The Indiana Gaming Commission's decision to restart the licensing process for the Terre Haute casino could end up costing the city of Gary approximately $5 million.
Under an agreement with the former Terre Haute license holder, the Steel City was in line to receive 0.5% of adjusted gross revenue from slot machines and table games at the Terre Haute casino, and 0.5% of commissions from sports wagering vendors affiliated with the casino, during the first 10 years of gaming operations in Terre Haute.
That equates to about $500,000 a year for Gary if the 850 slot machines and 35 table games planned for the Terre Haute casino performed as well as the similarly sized French Lick Casino did during the 2019 gaming year — the most recent comparable period without COVID-19 disruptions.
The Gary payment agreement, however, does not automatically transfer to a new Terre Haute license holder because it was conditioned on the expectation of a continuing affiliation between the parent companies of the Gary and Terre Haute casinos.
The IGC broke that link last week when it unanimously refused to renew the Terre Haute casino license held by Lucy Luck Gaming, whose majority owner, Terre Haute businessman Greg Gibson, also is majority owner of Spectacle Entertainment, the parent company of the Hard Rock Casino Northern Indiana in Gary.
Records show the IGC denied Gibson's license renewal due to Lucy Luck's slow pace toward constructing a Terre Haute casino some 13 months after a license initially was awarded, the company's lack of a full executive team and an industry recognized corporate structure, and uncertain financing for the casino development.
As a result, there's no guarantee any subsequent Terre Haute casino licensee will pay anything to Gary in recognition of Gary's efforts to secure two casino licenses more than a quarter-century ago, including the license state lawmakers in 2019 reassigned to Terre Haute.
Gary Mayor Jerome Prince said Tuesday he plans to ask the IGC to ensure the Gary payment agreement is included as a condition of awarding the Terre Haute casino license to another entity.
But IGC Executive Director Sara Tait was noncommittal. She said the next Terre Haute license holder will have to negotiate a new local development agreement with relevant parties in Terre Haute and Vigo County, and could perhaps include Gary.
The city of Gary separately is guaranteed $6.15 million a year through its local development agreement with the Hard Rock Casino located adjacent to the Borman Expressway at Burr Street.
The IGC has set a Sept. 22 deadline for casino companies to apply for the Terre Haute license. The agency said it's a top priority to reissue the license as soon as possible.
"The commission is committed to ensuring that the applicant selected for the Vigo County casino meets or exceeds all applicable standards and presents the highest potential for successful operation of a casino."
Tait said Gibson and Lucy Luck are welcome to reapply for the Terre Haute license if they remedy the deficiencies identified by the IGC — which could put the Gary payment agreement back in play.
However, Gibson said he's not certain he'll try again since he's already succeeded in his original goal of bringing a gaming license to Vigo County.
The latest plan for the Terre Haute casino called for Lucy Luck to contract with Hard Rock International to develop and manage a $170 million "Rocksino" casino that would have had about half the gaming positions as the Gary Hard Rock Casino, along with a steakhouse, Hard Rock Cafe, food hall, and a 250-seat venue for live performances and other events.
Terre Haute is the seat of Vigo County and located approximately 165 miles south of Gary and seven miles east of Indiana's border with Illinois.