Changes at the Indiana State Legislature on how casino funds are allocated and returned to communities will mean a reduction in funds coming to Switzerland County totaling more than $275,000 next year.
Money coming to the county travels two different paths. One is through a wagering tax – the money that is paid to the state as a percentage of the money being wagered in a casino.
The other is an admissions tax, which is paid by every person who enters the casino.
When the State of Indiana first approved riverboat casinos here, the riverboats were designed to cruise on the river; and gamblers had to get on and off the riverboat after each two hour cruise. Even if the riverboat didn’t actually cruise, visitors still had to get on and off the casino.
Each time that happened, a $3 admission fee was charged. Some casinos chose to charge that fee to the visitor; while others decided to pay the fee themselves to help encourage traffic at the casino.
Jon Bond, President of the Switzerland County Economic Development Corporation, said that from each $3 admission, casinos in cities would see a split of $1 to the city; $1 to the county; 10-cents goes to the local tourism entity; and the other 90-cents goes to the state to help fund a variety of programs.
Since Belterra does not sit in a city; Switzerland County receives both the city dollar and the county dollar. Switzerland County Tourism gets 10-cents; and the rest goes to the state.
As riverboat gambling got started in Indiana, the breakdown worked fine; but as competition for casino dollars grew; Hoosier casinos asked for and received concessions.
“What happened was that the state eliminated the requirement that the riverboats had to cruise, so people didn’t have to get on and off every two hours,” Jon Bond said. “So, instead of collecting admission fees from the same visitor several times, it was just collected once because the person didn’t have to get off of the riverboat. That was good for the casino, but bad for the county.”
As a compromise, the State created a way to supplement admission tax income to the communities with riverboats.
The state ‘froze’ the amount of wagering tax at each community’s 2002 level. Because visitors could stay on the casino floor longer because of the elimination of the two hour cruises, that meant that they would wager more money – which meant more wagering tax.
The state then told communities that it would take increased wagering taxes and supplement each community by giving money back up to the amount of the 2002 level.
In 2002, that admission tax level here in Switzerland County was $4,804,708.
So, when admissions dipped below that figure, funds would come from the state to bring the total up to that figure. The same program was in place for the Tourism funds. In 2002, Switzerland County Tourism received $240,233.24 from that 10-cent admissions tax.
But now, in a letter from Indiana State Auditor Suzanne Crouch, that ‘make up’ money, called ‘hold harmless’ funds, has been capped by the state at $48 million statewide.
As all of the riverboat casinos in Indiana count their admissions and apply for their ‘hold harmless’ funds, the State will reimburse those funds on a percentage basis until Indiana reaches $48 million. If the $48 million is expended, but the 2002 levels aren’t reached, then every casino will experience a shortfall in the admission tax funds.
The letter from the State Auditor has told the county and Switzerland County Tourism that that’s what’s going to happen in 2014.
The letter states that for the 2014 fiscal year, Belterra Casino and Resort saw admissions tax of $2,591,881.41.
Under the old system, the state would step in and provide $2,212,826.59 to bring the Switzerland County admission tax revenue to the 2002 level of $4,804,708.
But, instead, under the new system, Switzerland County will receive only $1,982,261.23 – which falls $230,565.36 short of getting to the 2002 level.
Switzerland County Tourism received a letter from the State Auditor stating that its 2002 floor was $240,233.24.
At the end of fiscal year 2014, Tourism had accumulated a total of $129,592.90. Again, under the old system, the state would use revenue that it gathered from wagering taxes to pay $110,640.34.
With the new system, the state will reimburse Tourism $99,112.18 – which is $11,528.16 under the 2002 level.
In total, that means Switzerland County will received $242,093.52 less than it would have received under the old system.
Add to that, because the county has a development agreement with Pinnacle Gaming based on a number of factors based in admissions and amount wagered, it is anticipated that these drops will result in the county falling about $45,000 short in funds coming through the development agreement.
Overall, adding the loss of admission funds and the decrease in the development agreement, Switzerland County – for fiscal year 2014 – will see $287,093.52 less than it would have because of the minimums set by the state under the new law, which was approved by the Indiana General Assembly last year and became effective on July 1st, 2013.
As competition continues to grow – the State of Illinois recently enacted legislation that greatly opens up the possibilities of gambling in a variety of locations in that state – and the increased presence of the Cincinnati gambling market among others, the trend of decreasing admission tax for Hoosier casinos all around Indiana could well continue.
If current trends continue, Jon Bond is estimating that the shortfall in revenue for fiscal year 2015 could hit $431,209 – a drop of another $155,644.