Tuesday, October 17, 2006

While mapping plans for a multimillion-dollar expansion, Caesars casino
executives have begun laying groundwork for the local government in Harrison
County to share some of the project's costs. Caesars general manager Ed
Garruto approached Harrison commissioners last summer about having the
county pay several million dollars toward the improvements. The payments
likely would come from about $10 million in profit-sharing money that
Caesars pays the county each year under its development agreement. So far,
$68.8 million from the casino has gone to create the Harrison County
Community Foundation endowment, providing grants and scholarships to
nonprofit groups, and a smaller "community fund" that boosts county
operating money. No dollar figure has been put on the expansion beyond a $40
million first phase to re-brand Caesars as a Horseshoe Casino, or on how
much Caesars wants from the county. But casino executives have estimated the
benefits of the investment - the commissioners said they were told - to be
an anticipated $150 million increase in annual gambling revenue.
Commissioner James Goldman said it's too soon to say whether a partial
rebate to Caesars would mean less profit-sharing money, given the projected
increase in gambling. "What he (Garruto) said is ... `We'd like for you to
help us do that expansion because you're going to benefit from it, just like
we are,'" Goldman said.
Clark Hardsaw, who owns the Longbottom and Hardsaw feed and fertilizer store
in southern Harrison, said he wouldn't support a rebate of casino money.
"I just don't understand why we need to pay a business to stay in business,"
Hardsaw said. "I can't see why the commissioners would want to do this."
Garruto was out of town late last week and did not respond to questions sent
to him via e-mail. But commissioners said he pointed out that similar
partnerships have been forged by Casino Aztar at Evansville and Argosy
Casino near suburban Cincinnati, where the cities have committed a total of
$60 million toward improvements.

Harrison leaders said they have made no commitment.

Two commissioners said in interviews last week that they initially were
lukewarm to Garruto's proposal for fear the Indiana General Assembly could
reduce the amount of casino tax money paid to Harrison and other casino
communities in the next few years.

Hoosier lawmakers early last year considered reducing Harrison's annual
casino tax revenue to $4million from the current $23 million - then backed
off the proposal.

The scare over losing the money hasn't subsided.

Goldman said the commissioners are worried about locking the county into a
significant rebate for Caesars' improvements when they can't say whether the
legislature will slash its tax revenues.

"Our initial reaction (to Garruto) was, `How much is the state giving?'"
Goldman recalled.

After the Nov. 7 election, county leaders might get a better sense of
whether legislative leaders are still bent on reducing tax payments to
Harrison and other communities with casinos, Goldman said.

"I really expect until the election comes around you won't see anything
signed by us," he said.

Garruto recently sent the commissioners a copy of an Indiana casino trade
group's newsletter with an article on Casino Aztar's improvement plans - and
a note attached saying that Evansville had committed $10 million toward the
project.

Until last year, Caesars Entertainment Inc. owned the $400 million gambling
complex in Harrison, about 12 miles downstream from Louisville. It was
acquired last year by Harrah's Entertainment Inc.

Harrah's has since told state gambling regulators it intends to spend more
than $40 million to re-brand its 93,000 square feet of gaming space and
170,000-square-foot pavilion as a Horseshoe Casino.

A company executive also told The Courier-Journal in June that it expected
to complete plans by early next year for a second phase of improvements to
enlarge Caesars' existing 503-room hotel or build a second hotel tower.

Garruto told the commissioners that those plans include creating an upscale
steakhouse to replace Portico Restaurant and enlarging a concert and live
entertainment area, Commissioner Jim Heitkemper said.

Harrah's has said the expansion is proceeding, despite published reports
this month that the company was the target of a $15.1 billion buyout offer.

Regardless of who owns Caesars, such expansions are a big trend in Indiana,
said Ernest Yelton, the Indiana Gaming Commission executive director.

"There's so many projects in Indiana. ... It seems as though the entire
industry" is revamping outdated facilities all at once after a decade in
business, Yelton said.

Lawrenceburg Mayor Bill Cunningham said predictions that Argosy Casino would
face tougher competition for gamblers' dollars in coming years motivated
officials in his city to agree to rebates of up to $5 million annually for
10 years to help Argosy pay for its $350 million investment.

The city had a vested interest in backing Argosy's bid to stave off new
competition if Kentucky and Ohio legalize casinos or slot machines at
racetracks, he said of the June 2004 Argosy agreement.

"We're concerned about what's going on in other states, too," Cunningham
said.

At the same time, Lawrenceburg stands to benefit from additional jobs and
gambling revenue, he said. The Argosy expansion "is going to put another
1,000 jobs here, and this is going to put another $350 million on the tax
base. We felt very comfortable with it."

Lawrenceburg, located four miles from Cincinnati's Northern Kentucky
suburbs, has the richest deal of all 10 Hoosier communities with a casino.
The city receives more than $30 million a year from Argosy's profit sharing
and $20 million or more annually in gambling tax revenues.

The willingness of Lawrenceburg officials to share the cost of Argosy's
project has set "the standard" in the state, Yelton said.

"The good people of Lawrenceburg thought it was a good idea," he said. "I
wouldn't want to question that."

Caesars' pitch didn't surprise Gary Davis, president of the Harrison County
Council. Once officials in Evansville and Lawrenceburg agreed to bear some
of the costs, he thought it was a foregone conclusion that Caesars
eventually would raise the possibility.