Lawmakers agree on casino tax hike, gaming expansion

Chris Sundheim

Wednesday, March 13, 2002 | 10:56 a.m.

INDIANAPOLIS -- A final agreement on legislation to expand legalized gambling and raise casino taxes appears within reach as state lawmakers enter the last two days of the regular legislative session.

Members of a conference committee were expected to present a proposal today to throw out Indiana's existing casino-tax structure and replace it with a system that generates more money and imposes higher taxes on riverboats that take in greater revenues.

The tax proposal would likely scrap the $3 admission tax paid by casinos for each person who boards riverboats and replace that revenue with a higher wagering tax, which is paid on each casino's gross profits from gambling, said Rep. Mark Lytle, D-Madison.

The wagering tax currently stands at 20 percent.

Budget negotiators hope to use gambling taxes to raise $300 million in new revenue. They want the extra money to help offset a projected $1.3 billion budget deficit that threatens to leave the state broke by mid-2003.

The tax package will likely be one of the last details settled before the committee votes on whether to send the legislation to the full Indiana House for final consideration.

While the committee weighed tax reforms, lawmakers also neared a deal on a bill that would allow Indiana's 10 riverboat casinos to remain permanently docked and permit devices similar to slot machines at horse racing tracks and some off-track betting parlors.

On Tuesday, Lytle offered a proposal to approve dockside gambling and transfer a dormant casino license for Patoka Lake to a new historic-preservation district covering West Baden Springs and French Lick in south-central Indiana.

The measure places no size limit on floating casinos, but it would create a cap of 1,400 electronic pull-tab slot machines for each horse racing track.

Track owners could then decide for themselves how to distribute those machines between tracks and two off-track betting parlors in Marion County. Indianapolis currently has one such parlor; a proposed second parlor could not open unless the legislation is approved.

The conference committee has until Thursday to draft an agreement acceptable to members of the House and Senate. That is when the General Assembly's regular session is scheduled to adjourn, although some Republicans suggested Tuesday that it might take a special session to restructure taxes and close the state's budget deficit.

Committee members said they tried to build a proposal that struck a balance to satisfy the competing interests, but Lytle told gambling lobbyists the deadline is fast approaching to submit a finished bill.

"We're done taking new ideas," Lytle said. "We're really running out of time for that."

Some House Democrats have cautioned that passage of any gambling legislation is dependent on approval of a plan to balance the state's budget and restructure taxes.

The committee's chairman said that completing work on the gambling proposals will help budget negotiations during the waning hours of the legislative session.

"If something can be worked out, this is a source of revenue to help carry out the restructuring or deficit problems," said Sen. Greg Server, R-Evansville. "If we have worked out the mechanics ... then that makes it a little more fluid at the end."