I-64 bridge from Kentucky to Indiana
Expanded gambling proponents often talk about the need to recapture Kentucky money going “across the river” to Indiana and Ohio casinos as justification for adding casinos in Kentucky. The flawed logic used to make this claim is that if there are casinos on the Kentucky side of the river, gamblers will stay at home and the tax revenue from the casinos will then be available to meet needs here in Kentucky rather than in Indiana.
That’s great as far as it goes. Unfortunately, it inflates the dollar value of the amount that is actually going out of state. The argument also seeks to deflect attention away from the fact that most the money captured by Kentucky casinos will be from massive new gambling losses by Kentuckians. does not deal with the fact that the expanded gambling proposals are designed to capture a whole lot more than the money going across the river.
Below is a much more realistic calculation of the amount of gambling money that actually goes across the river from gambling industry expert Ivan Zabilka. This is a repost from his blog, The Gambling Notepad.
For over a decade one of the main arguments for casinos in Kentucky has been the “hundreds of millions” going over the river to Indiana and Illinois casinos. Gov. Beshear repeated that claim last week. The largest amount going over the river is to Indiana. Illinois has one small casino on the river with less than $10 million in revenue from Kentuckians each year. We do not know how much goes to Vegas or Atlantic City, but it is not hundreds of millions.
So how much is going to Indiana? The Indiana Legislative Services Agency estimated in 2009 that Indiana would lose between $131.7 and $163.8 million in tax revenue if Kentucky put casinos at the racetracks or other border locations. Since the tax rate is an average of 38 percent pus a $3 or $4 admission fee, the gross revenue from Kentuckians is between $197.55 million and $245.7 million.
In 2009, Gov. Beshear claimed that $500 million was going over the river, and House Speaker Stumbo claimed $700 million. After these figures were shown to be fallacious, the governor has backed off to “hundreds of millions” going over the river, without being more specific. If the lower figure of $197.55 million is the correct estimate, it does not qualify as hundreds since it takes at least two to be hundreds. Even the $245.7 million is not what the “hundreds of millions” phrase brings to mind. Both estimates are far below previous claims.
Similar cases in other states have shown that not all the “over the river” revenue is regained, although no one knows the percentage. What is known is that the percentage will be high because people seldom drive past one casino to get to another unless there is a difference in pay out rate.
The end result of Indiana estimates, where there is no benefit to the Indiana legislature if the estimates are too low, is that the “hundreds of millions” going over the river is a false argument. The cost to Kentuckians of having our own casinos scattered over the state will be much greater than the money lost over the river.