Friday, August 28, 2009

Indianapolis Star Urges General Assembly To Tell The Racinos "No"

It appears the editors over at the Indianapolis Star has finally found a corporate welfare scheme that goes too far. The racinos - the horse tracks in Shelbyville and Anderson which now feature limited forms of other gambling - came before a summer committee of the Indiana General Assembly asking for a bailout. It seems that they made a bad bet when they paid a high licensing fee to the state for the right to convert the horse tracks into racinos. One wonders if the racinos offer their customers the right to get out of bad bets they made as they are asking to do here. My guess is "no."

The Star's editorial weighs in on the matter:

Advocates for Indiana's once-burgeoning gambling industry argued for years that the only way to save the state's outpaced horse tracks was to throw up a couple of casinos just outside the clubhouse gate. They finally reached the home stretch last year when the General Assembly, whose members freely partake in the casino lobby's generosity, gave horse tracks in Anderson and Shelbyville the authority to fire up 2,000 slot machines.

Critics said even then that the gambling lobby soon would be back for more. It didn't take long.

Fifteen months after opening the so-called racinos, the operators are now not only crying poverty but also asking for hefty tax breaks. It's actually the second time the casino owners have tried to escape an agreement they freely entered into last year. This spring, the Indiana House, at the casinos' behest, approved $75 million in tax breaks for the two operations. Thankfully, the proposal died in the Senate.

But the state's gambling interests are as persistent as a slot jockey with a cup full of quarters. On Monday, they once again appealed to a legislative study committee for tax relief because business -- and imagine this amid the deepest recession in 70 years -- is bad.

The committee's chairman, state Sen. Luke Kenley, is appropriately skeptical. "We need to remember that they voluntarily entered into this agreement, and all the terms and conditions were known at the time they did that,'' Kenley told The Star's Bill Ruthhart.

It's not as if questions weren't raised about the racinos' viability before they opened. Standard & Poor's assigned credit ratings of "B,'' the sixth highest grade, to each operation's debt. Such debt, according to Standard & Poor's, carries "significant speculative characteristics.''

In other words, the companies gambled on their new casinos' profitability. Now, they want a state bailout.

Let's imagine, for the sake of argument, that the General Assembly does eventually give in to this special interest. What will lawmakers tell the thousands of other Indiana businesses -- from auto dealers to jewelry stores -- struggling because business isn't as brisk as it once was? For that matter, what will lawmakers tell the more than 10 percent of Hoosiers who are currently unemployed? When will they get their tax breaks?

While this is a good editorial, one wonders why the Star's editors couldn't muster a comparable sentiment when it came to the bailout of the Capital Improvement Board. For years the secretive CIB has been horribly mismanaged and has entered into giveaway deals with professional sports teams. Despite massive debt, the CIB is still insisting it wants to pick up the Pacers' operating costs on Conseco Fieldhouse, a facility for which the Pacers get all the revenue, even though there is no contractual requirement that these costs be picked up. Yet through the CIB saga the last several months, the Star's editorial pages has never once opined against throwing more tax money at the problem, i.e. the CIB, never asked for reform of the CIB, and never came out against the CIB giving away $15 million more to the Pacers.

Let's say "No" to the racinos. But we also need to be saying "No" to the CIB.


Jon said...

You are right about the double-standard, no one complained about the CIB always having it's hand out. Furthermore at least we had some idea of the +'s and -'s with a casino. All we ever get from the CIB is why they need more and more and more...

Grandpa said...

Jon - You should understand it is all a matter of location. Any tax break - abatement, direct subsidy with tax increases, TIF district - is OK with the folks if it is downtown and under the control of the "downtown folks."