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 Indiana's 10 Gambling Boats Provided the State a Net Benefit
 of More than $700 million for the Fiscal Year 2005

By Greg Hafkin, The Indianapolis Star
Knight Ridder/Tribune Business News

Mar. 6, 2006 - Riverboat casinos cost Indiana $1 million worth of crime each week, according to an analysis of Indiana's casino industry commissioned by state lawmakers.

Overall, however, the study found the state's 10 gambling boats provided a net benefit of more than $700 million for the fiscal year that ended in June 2005.

The analysis, intended to present a neutral view of gambling in Indiana, concluded what many in the industry have long contended: the costs, including bankruptcies and poor mental health, are significant but are far overshadowed by the $763 million of additional yearly tax revenue that the casinos generate.

But considering the relatively short amount of time given to Indianapolis-based consultant Policy Analytics LLC to do the study -- seven months -- the results likely are not the last word in Indiana's ongoing debate over legalized gambling.

The state had the fourth-largest casino revenues in fiscal year 2005, behind Nevada, New Jersey and Mississippi.

Perhaps the most controversial conclusion, the $52.1 million worth of yearly crime -- including $20.2 million in property crimes -- did not come as a result of an actual study in Indiana but is an estimate based on national research.

"That's kind of disappointing, because that's not necessarily a reflection on Indiana itself," said Mike Smith, executive director of the Casino Association of Indiana. "That's the problem with trying to use a broad brush using national data, which could in itself be flawed."

Rep. Peggy Welch, D-Bloomington, who said she's "pretty much anti-gaming," was one of two legislators who asked for the study last year. She said the results might be inconclusive because of its limited time and funding, and she'd like future studies to go more in-depth.

"When you start talking to churches, to the counseling groups and to the banks, what does it really mean to the community?" she asked.

Welch and Rep. Ralph D. Ayres, R-Chesterton, will formally present the study at 11:45 a.m. Tuesday in the Indiana House chamber.

The large net benefit is mainly due to the casinos' locations near Indiana's borders, with two-thirds of all patrons coming from other states, the study concluded. Still, Hoosiers incur $1.2 million in bankruptcy costs per year and up to $42 million in other social costs, such as gamblers' loss of productivity at work.

But Fred Reese, 49, Anderson, who likes to gamble at the Argosy Casino, said repetitive gambling is not such a big problem. He visits the Lawrenceburg riverboat about 10 times a year, and he hasn't seen the same people there twice. Scratch-off lottery tickets are a bigger danger, he said.

The study also measured something economists call the distance consumer surplus, loosely defined as the difference between how much Hoosiers are willing to pay to get to the nearest casino and how much they actually shell out. The surplus comes out to $52.6 million, similar to the estimated cost of the additional crime.

Among the other findings:

--Casinos have resulted in an additional 6,178 problem gamblers and 12,356 pathological gamble-rs in Indiana.

--The closer a Hoosier lives to a casino, the more likely that person is to have a gambling problem.

--Eight percent of crime in casino counties and 1.4 percent of Indiana bankruptcies are attributable to the casinos.

John Wolf, the founder and former coordinator of the Indiana Coalition Against Legalized Gambling, said one of the study's most disturbing findings was that 18,000 Hoosiers have gambling problems.

"That's an awful lot of people to be afflicted by the disease of compulsive gambling," Wolf said. "Wouldn't you call that an epidemic?"

The next step, according to Welch, ought to be a thorough look at the effects of gambling in Orange County, where the state's 11th casino, the French Lick Springs Resort & Casino, is scheduled to open in December. The problem with the latest study, she said, is that it likely ignored the continuing industrial downturn in Lake County, home to four riverboat casinos.

Ayres echoed some of Welch's concerns about the study but said gambling was worth examining.

"We need to have a discussion based on data and the social significance of that data," he said. "Considering the time constraints, I think it was a good study."



--Bankruptcy: $1.21 million.

--Crime: $52.14 million.

--Other social costs (loss of work productivity, mental illness, etc.): $19.02 million to $41.87 million.

--Regulatory costs: $3.34 million.


--Travel savings to customers: $52.62 million.

--Tax benefits: $763.23 million.

NET BENEFIT: $717.29 million to $740.14 million.


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Copyright (c) 2006, The Indianapolis Star

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