INDIANAPOLIS — State Sen. Eddie Melton, D-Gary, is wagering that by proposing some of the biggest changes ever to Indiana's gaming industry, it will set Gary on course toward improved job opportunities for city residents and sustainable economic development benefiting the Region.
It's a bet that other Northwest Indiana leaders believe shouldn't be made because it has the potential to disrupt the gaming industry statewide and deter investment by casino companies in existing properties, risking millions of dollars in revenue for communities.
Here are the major provisions in Melton's Senate Bill 636 as it awaits review by the Senate Appropriations Committee:
- The Majestic Star, which operates as a single casino but actually has two gaming licenses, would relocate off Lake Michigan to a land-based site in the city of Gary, likely adjacent to a Borman Expressway exit.
- The second license would be sold to the operator of a new, land-based casino that must be at least 100 miles away from Gary.
- 20 percent of the adjusted gross receipts at the second license casino would be paid to Gary for 20 years.
- A to-be-determined portion of the license sale revenue would be used to develop a multimodal transportation and warehousing hub at Buffington Harbor through the Gary Port Authority, and to offer education and job training programs for future workers at that facility though a new Greater Gary Community Foundation.
- The Gary City Council would decide how to spend the city's share of the annual receipts from the second license casino.
- The Indiana Gaming Commission would identify ways to "hold harmless" gaming revenue paid to Hammond and East Chicago to counter an anticipated reduction caused by the new Gary casino being in a more accessible location.
Melton said that while his legislation includes many gaming-related provisions, his primary interest is the development of the multimodal transportation hub along Lake Michigan, which requires the Majestic Star first be moved out of Buffington Harbor.
To that end, his measure also proposes a new Gary Community School Corp. central campus and career center, along with new credentialing programs at Ivy Tech Community College to train Gary residents for careers in rail, trucking, gaming, security and environmental remediation, among other fields.
"This is economic development focused and it's not solely about gaming," Melton said.
Nevertheless, Melton anticipates that moving the Majestic Star inland will boost gaming revenue at the casino by 10 to 30 percent.
He said it also will increase property values near the new casino, generate jobs for Gary residents and attract ancillary commercial development.
As for the second license, Melton said he wants to put it to the "highest and best usage," which obviously requires sending it to a location where it will not cannibalize the revenue from the new Gary casino.
"My intent is to make sure that our casino is in the best location and the second license is at a location that is not going to conflict," he said.
According to the Indiana Gaming Commission, no casino owner's license has been moved out of the city to which it originally was assigned by state law.
Every sale or transfer of an owner's license, since the licenses first were issued in 1994, has involved the purchase of an existing gaming facility along with the license to operate it, IGC Executive Director Sara Tait said.
The notion of selling a gaming license to operate in a new city clearly is prohibited under current Indiana statutes, which specify that a license to operate a casino is "a revocable privilege granted by the state" and "is not a property right."
Melton acknowledged that what he's seeking is unprecedented in terms of a license sale, and the mandatory sharing of those proceeds with Gary-related entities, along with a continuing obligation to provide Gary one-fifth the revenue earned at the new casino.
But he said since the second license is assigned to Gary, "I thought it was only right that the city in some way, shape or form can leverage the resources that are generated from that."
Gaming insiders at the Statehouse, who declined to speak on the record, laughed at the idea that any casino operator would be willing to kick back 20 percent of its receipts for two decades to a city that's nowhere near where they are in business.
Indeed, a separate gaming measure, Senate Bill 552, proposes that the second Gary license be shifted to Vigo County, whose largest city is Terre Haute, without paying anything to the city of Gary.
Further complicating the situation is that the Majestic Star is in the process of being purchased for an unknown sum by Spectacle Entertainment in a deal that could win state regulatory approval as soon as March.
Spectacle is led by Rod Ratcliff, who last year sold the two central Indiana horse track casinos to Caesars Entertainment, and Greg Gibson, a Terre Haute businessman.
They've expressed interest in relocating the Majestic Star on land within Gary and using the second license to build a new casino in another community, likely Terre Haute.
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However, Melton's legislation appears to require the second license be sold in order to trigger the opportunity to move it and to officially accept the corresponding financial obligations to Gary.
Melton said that provision, along with everything else in his measure, is subject to change as state lawmakers evaluate his ideas and propose alternatives.
"We're very early in the session and legislation takes time to take shape and form fully," Melton said.
"I just want to be proactive in terms of if there is a relocation that takes place with the second license, looking for opportunities for Gary to be part of that discussion."
Hammond Mayor Thomas McDermott Jr. said Friday on his WJOB-AM radio program that Melton seems only to care about Gary at the expense of the rest of the state.
The Democratic mayor of Lake County's largest city, which is home to Indiana's biggest casino, said because Melton's legislation so dramatically changes the rules for gaming in the state, it's apt to cause casino companies to think twice about making further investments in their Hoosier properties.
"Just the fact that we're having this discussion is killing our industry. It's killing our industry," McDermott said.
"Eddie Melton should be ashamed of himself. It's a selfish bill. It's clearly, 'We're taking care of Gary and we're screwing everybody else.'"
McDermott took particular offense at the provision prohibiting the second license from being used within 100 miles of Gary, even though Hammond is Indiana's most successful casino city and has expressed interest in acquiring the second license, as has Portage and Hobart.
"What kind of regionalism is that? It's like screw everybody except for Gary," McDermott said.
Portage City Councilman Collin Czilli similarly was displeased that Melton's legislation would exclude Portage from possibly getting a casino.
"I think Portage is better suited than any other community in Indiana for a new casino. We have the available land within walking distance to the South Shore Line, no other community in Northwest Indiana can say that," Czilli said.
"It's disappointing that this bill would pull increased revenue from an additional casino out of Porter County and Northwest Indiana."
Melton insisted that he's not seeking to punish other Region communities, only to ensure that a new Gary casino gets off on the right foot and the second license is given its best possible use where it could do the most good for Gary.
"I'm starting a discussion in terms of what's the best approach and mechanisms for the city, the Region and the state to win from a holistic economic development opportunity," Melton said.
McDermott isn't convinced.
He said there's no money to develop an intermodal facility at Gary, no transportation companies interested in locating there and no reason why Gary should be rewarded with a prime casino location when it has the worst maintained casinos in Northwest Indiana.
"This is all a ruse so they can do something they've wanted to do for a long time, which is move the casinos out of Buffington Harbor," McDermott said.
"They've squandered this opportunity so badly that now we have to change the rules and screw over the communities that have done well."
Melton pointed to the "hold harmless" provision in his legislation as proof that he's not out to reduce gaming revenue for Hammond or East Chicago.
McDermott responded that what Melton really is saying is, "We will study, after we take your money, and we will study how much money we took from you."