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Sunday, October 25, 2009

Ind. Law - Attorney General Zoeller wants more authority over casinos and their funds

Eric Bradner reports in the Oct. 24th Evansville Courier & Press:

Indiana's attorney general is calling for a new law that would pry open the financial record books of organizations to which casinos, in order to keep promises of economic development, funnel some of their revenue.

In a long-standing requirement to offset what lawmakers consider the negative effects of gambling, Indiana casinos donate portions of their profits to local governments or organizations that promote economic development.

After a northwest Indiana for-profit organization that was the recipient of some of that money was alleged to have funneled large portions of the $16 million it collected to political cronies, efforts began to require beneficiaries of casino revenue to open their records for review.

State Attorney General Greg Zoeller renewed that call last week as he testified before the legislative Gaming Study Committee. * * *

The Indiana General Assembly requires casinos to enter what are called local development agreements with their host communities. As a result of that statute, casinos handed over about $14 million in profits last year.

  • Sometimes that means money goes directly to city or county government, as is the case with Evansville's Casino Aztar.

  • In other cases, such as Harrison County's Horseshoe Casino, the money is donated to nonprofit organizations. The Horseshoe has given $150 million to two community foundations in Floyd and Harrison counties since 1998.

  • And in only one instance — northwestern Indiana's Second Century Inc., which collected $16 million from an East Chicago, Ind., riverboat casino — the beneficiary is a for-profit corporation.
The problem, Zoeller says, is the Legislature only requires that the money donated by casinos go toward economic development, and the fact that nonprofit and for-profit corporations don't have to file extensive financial reports with the state makes it tough to police whether that goal actually is being achieved. * * *

He wants to require organizations that draw casino revenue to file what would amount to detailed versions of the Form 990, which already is required of nonprofit organizations.

Zoeller encountered some resistance from Rep. Trent Van Haaften, a Mount Vernon Democrat who is on the Gaming Study Committee and, as House Public Policy Committee chairman, is a top voice on gambling issues.

Van Haaften said he did not disagree with the idea of casting a skeptical eye on organizations that receive casino revenues, but that doing so could be a role better served by the Indiana Gaming Commission than the attorney general's office.

Van Haaften pressed Zoeller as to why, since local development agreements are not state contracts but rather part of the deal casinos make in order to gain a license, the attorney general's office would review beneficiary organizations' financial books.

He asked whether Zoeller's office planned future attempts to further increase its role in regulating casinos.

"I still have a concern with the 'lawman,' if you will," said Van Haaften, a former prosecutor himself, "playing judge and jury."

Van Haaften said he would have the Gaming Commission review financial reports made by beneficiaries of local development agreements, and then call on the attorney general if a problem is spotted.

Dan Carden reported in the Oct. 19 NWI Times:
In East Chicago, a slice of the city's LDA revenue used to go to East Chicago Second Century Inc., a for-profit real estate development corporation controlled by allies of former Mayor Robert Pastrick. Current Mayor George Pabey has since blocked distribution of LDA money to Second Century.

However, Second Century still refuses to disclose how it spent the more than $16 million dollars it received in casino revenue between 1997 and 2006.

That is inappropriate, said Zoeller, who has sued Second Century to get their spending records.

"Gaming has to be licensed by the state, and other gaming revenues flow back to the state, so it's a mystery why the Second Century board would be so secretive about how it uses gaming dollars," Zoeller said.

The Indiana Supreme Court ruled in April the attorney general's lawsuit seeking spending information can go forward. That case is pending in Marion County.

"Five years of litigation cost the taxpayers a lot of money. It's unnecessary if there's nothing to hide," said David Miller, a legislative liaison in the attorney general's office.

In the meantime, Zoeller said state lawmakers could simply approve a new law mandating disclosure of the information.

He proposed requiring the name, date, amount and purpose of every disbursement of more than $5,000 be reported to the attorney general's office and made public.

"I do think additional accounting and transparency go a long way to satisfy the public, as well as our office," Zoeller said.

The Attorney General issued this press release Oct. 19th re "his continuing support of a proposal to require public disclosure by any for-profit or nonprofit corporation that receives casino revenue through a Local Development Agreement or LDA.."

Posted by Marcia Oddi on October 25, 2009 02:33 PM
Posted to Indiana Law