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Casino boogie

While Hoosier Park lines up dance partners for a possible “racino” in downtown Fort Wayne, city government does a soft shoe around the issue

By Michael Summers

michael_summers@fortwaynereader.com

Fort Wayne Reader

2009-01-16


Here are a few things about gaming in Fort Wayne that you probably already know…

Rumors of a casino in Fort Wayne pop up every few years, but gambling talk reached a fever pitch in late 2008. Stories appeared in local media, the question came up at a city council meeting, and a local businessman announced plans to develop a casino, waterpark, hotel and theater.

Chatter got so loud that in mid-December Mayor Henry’s office issued a statement on the issue. After reiterating that times are tough, that the economy stinks (not the Mayor’s phrase), and that Fort Wayne is facing a sizeable budget shortfall in 2009, the statement says the City is constantly looking for new ideas. “Recently, several groups have come to us,” the statement reads. “They are exploring the potential for gaming in our community.”

The statement goes on to say that the City is communicating with these groups and has made it clear that they’re open to ideas — “we’re open to meeting with anyone who wants to bring a viable proposal to the table.” It also says that the City is doing its homework and looking into the issue. “It would be irresponsible for the City not to
talk to individuals interested in gaming because of the potential revenue it could
create to help us provide the level of services expected by our residents and
necessary to keep us competitive.”

City councilman Mitch Harper (R-4) raised the issue of gaming during a city council meeting several months ago, before the mayor’s office issued its statement. “No one in the administration had mentioned that over a period of months they were actively involved in discussions in terms of gaming in Fort Wayne,” Harper says. “I think some of the signals coming out of the administration haven’t been very clear, and they seem to be changing as time goes on.” He adds that when he brought it up “…everyone sort of looked shocked, but the Mayor’s office did confirm it, and that’s when the first story came out.”

Fueling some of the speculation might have been a November announcement from a company called Summit City Grand Resort and Casino Holdings Corporation about ambitious plans to procure financing for a casino, water park, hotel and 3000 seat theater. The company’s CEO is Stan Liddell, the owner of Pierre’s and the Trolley Bar, and part-owner of the Sosua Bay Grand Casino & Resort and the Hotel Villa Chessa in the Dominican Republic, among other businesses. The president is Todd Smith, an associate of Liddell’s who, according to the company’s press materials, oversees “18 corporations with over 300 employees owned between himself and Mr. Liddell's umbrella of businesses over the past 21 years.” The company says the project could bring 1500 jobs to Fort Wayne. Early January brought the news that architecture firm MSKTD & Associates had committed to secure all architecture and design work for the project.

When the Mayor’s office issued the first statement on gaming in early December, they were careful to say there were no specific plans on the table, that they were merely considering their options and trying to remain open-minded about the prospect. But on January 8, they released another statement saying they had engaged the services of two groups to help them study the issue — the Third House Advocacy Group, LLC, an Indianapolis-based firm that will perform an independent analysis of the market potential for gaming in the Fort Wayne area and an evaluation of its economic and fiscal impacts here; and IPFW’s Community Research Institute (CRI) to coordinate an assessment of the issue’s social and community effects. The statement reads: “The City of Fort Wayne’s investigation has been prompted by the actions of various private-sector entities as they explore the business potential for gaming in northeast Indiana.”

And that brings us to what you may not know yet.

Hoosier Park, a gambling and horse-racing business owned by Indianapolis-based Centaur with facilities in Anderson (a “racino”) and an off-track betting location in Fort Wayne, has been looking into locating a gaming facility with video gambling machines right in downtown Fort Wayne. The plan is to move the off-track betting site from Washington Center road to downtown, and bring up 500 gaming machines from the site in Anderson.

The project has moved beyond the investigation stage. They’ve even picked a location — the parking lots along the corner of Harrison and Berry, across from the Metro building (though they haven’t purchased it yet). A professional poll conducted by a prominent out-of-state company that specializes in political and issue research surveyed some 400 people in the area on their attitudes towards some kind of gambling facility in Fort Wayne.

“I think people would be surprised at how long ago the poll took place,” says Mitch Harper, who believes it was done in September, perhaps even August. “No one has discussed it. Certainly no one has discussed it in real time.”

And the results of the Hoosier Park poll are a bit like an urban legend, with many people claiming to know someone who has seen the poll, though they haven’t seen it themselves. “I’ve heard the polling was about 50/50,” says Fort Wayne City Council President Tom Smith (R-1). “I’ve talked to people who have seen (the poll), and I was told it was 59/41 in favor, or something like that.”

But City Council Vice-President Glynn Hines (D-6) has seen it. “The results indicated there’s probably quite a few citizens in Allen County that would favor a Hoosier Park-type set-up,” he says.

Many people who have been shown the poll don’t remember exactly what kind of questions were asked (“would you like to see your community’s economic downward spiral continue?”), but the responses tended to mention the potential economic benefits of a gaming facility far more frequently than the ill effects like the potential for crime. “I personally would support it,” Hines says. “The revenue stream they’re projecting is something like $10 million, and if that’s true and if the taxes we can make off of that… that would be pretty decent. It would help the economy as it relates specifically to our tax burdens.” Furthermore, Hines adds that over 20% of Hoosier Park’s business in Anderson comes from Allen County; keeping that money in the area would obviously be a good thing.

The Hoosier Park project seems to have the best chance of becoming a reality, more so than the Summit City Grand Resort project or several other scenarios (such as a riverboat) for gaming in Fort Wayne. “It’s probably the easiest sell to both the legislature and the people of Fort Wayne,” says Ed Feigenbaum, an expert in Indiana legislative issues who edits the Indiana Gaming Insight newsletter as part of Indiana Daily Insight (www.ingrouponline.com). “You’re not talking about a real casino, a destination kind of resort that has the potential to change a community, that has the potential to really incite the anti-gambling factions within the community. You’ve got a facility that’s already in existence, with a limited number of machines. That’s what makes it an easier kind of sell.”

The ambitious project from the Summit City Grand Resort and Casino Holdings Corporation would be one of those “destination resorts” with community-changing potential that Feigenbaum talks about. Not only would the project have a hard time getting any sort of official support, but more to the point, current economic conditions might make the project too cost prohibitive. “These things are not cheap, and to go in to the market looking for that kind of money now is virtually impossible,” Feigenbaum says. He adds that recently, El Dorado resorts were trying to buy a bankrupt company in Evansville. They had put together a financing deal, but because of regulatory delays related to the bankruptcy, they got caught in the big economic crash of last fall. “They found their cost of financing was going up from between 8 – 9% to 18 – 19%. They said ‘we can’t afford it’, paid the break-up fee and backed out. It’s just difficult to raise any kind of capitol in these conditions.”

“It’s going to be difficult for any company that’s not sitting on a pile of cash to come in and, say, invest in new gaming platform,” he continues. “We’re talking $400 million, $500 million.”

But even if the money were there, getting a gaming facility in town requires legislative approval, and this is where support from local government becomes necessary to a certain extent. At this point, no one in city government is talking about providing financial assistance to establish gaming in Fort Wayne. Mitch Harper, who conducted his own poll on gaming on his blog Fort Wayne Observed, says talk of any kind of financial assistance would probably change the community’s attitude towards the issue considerably. “I know that there are a lot of people who simply think ‘well, if the state makes it legal, and someone wants to put their private dollars downtown or wherever…’ There’s a shrug of the shoulders,” he says. “But if the city is going to do TIF districts and tax abatements and build new sewer lines or whatever they do to offer assistance, those people would go absolutely ballistic.”

Harper himself doubts expanded gaming in Fort Wayne would be an effective tool for economic development. Furthermore, he says there’s a saturation point with gambling, that setting up a gaming establishment in a community doesn’t significantly “grow the market” as far as gamblers are concerned. “There seems to be a finite amount of gambling money,” he says. “We’re at a point where there’s enough saturation that communities are chasing their tail.”

Feigenbaum says that argument has a point. On one hand, whenever a new casino in Indiana opens or expands its current facilities by adding a hotel or spa, there has been a marked increase in attendance and revenues. “But we also know at some point there’s going to be significant cannibalization of the existing properties. We do know that when Hoosier Park and Indiana Downs opened their racinos, they took away business from three Cincinnati properties. So, we’ve seen some cannibalization.”

Also, the state of the economy means people are especially picky about where they drop their entertainment dollars. In boom times, a gaming facility might be an acceptable option for a night out; these days, a take out pizza and a used DVD might constitute the high life.

But as we said before, all these factors — community response, financing, effectiveness, local government’s role — mean nothing if the legislature doesn’t grant a license, and that, according to Ed Feigenbaum, is a virtual Pandora’s Box, nest of vipers, tangled web, etc. of problems. In December, the Herald Bulletin in Anderson ran an editorial on why the state should not grant a casino license to Fort Wayne. The piece itself amounted to not much more than Anderson worried about losing business at its own Hoosier Park facility, but those kinds of objections are going to be raised by almost every other community in Indiana who believes gaming could do good things for them. “It’s not a simple matter of ‘oh, let’s put a facility here,’ or ‘let’s move these machines here,’” says Feigenbaum. “ Once you start doing that, you have all kinds of different interest that will get involved. For example, if anyone wants to move anything to Fort Wayne, the folks at Blue Chip Casino — who are going to be adding a brand new, 22-story, 185 million hotel January 22 to their Michigan City property — are going to be apoplectic.”

“Once you start opening things up to Fort Wayne — and you’ve probably heard Senator Long say this — people from Indianapolis, people from Terre Haute, people from Clark County, who actually approved a referendum, all of a sudden start to think ‘hey, why not us? What makes them so privileged?’”

Though private interests can lobby state legislators for a gaming license without the support of city and local government, most state lawmakers wouldn’t want to step on the toes of local officials. Fort Wayne has a lot of state legislators from the area, and so far, the Hoosier Park project has tried to cultivate the support of what one source called high profile “influencers” in town. The bill that would allow 500 slot machines from Anderson to Fort Wayne has recently been introduced in the legislature. But for better or for worse, one of the factors that might prevent the Hoosier Park project from becoming a reality is the hesitant — or prudent — tone coming out of the Mayor’s office. Without aggressive campaigning on the part of city leaders, what is promising to be a tough sell anyway might just fizzle away. “There are going to be an awful lot of moving parts in this legislative session with respect to gambling,” says Feigenbaum. “Either a lot will happen or absolutely nothing will happen. This is an issue with a lot of moving parts.”

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