Restoring, Not Expanding - by Eric Mitchell

Earlier this month Indiana Gov. Mike Pence vetoed legislation that would have allowed advance deposit wagering because it violates his stance against expanding gaming in the Hoosier State.

Pence then allowed two other gambling-related pieces of legislation to become law without his signature—one allows riverboat casinos to move ashore, provided the size of the casino remains unchanged, and the other outlines the procedures for ratification of a tribal gaming compact with the Pokagon Band of Potawatomi Indians.

New casinos to be operated by the Pokagon tribe are clearly an expansion of gaming, but, in Pence’s defense, Indian gaming is a federal issue and governors are required to negotiate in good faith with Native American tribes.

But characterizing ADW as an expansion of gaming when Indiana offered this option through the early- to mid-2000s is not quite right.

Indiana has had pari-mutuel wagering since Hoosier Park opened in 1994. When TVG began operating in 1999, the company signed up customers in some states where pari-mutuel wagering was legal and ADW was not specifically prohibited. Indiana was apparently one of these states because in 2005 state legislators decided to close the door on all forms of wagering via the Internet.

Wagering on horse racing was not supposed to be a part of the 2005 Internet wagering ban, according to Rep. Robert Cherry, co-author of this year’s bill to restore ADW. But it was.

Mike McDaniel, executive director of governmental affairs for the Krieg DeVault legal group, told Franklin College’s The that this year’s ADW law did not open the door to other forms of online gaming.

“This limits it to the horse racing, which is what we had prior to 2005,” McDaniel said.

The chart on this page shows just how dramatically Indiana’s in-state handle alone has changed since the state pulled the plug on ADW. Besides losing purse money from the lost takeout, racetracks have lost source market fees as well, which ADW companies return from the handle to racetracks and horsemen in the markets where the ADW outfits accept wagers.

“Those source market fees did help horsemen and would help with track operating expenses,” said Jim Brown, president and chief operating officer for Centaur Gaming and general manager of Indiana Grand. Centaur also owns Hoosier Park. Centaur, unfortunately, could not be part of this year’s ADW push because it was prohibited from lobbying due to the terms of its simulcasting agreement with Churchill Downs Inc. Brown said the restrictions in the agreement are more than offset by the benefits of being a part of Churchill’s larger simulcast distribution group.

“It would be a lot tougher if we were going out into the market on our own,” he said.

The Indiana racetracks—both racinos—did get some other benefits out of the recent Indiana legislative session on the gaming side of the equation, including a tax break on the amount of free play offered to customers and the ability to offer live table games in five years.
“Overall our glass is half full,” Brown said.

Fortunately for racing, Centaur is committed to growing its Standardbred and Thoroughbred racing products, so growth in gaming continues to support racing. But racing needs to push continually for access to its own product, which in Indiana is nothing more than restoring what it has already had. 

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