plaines, IL
RIVERS HORSESHOE, MAJESTIC STAR AMERISTAR, CASINO, DES HAMMOND I & II, GARY EAST CHICAGO PLAINES, IL Opened 2011 1996 1996 1997
Distance from Zip Code 33 Miles 14 Miles 22 Miles 20 Miles 60629 (South of Downtown) Distance from Zip Code 10 Miles 22 Miles 30 Miles 30 Miles 60618 (North of Downtown)
Gaming Sq. ft. 43,687 108,000 78,020 54,000 Number of 1,890 2,928 1,704 1,819 Slots Number of 486 0 300 290 Hotel Rooms
FY 2014 GGR $418.7 M $461.2 M $171.1 M $213.6 M FY 2014 3.6 M 4.3 M 2.3 M 2.4 M Admissions GGR per $116.3 $107.3 $74.4 $89.0 Admission Rivers Casino Opening Monthly GGR (in millions, 6-month average)
$120 22.0% Horseshoe Growth Rate
17.0% 100 Rivers Casino 12.0% 80
Majestic Star 7.0% 60
Horseshoe Hammond 2.0%
40 All Lake County Growth Rate -3.0%
20 -8.0% Ameristar 0 -13.0% Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
Notes: Based on observed data, Rivers Casino resulted in a loss of $60 M to $90 M in GGR annually to the Lake County casinos. This is 6% to 9% of Lake County casinos’ GGR and 15% to 20% of Rivers Casino’s GGR. Lake County Casino Growth Rates in GGR
Horseshoe Majestic Star and Rivers Casino, Investment Horseshoe Des Plaines Upgrades Opens 55%
45%
35%
25%
15%
5%
-5%
-15%
-25% Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Events Ameristar Growth Horseshoe Growth Majestic Growth Ohio Casino Expansion Starting in 2012 Q 2
Gaming Floor June 2014 Year Space Gross Casino Location Opened (Sq Ft) Revenue
Hollywood Lawrenceburg,, IN 1996 142,000 $15.5 M
Rising Star Rising Sun, IN 1996 40,000 4.2 M
Belterra Dearborn County, IN 2000 48,000 8.9 M
Scioto Downs Columbus, OH 2012 120,000 14.8 M
Hollywood Columbus, OH 2012 120,000 18.5 M
Horseshoe Cincinnati, OH 2013 100,000 17.3 M
Miami Valley Lebanon, OH 2013 68,000 12.4 M
Belterra Park Cincinnati, OH 2014 48,000 4.2 M Estimated Baseline Monthly Share of 45% to 55% of GGR of Ohio casinos in Cincinnati Market Facilities Cincinnati market have been 80 cannibalized from Indiana casinos (in millions)20% to 25% of GGR of Ohio casinos in Columbus market have been $70 cannibalized from Indiana casinos
60 Rising Sun Facility Cincinnati 50 Columbus Facility Facility
40 Lawrenceburg Facility 30
20
10 Dearborn County Facility
0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14
NOTES: 45% of Southeast Indiana GGR were lost to Ohio gaming facilities. This amounts to $275 M in GGR and $90 to $100 M in state and local taxes. In the long term the impact is estimated to be higher in volume and market share. VIDEO GAMING TERMINALS IN ILLINOIS BEGINS 2012 Q3 STATEWIDE DATA In July 2009, Illinois passed ‘The Video Gaming Act’ that legalized the use of video gaming terminals in licensed retail establishments, licensed truck stop establishments, licensed fraternal establishments, and licensed veterans establishments. The law allows a maximum of 5 machines for any single location. The VGTs are all connected to and monitored by a Central Communications System. The VGT operations began in September 2012. The data from the month of August 2014 is provided below.
NUMBER OF VGT NUMBER AVERAGE VGT TOTAL MONTHLY TOTAL MONTHLY LOCATIONS OF VGT PER LOCATION INCOME TAX @ 30% AUGUST 2014 4,464 18,118 4 $59,075,332 $17,722,766 Video Gaming Terminal – Illinois Experience (in millions)
$ 160
140 Riverboat GGR 120
100
80 VGT Net 60 Terminal Income 40
20
0 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 RECENT GAMING LEGISLATIONS AND PROPOSALS FREE PLAY DEDUCTION, SEA 528-2013
Adjusted gross receipts (AGR) attributable to free play wagering deductible at any time during the year.
Total amount deductible by a licensee for free play may not exceed $2.5 million in FY 2013 and $5 million annually in FY 2014 through FY 2016.
STATEWIDE FREEPLAY % OF DIRECT REDUCTION IN DEDUCTION CLAIMED STATEWIDE GGR STATE & LOCAL TAXES
FY 2013 ALL CASINOS $32,500,000 1.3% ($10,775,000) FY 2014 ALL CASINOS $64,284,325 2.8% ($20,452,409) FREE PLAY DEDUCTION – FY 2014 BY FACILITY
FREE PLAY DEDUCTION DIRECT REDUCTION IN CASINOS % of CASINO GGR CLAIMED BY CASINO STATE & LOCAL TAXES Rising Star $4,284,325 7.3% ($1,071,081) Majestic Star II 5,000,000 6.9% ($1,250,000) French Lick 5,000,000 6.8% ($1,250,000) Majestic Star I 5,000,000 5.1% ($1,500,000) Tropicana 5,000,000 4.3% ($1,500,000) Belterra 5,000,000 4.2% ($1,500,000) Blue Chip 5,000,000 3.2% ($1,733,728) Ameristar 5,000,000 2.3% ($1,750,000) Hollywood 5,000,000 2.3% ($1,750,000) Hoosier Park 5,000,000 2.3% ($1,747,600) Indiana Grand 5,000,000 1.9% ($1,900,000) Horseshoe Southern 5,000,000 1.9% ($1,750,000) Horseshoe Hammond 5,000,000 1.1% ($1,750,000) TOTAL $64,284,325 2.8% ($20,452,409) FULL FREE PLAY DEDUCTION – OTHER STATES REPORTING
FY 2014 OHIO FREE PLAY AS A SHARE OF GGR PENNSYLVANIA'S ANNUAL STATEWIDE HORSESHOE CLEVELAND 15.2% PROMOTIONAL DEDUCTION AS A SHARE OF GGR FY 2007 2.5% HOLLYWOOD TOLEDO 5.4% FY 2008 6.6% HOLLYWOOD COLUMBUS 12.3% FY 2009 12.9% HORSESHOE CINCINNATI 17.3% SCIOTO DOWNS, COLUMBUS 24.3% FY 2010 17.9% THISTLE DOWNS, (near) CLEVELAND 19.1% FY 2011 19.7% HARDROCK, (near) CLEVELAND 11.8% FY 2012 20.8% MIAMI VALLEY, (near) CINCINNATI 18.0% FY 2013 22.4% BELTERRA PARK, CINCINNATI 10.6% FY 2014 22.5% SEA 528-2013 and SEA-609 – OTHER PROVISIONS
SMALLER RIVERBOATS: Lower rate of 5% instead of 15% for riverboats that have less than $75 M in GGR during the preceding year. In FY 2014, 3 riverboats were below the $75 M threshold. As a result, in FY 2015, these riverboats will pay $2.5 M lesser in wagering tax, than they would have paid in absence of SEA 528-2013.
IN FY 2015, THE STATE WILL RECEIVE $7.5 M LOWER IN RIVERBOAT WAGERING TAX. THIS IS ESTIMATED TO CONTINUE IN FY 2016 AND THEREAFTER. SEA 528-2013 and SEA-609 – 2013 OTHER PROVISIONS
RACINO TAXATION: As allowed by SEA 609-2013, the portion of racino GGR set aside for the horse racing industry and state funds has been reduced from 15% to 12% (negotiable between 10% and 12%). The statute also provides that starting FY 2014, the racino slot machine wagering tax is imposed on 91.5% of the GGR.
TABLE GAMES AT RACINO- LEGISLATIVE PROPOSALS: Several legislative proposals (e.g. HB 1271 – 2004) have been filed to allow table games at the two Indiana racinos. TABLE GAMES SHARE AT RIVERBOATS -STATEWIDE
RIVERBOAT RIVERBOAT RIVERBOAT FISCAL YEAR TABLE SHARE TABLE SLOTS TOTAL 2006 $420,462,554 $2,062,106,710 $2,482,569,264 16.9%
2007 $453,573,356 $2,210,382,137 $2,663,955,493 17.0%
2008 $428,566,587 $2,116,509,340 $2,545,075,927 16.8%
2009 $418,670,325 $1,989,626,926 $2,408,297,251 17.4%
2010 $388,165,313 $1,966,885,770 $2,355,051,083 16.5%
2011 $381,059,497 $1,935,558,094 $2,316,617,591 16.4%
2012 $358,362,996 $1,896,143,906 $2,254,506,902 15.9%
2013 $357,755,127 $1,742,867,617 $2,100,622,744 17.0%
2014 $324,210,320 $1,525,741,643 $1,849,951,963 17.5% TABLE GAMES SHARE AT RIVERBOATS – BY FACILITY
FACILITY LOCATION FY 2012 FY 2013 FY 2014 Ameristar East Chicago 11.4% 10.0% 10.9% Belterra Switzerland County 14.6% 14.4% 15.7% Blue Chip Michigan City 10.7% 10.5% 10.9% French Lick Casino French Lick 13.3% 13.1% 12.5% Hollywood Lawrenceburg 14.6% 13.3% 11.7% Horseshoe Hammond 23.4% 26.9% 27.8% Horseshoe Harrison County 15.8% 20.1% 19.3% Majestic Star Gary 24.1% 24.9% 24.7% Majestic Star II Gary 5.0% 5.0% 5.3% Rising Star Rising Sun 10.8% 11.4% 10.2% Tropicana Evansville 14.2% 14.0% 15.2% ALL RIVERBOAT STATEWIDE 15.9% 17.0% 17.5% Information Sources:
INDIANA GAMING ASSOCIATION INDIANA HORSE RACING COMMISSION MICHIGAN GAMING CONTROL BOARD ILLINOIS GAMING BOARD OHIO GAMING CONTROL COMMISSION OHIO LOTTERY AMERICAN GAMING ASSOCIATION NATIONAL INDIAN GAMING COMMISSION INDIANA AUDITOR OF STATE OFFICE
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