Gary loses cut of Terre Haute casino revenue
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The city of Gary will not directly benefit from the new casino at Terre Haute, even though the license for the west-central Indiana gaming facility, set to break ground in coming weeks, originally was assigned by the state to the Steel City.
A new local development agreement (LDA) recently approved by the Vigo County commissioners and the Churchill Downs affiliate set to run the Queen of Terre Haute Casino includes no provision for sharing a portion of the new casino's revenue with Gary.
Under an agreement with the former Terre Haute license holder, Gary 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 would have amounted to about $500,000 a year for Gary, or $5 million for the decade, if the 1,000 slot machines and 50 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 new LDA instead requires Churchill Downs pay 3% of its adjusted gross revenue up to $175 million, and 3.25% of any revenue over $175 million, to a new, nonprofit organization, known as the Queen of Terre Haute Foundation Inc., to support economic development, health and wellness, infrastructure, quality of life, talent retention and tourism efforts in Vigo County.
State Sen. Eddie Melton, D-Gary, said Wednesday he's disappointed the Terre Haute LDA does not financially recognize both the decades of work by Gary leaders to clear the way for legalized gambling in the Hoosier State and the origin of the Terre Haute casino license.
"That second license was intentionally given to the city of Gary," Melton said. "That's the reason why I authored legislation this year to ensure we get what's owed to Gary."
Senate Bill 318 did not advance in the Republican-controlled Senate. Melton said he plans to try again next year to put provisions from the original Terre Haute LDA into state law so Gary is properly compensated for the casino license it gave up in the 2019 deal to relocate the city's former Majestic Star casinos from Lake Michigan to an improved inland location.
"I would like to see more local support from folks to help get this done," Melton said. "Those funds would help the city of Gary. Every dollar counts."
Gary Mayor Jerome Prince also plans to pursue legislative action at the Statehouse to ensure the city receives the full value of its former license.
"Gary's support for the transfer of the license was based upon an agreement to provide financial compensation to the city. Although the licensee has changed, the lost value of the license to Gary remains," Prince said.
"We have shared our concerns with state leaders, and will continue to advocate for a solution that acknowledges this situation as we enter a budget session in the General Assembly next year."
The original Gary payment agreement was conditioned on the expectation of a continuing affiliation between the parent companies of the Gary and Terre Haute casinos.
That link was severed last year when the Indiana Gaming Commission unanimously refused to renew the Terre Haute casino license held by Lucy Luck Gaming, whose majority owner, Terre Haute businessman Greg Gibson, at the time was majority owner of Spectacle Entertainment, the former 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.
The IGC reissued the Terre Haute casino license to Churchill Downs in November. Gibson also largely was bought out of the Gary casino in August by its operating company, Hard Rock International, a business enterprise of the Seminole Tribe of Florida.
Records show the city of Gary separately is guaranteed $6.15 million a year through its LDA with the Hard Rock Casino, located adjacent to the Borman Expressway at Burr Street.
Terre Haute is the seat of Vigo County and located approximately 165 miles south of Gary and 7 miles east of Indiana's border with Illinois.
