Money is again flowing from two casino boats to the coffers of Gary, Indiana. The city received a check for more than $576,000 from Don Barden, the owner of Majestic I and Majestic II casino boats.
The news couldn’t be sweeter for a city that’s been on the brink of financial collapse due to a reduction in property tax revenue.
“The agreement calls for the immediate resumption of monthly payments to the city of Gary,” Susan Severtson, an attorney who worked on resolving the issue for the city of Gary, said Friday. “We think that it’s a favorable outcome for the city of Gary.”
Sixteen years ago Gary thought it had hit the jackpot because the Indiana General Assembly announced the city could have two floating casinos on its Lake Michigan shoreline. The lake-bound boats allowed the city to rake in millions every year from the Majestic Star, which is owned by Detroit businessman Don Barden. The second boat was owned by real estate magnate Donald Trump.
The original local development agreement called for Barden to pay three percent of adjusted gross revenue to the city monthly. Trump, meanwhile, had to pay four percent. Barden eventually purchased Trump’s boat, and thus owned both casino licenses in the city. In 2005 Gary Mayor Scott King and Barden entered into a new revenue sharing agreement that called for the the city to collect three percent of adjusted monthly revenue from each boat.
But in 2008, monthly payments stopped. Barden said it was due to an overpass that was never built from Cline Avenue directly to his casino boats and hotel at Buffington Harbor.
But the payment stoppage also came right around the time Barden’s company filed for bankruptcy. Payments designated for the city were supposedly dropped into an escrow account created and managed by Barden, Severtson said.
Barden will now resume monthly installments to Gary, based on the revenue agreement made in 2005.
Severtson says the city will also use some of the casino revenue to build an overpass that leads close to both Majestic casinos.
The city, she says, is also due a sizable windfall from Barden from the missed monthly payments. Severtson says the agreement with Barden still needs to be finalized.