Spectacle Entertainment Indiana Casino License to Come with $100M Tab for Move to Dry Land in Gary

Posted on: March 28, 2019, 02:45h. 

Last updated on: March 29, 2019, 12:21h.

Ed Silverstein @casinoorgedsilv Read More
Expertise: Legal, Tribal Gaming.

An Indiana legislative committee Wednesday made it harder for home-grown gaming operator Spectacle Entertainment to open two land-based casinos, after legislators imposed a $100 million fee to reassign one license from a current Lake Michigan location to a nearby property on dry land in Gary.

Indiana Gov. Eric Holcomb (R) has come under fire for taking two free flights from Spectacle Entertainment as the company vies to keep two casino licenses. (Image: Indianapublicmedia.org)

Lawmakers also proposed taking the second license away from the company altogether, and putting it out for competitive bids.

The House Public Policy Committee amended a bill which had given Spectacle control over where to assign both licenses, which are now used for two Majestic Star floating casinos.

The company wants to use one license to open the casino near the Borman Expressway, and use the second for a planned venue in Terre Haute.

An unnamed rival company has claimed that Spectacle would profit by some $790 million if licenses were reassigned to the two locations, according to the Indianapolis Star.

Rep. Ben Smaltz (R-52), who is chairman of the Public Policy Committee, told Casino.org “The initial licensing fee for each of the two licenses … were paid for that specific location. If Spectacle would prefer to remain in the originally permitted location, there would be no fee.

“However, if Spectacle wishes to move to a different location, which would significantly enhance the value of their casino operations and possibly negatively impact other licensed operators, then there would be a fee attached with that. Instituting a fee would be appropriate and consistent with past policies.”

He added what the fee “ends up being remains to be seen as the bill continues through the process.”

Fee Questioned

Several legislators were taken aback at the hefty fee price tag be paid to the state during a recent hearing. Rep. Vanessa Summers (D-Indianapolis) noted that, “Even for a rich person, $100 million is kind of in the stratosphere,” according to the Chicago Tribune.

“To me, that’s a tough one to swallow,” chimed in Rep. Sean Eberhart, R-Shelbyville, the newspaper reported.

Supporters of the amendments point out the company gets increased value with the casino moving to dry land, and taxpayers and the state deserve to benefit, too. Before the amendments were introduced, in February the state Senate approved the bill by a 38-11 vote.

The bill is next headed to the House Ways and Means Committee, where it could be amended once again.

Last October, the legislature signed off on plans to relocate the casinos to make room for a regional transportation and shipping complex at Buffington Harbor. The Indiana Gaming Commission approved the sale of the two casinos to Spectacle.

Friends in High Places

As the future of the casino licenses are in flux, new questions are arising over possible attempts by Spectacle to influence the outcome.

The Indy Star revealed that Spectacle gave free flights in 2018 on chartered jets to Gov. Eric Holcomb to meetings of the Republican Governors Association (RGA) in Aspen, Colorado, and Scottsdale, Arizona, with one of the flights a day before Spectacle announced it wanted to acquire the licenses.

The July flight to Aspen cost $21,486 and was identified as an “in-kind” travel contribution. The other one — whose value was not identified — was initially not reported to the Internal Revenue Service.

The flights were identified in accounting records as donations to the RGA. Indiana law prohibits holders of a casino license from making donations directly to political candidates, but allows for contributions to national organizations, The Star reported.

Rod Ratcliff, chairman and CEO of Spectacle, and his companies, have donated more than $1 million to the RGA since 2016, according to the newspaper. Holcomb received $7.6 million from the RGA for his 2016 election campaign.

This week, Indiana Republican Party Chairman Kyle Hupfer described the flights as “perfectly legal and customary.”

Spectacle’s attorney, John Keeler, told the Star, “We belong to the RGA. We had an extra seat or two on the plane, the governor flew along with us. Not a big deal.”

In February, Holcomb said he hadn’t yet decided whether he would sign a bill allowing Spectacle to reassign the casino licenses to land.