By DEANNA MARTIN

Associated Press Writer

INDIANAPOLIS — Lawmakers appeared closer to a deal Sunday to allow slot machines at Indiana’s two horse racing tracks — a move that would funnel more than $500 million toward property tax relief for homeowners.

It would be Indiana’s biggest expansion of gambling since the Legislature authorized riverboat casinos in 1993, but lawmakers were working on another bill to crack down on illegal gambling elsewhere. That proposal would step up enforcement against illegal video gambling machines sometimes found in back rooms of bars, gas stations, truck stops and other locations.

Some say the two bills together could result in an overall decrease in gambling — something Gov. Mitch Daniels has said he supports.

Senate President Pro Tem David Long, R-Fort Wayne, said lawmakers faced mounting pressure to approve the slot machine bill to help homeowners cope with property tax bills that could jump nearly 24 percent on average this year.

“Our constituents want us to help,” Long said. “We’re doing what we can, even though the source of the money is certainly not my choice. It is where we are right now given the circumstances the state’s facing.”

Under the compromise slots plan, the pari-mutuel race tracks in Anderson and Shelbyville could each pay a $250 million licensing fee to install up to 2,000 slot machines. The legislation would impose a graduated slot machine wagering tax — 25 percent on the first $100 million of adjusted slot machine receipts each year, 30 percent on the second $100 million and a 35 percent tax on revenues exceeding that amount. Both the fees and the tax money would be directed to property tax relief.

The bill would also require the race tracks to spend at least $100 million to build the facility to house slot machines. Supporters said that would ensure quality facilities at the horse tracks.

Lawmakers had considered permitting riverboat casinos to pay a $25 million fee to go from a riverboat to a barge — allowing them to more cheaply build bigger facilities on platforms instead of boats. Those provisions were removed after some casinos objected.

The bill could affect riverboats, however, because it would increase the tax rate to 40 percent for boats with adjusted gross receipts of more than $600 million a year. No riverboats currently take in that much per year.

The bill to crack down on illegal gambling would provide extra officers to go after video gambling machines, sometimes called “Cherry Masters.” Estimates on how many machines are being operated illegally have varied widely, but generally have ranged between 10,000 to 20,000.

That proposal would also create an administrative position that could revoke alcohol, tobacco, lottery and retail licenses from businesses that house illegal gambling machines.