Odds On Racing - Harness Racing

Indiana Could Grab $9 Million in Revenue

August 16, 2007

An owner of a minority share in the Indiana Downs horse racing track would pay the state $9 million that would be set aside for property tax reliefas part of plans to sell its stake in the company.

LHT Capital, owned by Carmel home builder Paul Estridge Jr. and an Estridge family trust, has an agreement to sell its 34 percent share in the Shelbyville track to the other owners for $58 million, according to documents filed with the Indiana Horse Racing Commission.

The commission must approve any change in ownership. Indiana Downs hasn't posted a profit since it opened in 2001, but it's poised to become more lucrative, thanks to legislation allowing it to install as many as 2,000 slot machines.

At the prodding of Gov. Mitch Daniels, the Horse Racing Commission approved regulations giving the state the right to take a cut of any windfall should a license holder sell a minority interest.

"The Horse Racing Commission is acting vigorously to see that Indiana property taxpayers will share in the large gains made due to the value given the tracks through the slot machine licenses," Daniels said Wednesday in a statement.

The exact amount of the transfer fee is determined on a case-by-case basis. The $9 million, spelled out in documents filed by the track Tuesday, was reached after "much dialogue," said Joe Gorajec, executive director of the Horse Racing Commission.

While the money would be used for some form of property tax relief, just where the dollars would go has not yet been determined, he said. The state is already spending $300 million this year to give property tax rebate checks to homeowners.

Sen. Luke Kenley, R-Noblesville, said adding to that pot would require legislative approval. Alternatively, he said, the money could be funneled into a newly created trust fund that will be used to deal with long-term solutions to the property tax crisis.

The ownership transfer was scheduled to be taken up by the Horse Racing Commission on Wednesday, but the meeting was canceled because the commission felt the issue was "not ripe for consideration," Gorajec said. He said he hopes the transaction will be before the commission soon.

The board's next meeting is Tuesday. If the deal is OK'd, Oliver Racing LLC would own more than 95 percent of Indiana Downs, up from about 63 percent as of April, records show. Estridge said he is "very optimistic that it's going to go forward."

Ross J. Mangano, chairman of Indiana Downs, said plans for the "racino" will move forward regardless of whether the LHT sells its shares.

The track must pay the state a $250 million license fee for the right to add slot machines, with the first installment due Nov. 1. In addition, the track must invest $100 million in capital in the new facilities. Indiana Downs has hired Jefferies & Co., a New York investment firm, to raise $545 million to finance the proposal.