04/07/2011 1:41PM

Indiana Downs owner files for bankruptcy

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The parent company of Indiana Downs in Shelbyville, Ind., filed for Chapter 11 bankruptcy protection in Delaware on Thursday, joining the parent company of Indiana’s other racetrack-casino, Hoosier Downs, in bankruptcy court.

In a release, the company, Indianapolis Downs LLC, said the track and its casino would remain open while the company reorganizes. The company claimed that it was generating enough cash flow to pay its operating expenses, but would seek to restructure its $500 million debt.

According to the release, the company has secured $103 million in debtor-in-possession financing.

Indiana’s two racetracks were allowed to open casinos through legislation passed in 2007, but the legislation required the racetracks to pay an up-front licensing fee of $250 million. The parent companies of both tracks raised the licensing fee through private debt issues, and both have struggled to meet their debt obligations over the past two years.

Both tracks are currently seeking legislative relief on the amount of gambling revenue collected by the state in taxes. Separately, the current state budget has proposed slashing the amount of gambling revenue directed to purses and breeders awards in half, a measure that the racing industry is fighting.

Centaur Gaming, the parent company of Hooiser Park, filed for bankruptcy one year ago. The company has continued to operate its casino and racetrack while in bankruptcy court.