Odds On Racing - Harness Racing

All Is Well in Shelbyville

June 17, 2008

Surrounded by the serenade of 1,900 slot machines, Duane Mathews watched his friends slap the buttons on the penny machines at Indiana Live -- the state's brand new horse-track casino.

The Shelbyville casino, which opened last week in a temporary pavilion just 100 yards from the backstretch of the Indiana Downs track, is the state's newest gambling option -- and the kind of operation that Kentucky racing officials say they need to bolster the industry in the commonwealth.

Just 30 minutes from Mathews' Indianapolis home, Indiana Live is an hour closer than the Argosy Casino in Lawrenceburg, where Mathews was a regular. That's important, he said, given rising gas prices.

"With the drive to Argosy, you start out $35 to $40 behind before you even get started gambling," said Mathews, 55. "It's a very easy decision."
It's too soon to gauge the impact that the state's two racetrack casinos -- Indiana Live and the new Hoosier Park Racing & Casino in Anderson -- will have on attendance and wagering at the state's 11 riverboats.

But horse officials say the new slots have already boosted the number of owners and breeders bringing mares and stallions into Indiana in anticipation of the higher purses.
"We're talking about some very nice purses, and there are a lot of people showing a lot of interest right now," said James Carmichael, chairman of the Indiana Thoroughbred Breed Advisory Committee.
Kentucky's horse tracks, meanwhile, can only watch, after their state's attempt to authorize racetrack casinos foundered in ... this year's legislature.

"We're paying attention -- no question about it," said Patrick Neely, executive director of the Kentucky Equine Education Project, which is an advocate for casinos. "As more and more of our surrounding states begin to adopt this model and supplement purses and breeding programs, obviously our industry in Kentucky is going to pay attention and see how it's going to affect our programs here."

Kentucky Gov. Steve Beshear proposed a constitutional amendment this year that would have authorized as many as a dozen casinos -- some at racetracks and others freestanding. But even after a House committee scaled back the legislation, it lacked enough support to even be called for a vote on the House floor.

Now, supporters are looking to next year.

"We hope at some point to have a level playing field so we can offer the same menu of gaming options to our customers," said Kevin Flanery, senior vice president of Churchill Downs Inc.

New Tax Revenue
Indiana's newest casinos are the result of legislation passed in 2007 that had a twofold purpose: generating new tax revenue to help pay for property-tax cuts and propping up the horse-racing industry with higher revenue and purses.
The tracks paid hefty fees of $250 million each for the new licenses -- money that went to property-tax rebate checks last year and further cuts this year -- and have been scrambling to open their new operations.

On June 2, Hoosier Park opened a casino attached to its racetrack grandstand that integrates slot operations with track operations. The 92,000-square-foot facility includes 2,000 slot machines, including some that electronically replicate table games.

Nine new bars and restaurants also opened as part of the complex.
Indiana Live opened a temporary facility nearly a week ago as it builds its 230,000-square-foot permanent casino operation.

From the outside, the structure looks like an enormous tent. Inside, it is decorated like a nightclub -- with high ceilings, industrial finishes and colored lights. Music -- sometimes performed live -- helps dampen the incessant ringing of its 1,900 slot machines.

Mark Hemmerle, the casino's general manager, said the atmosphere is meant to emulate 4th Street Live, the Louisville entertainment district also developed by The Cordish Co.

The Ripple Effect
Katie Browning of Shelbyville was visiting Indiana Live for the first time last week and described the facility as "awesome."

"They didn't skimp on anything," she said. "I like the bar in the middle, and I like to play slots so I don't miss the table games."

Browning and her friends usually drive to Argosy to gamble. But with Indiana Live just five minutes away, she said it will become her new hot spot. Officials at Argosy, which is building a massive gambling boat, did not return a call last week seeking comment about the new casinos.

But at Belterra Resort & Casino on the Ohio River in Switzerland County, assistant general manager Jeff Michie said there's been no noticeable drop-off in business. It's still expected, though, because Belterra draws about 12 percent of its customers from Central Indiana, where the new casinos are.

"Those are good quality operations up there," Michie said. "It's got to hurt us."
Belterra had planned a major expansion of its hotel but jettisoned it when the General Assembly authorized the new casinos. Still, Michie said he's hopeful that after customers try the new casinos, they'll return to Belterra for the full-resort experience -- the spa, golf course and upscale hotel.

"For people looking to get away, they're still going to choose us or Grand Victoria or Caesars, or wherever they like to stay and play," he said.

Ernest Yelton, the Indiana Gaming Commission's executive director, said he expects the biggest hit will be to the French Lick Resort Casino in Orange County and to southeast Indiana's casinos -- Argosy, Belterra and Grand Victoria, which is on the Ohio River in Rising Sun.

"It's a wait-and-see," Yelton said. "It will take … time to understand what's really happening."

He said Caesars in Harrison County will be affected to a lesser degree, and Casino Aztar in Evansville likely won't be affected at all. The Northern Indiana boats, which are in northwest Indiana and in Michigan City, are expected to be only minimally affected, he said.

Purses To Grow
The racing industry, though, is expected to see big changes. Fifteen percent of the taxes paid on revenue from the new slots will supplement purses to reward the owners of Indiana-bred horses.

That's why Larry Smallwood, a breeder in Nabb, Ind., brought his stallion, Killenaule, a son of Kentucky Derby winner Fusaichi Pegasus, back to Indiana from Kentucky for breeding.

Smallwood, who is chairman of the Indiana Horse Racing and Breeding Coalition, ran his horse Bernie's Boy in a race Friday with a $13,500 purse. Next year, he said, that same race will likely be worth at least $30,000.

Smallwood acknowledged that in the beginning, the quality of Indiana racehorses might not match the purses. But that will change, he said, as more breeders realize they can make money in the state.

"I think it'll take about three years to build more quality," Smallwood said. "It's like building a house. You've got to have a good foundation."