INDIANAPOLIS (AP) — Indiana state government could see a big drop in casino tax revenue over the next two years because of competition from new casinos in Ohio, state officials say.

The latest state revenue forecast released this month projects the state’s annual casino tax revenue to decline by about $42 million, or 9 percent, for the second year of the new two-year state budget that legislators will decide during their session that starts next month.

Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville, said he didn’t believe Indiana’s casino revenue would ever return to the levels seen when there was little competition from neighboring states. He said state lawmakers should support measures that ensure Indiana’s casinos remain as competitive as possible, The Times of Munster reported Wednesday.

"You’ve created an industry you’ve said, ‘We’re willing to have,’ and you have to be viable,” Kenley told the newspaper. “So now I think it’s a question of whether we’re going to make changes that allow them to continue to be viable or whether we’re going to let the industry just die.”

Indiana had tax revenue of $496.5 million from its 13 casinos during the 2012 budget year. As recently as 2008, when Illinois was the only adjacent state with casinos, Indiana’s casino revenue totaled nearly $583 million.

The new state forecast projects that casino revenue will drop to about $464 million during the current 2013 budget year, which ends June 30. Casino tax revenue is expected to fall to $432 million in 2014, and $423 million in 2015.

A proposed tribal casino in South Bend is under review by federal officials.

Ohio opened land-based casinos this year in Cleveland, Columbus and Toledo. The final Ohio casino is scheduled to open this spring in Cincinnati, which is expected to have the greatest impact on Indiana by draining gamblers and revenue from three nearby Indiana casinos along the Ohio River.

Michigan, Illinois and Kentucky also are threatening Indiana’s casino revenue.

Several tribal casinos have opened in southwestern Michigan in the past few years, including Four Winds — just minutes away from Blue Chip Casino in Michigan City. Illinois lawmakers are considering whether to allow casinos in downtown Chicago and its southern suburbs that could draw away business from the Indiana casinos in Hammond, Gary and East Chicago. And in Kentucky, Gov. Steve Beshear is pushing to lift a constitutional ban on casino gambling in his state.

Posted 12/27/2012