Saturday, March 09, 2002

State may be ready to gamble

Developers plan for legal land-based casinos

By Patrick Crowley,
The Cincinnati Enquirer

        SPARTA — Ten years ago developer Jerry Carroll rolled the dice by talking about legalizing casino gambling in Kentucky.

        But he crapped out. Few listened and the idea died.

        Today, Mr. Carroll — the chairman and developer of the Kentucky Speedway and former owner of Turfway Park race track in Florence — is once again stepping up to the table with a plan to build land-based casinos in Kentucky.

        At least one of those would be in Northern Kentucky.

        So why will lawmakers now listen to Mr. Carroll's plans for a “diversified mega attraction casino with something for everyone,” possibly on Covington's riverfront?

    Developer Jerry Carroll said land-based casinos in Northern Kentucky could generate millions of dollars in state and local taxes. Here is a breakdown of the taxes paid in 2001 by Indiana's riverboat casinos, including the total state and local taxes paid by all 10 boats and the taxes paid by the three gambling boats closest to Northern Kentucky.
   Total 2001 taxes: $492,621,511
   Argosy, Lawrenceburg: $91,609,646
   Grand Victoria, Rising Sun: $34,186,827
   Belterra, Vevay: $26,136,764
   Source: Indiana Gaming Commission
        What has changed from 10 years ago?

        “Everything,” Mr. Carroll said in his office in the $150 million Kentucky Speedway in Gallatin County. “We have riverboat casinos just a few minutes away in Indiana. We have the Kentucky legislature talking about allowing slots at the racetracks. We have a state that needs money. And we've seen the attitudes about gambling change.

        “Today, more than ever ... it's a no-brainer.”

        Mr. Carroll is renewing his decade-long crusade to convince state lawmakers that gambling is a good bet for Kentucky. He is joined this time by Corporex Cos. Chairman and President Bill Butler, who is responsible for developing most of the hotel, office and residential space along Covington's riverfront.

        Covington Mayor Butch Callery is happy they're considering casinos for the city's riverfront property.

Gambling beefs budget

        “The mayor of Lawrenceburg, Indiana, called our economic development not long ago,” Mr. Callery said.

        “He said they have several million dollars in the budget they aren't using and they wanted to know the kinds of things we did on our riverfront. I guess they are going to use some of that money from gambling to develop the riverfront there.

        “I know a lot of people from here spend their money now on the casinos in Indiana,” Mr. Callery said. “Covington should could put that money to good use.”

        A casino could also draw tourists. The Covington West property is near the Northern Kentucky Convention Center and within a block of two hotels Mr. Butler has developed — the Marriott and Embassy Suites.

        Mr. Carroll and Mr. Butler have access to available land and buildings in Northern Kentucky:

        • Covington's riverfront. Last Tuesday the City Commission granted Mr. Carroll and Mr. Butler the rights to study the feasibility of developing Riverfront West, a 15-acre tract between the Clay Wade Bailey Bridge and Covington Landing.

        • The former Oldenberg Brewery building in Fort Mitchell. Mr. Carroll is part-owner of the building, which features a large unoccupied hall.

        • The Kentucky Speedway, which is surrounded by hundreds of acres of undeveloped land.

        “It's like everything else in real estate,” Mr. Carroll said. “The key is location, location, location. And we want to do it right, probably a high-rise that will be just beautiful.”

Making a deal

        Recognized as a visionary and deal-maker, Mr. Carroll, 56,bought the track known as Latonia in 1986 for $13.5 million. Over the years, he invested $30 million in the track, including $5 million on a high-tech race book where races from across the country are simulcast daily at Turfway.

        Mr. Carroll opened the Kentucky Speedway in 2000.

        The ownership team he assembled includes two billionaires, Richard T. Farmer, chairman of Cintas Corp. in Mason and Richard Duchossois, owner of Duchossois Industries of Chicago and the largest shareholder in Churchill Downs.

        Chris Sullivan, co-founder of the Louisville-based Outback Steakhouse chain, is also an investor.s

Long-nurtured idea

        Mr. Carroll first began pushing for legalized gambling in 1992. At the time Indiana was debating allowing riverboat casinos.

        He had transformed Turfway, the once financially ailing thoroughbred race track into a racing showcase so much so that when he eventually sold it in 1998, one of the buyers was venerable Keeneland race track in Lexington.

        But in early 1990s, Mr. Carroll was concerned that riverboat casinos just minutes from the track in Indiana would hurt the business at Turfway and Kentucky's other race tracks.

        “I knew it was going to be big, and that's what I tried to tell people,” he said. “They didn't want to listen. Gambling was a new concept around here. It was untested. People didn't know about it and some people had moral problems with it.”

        Mr. Carroll's concerns turned out to be as prophetic.

        The three boats on the Ohio River in Indiana that began operations in 1996 have been a huge success. The closest boat to Turfway, the Argosy Casino in Lawrenceburg, Ind., has proven to be the most popular floating riverboat in the nation.

        In 2001, the Argosy had revenues of $346 million, up $2.2 million over 2000.

        “There is a marketplace for gambling in this area,” Mr. Carroll said.

        While the boats have thrived, business at the tracks has fallen. Attendance and betting at Turfway are off more than 40 percent since the Indiana riverboats began doing business.

        And in the last 10 years casinos have also opened on the rivers in Illinois and at race tracks in West Virginia.

        It's estimated that Kentuckians spend about $1.7 billion a year gaming in other states.

Predicted trend

        Members of Kentucky's thoroughbred industry are lobbying lawmakers to allow video gambling at race tracks — the same notion Mr. Carroll was pushing in the early 1990s.

        Track owners and operators say video gambling machines known as Electronic Gaming Devices — which offer video versions of slots, blackjack, keno and other casino games — could generate $919 million a year in revenue.

        Of that, $235 million would go to the state budget.

        Mr. Carroll said the state should not stop there. Instead, an effort should be made for full-blown land-based casinos to compete against the riverboats in Indiana.

        Bob Elliston, president of Turfway Park, said if video gambling is approved the track will build a $125 million gambling hall with more than 2,000 video slots.

        By comparison Argosy has 2,110 slots, according to the Indiana Gaming Commission.

        “We'll have entertainment, restaurants, lounges — plenty for people to do,” Mr. Elliston said.

        Mr. Carroll has said even though he and Mr. Butler have a lobbyist — former state Sen. Joe Meyer of Covington — monitoring the horse industry's gaming bill in Frankfort they won't try to push for a law allowing casinos until next year at the earliest.

        The state is facing a $500 million budget shortfall this year.

        Argosy paid $91.6 million in state and local taxes last year, according to the Indiana Gaming Commission.

        “You have to think in the right location a casino (in Northern Kentucky) would do more than Argosy,” Mr. Carroll said. “It would have to. We're closer to the population center of the region right here in Northern Kentucky.”

        Still, casinos will be hard sell in Kentucky. Senate Republicans have promised to kill the current video gambling bill.

        Mr. Carroll said his major focus is still on the speedway.

        “But I know in my heart of hearts that the time for casinos in Kentucky will come,” he said.

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