FRENCH LICK , Indiana - State regulators gave conditional approval yesterday to an investment group led by Bloomington philanthropist Bill Cook to build the state's 11th and final riverboat casino in French Lick.

The Indiana Gaming Commission unanimously approved a resolution authorizing the agency's staff to complete an agreement in the next two months with the group, known as Blue Sky Casino LLC.

Blue Sky includes the Cook Group Inc., a medical device manufacturer owned by Bill Cook, and the Lauth Group Inc., an Indianapolis real-estate development company. The casino will be operated by Majestic Star Casino of Gary.

Blue Sky -- the only applicant for the venture -- has proposed a $70 million casino with 1,000 slot machines in a three-acre lake beside the French Lick Springs Resort Hotel.
It also intends to sink nearly $150 million into restoring the historic French Lick hotel and another at nearby West Baden.

The Blue Sky casino and 200 renovated rooms in the French Lick hotel could be open by fall 2006.
But regulators announced yesterday -- to loud groans from Orange County residents in a packed ballroom at the French Lick resort -- that before giving the project final approval they need to review documents outlining the financing for the venture.

They also lack other key contracts, including the casino management agreement between Majestic Star and Blue Sky.

Once all the documents are submitted, probably by mid-August, the state will start negotiations on an operating contract, said Ernest Yelton, the gaming commission's executive director.
Orange County supporters -- dressed in blue T-shirts -- responded with loud applause when the commission voted.

After the meeting, Butch Cox, a self-employed concrete contractor, said he was excited and relieved by the vote.

"This is what the (area) needs," he said. "It's been such a long wait."

Although gambling regulators say they're confident about Blue Sky's financial ability to invest such a large amount in the economically depressed county, some gaming commission members expressed skepticism yesterday about the venture's revenue forecast.

Donald Vowels, an Evansville lawyer who has served on the commission since its inception 10 years ago, asked why annual projections had grown from $60 million for a casino proposed last year by Donald Trump's company to Blue Sky's $115.8 million.

Vowels also noted that a gaming-market analysis by The Innovation Group of New Orleans projected that nearly 80 percent of the patrons would be people who live within 50 miles of the casino and come for a day trip, not an overnight stay.

Given that other Ohio River casinos draw from the same region, he asked, "Isn't that counterproductive to what we're trying to do here?"

He added, "Your marketing area will overlap significantly with the other casinos."

Robert Lauth, president of the Lauth Group, defended the projections. He said Blue Sky believes that the two resorts and the state's smallest casino can draw from a larger area, attracting gamblers from communities up to 200 miles away.

As for the increase in revenues, Lauth said Blue Sky expects to sell French Lick and West Baden as a unique destination resort for groups and conventioneers.

Blue Sky representatives conceded that overcoming the casino's remote location, at least 30 miles from the nearest interstate highway, will require a savvy marketing and promotional strategy.

Cash promotions, car giveaways and an aggressive approach to building a player database will form their core approach, said Christina Felts, corporate director of marketing for Majestic Star.

Commission member Ann Marie Bochnowski said residents shouldn't take the commission members' questions about the project as criticism.

She said the commission was making an honest effort to ensure the community gets the best contractor for the project.

"A year ago, we thought we were making your dream come true," she said. "Hopefully, today will be the beginning of the real dream."

Vowels added in a brief interview after the meeting that he raised the questions publicly because he has real concerns about Blue Sky's projections.

Nonetheless, he said, all the competitors for the existing five Ohio River casino licenses clearly understood that the state originally envisioned 11 riverboats -- six in Southern Indiana and five on Lake Michigan.
So their revenue forecasts should have taken into account the planned 11th casino in rural Southern Indiana.

Orange County's leaders have worked since 1991, two years before casino gambling was legalized in Indiana, to bring gambling back to the French Lick area.

Illegal gambling thrived in the early 20th century when the Springs Valley lured the rich and famous to high-end resorts and healing mineral springs.

Several residents reminded the commission yesterday that they were beginning to wonder if their casino would ever become a reality. The plans derailed last year after the state gaming commission chose Trump to develop a $110 million project.

The company's bankruptcy filing last fall left it unable to meet deadlines, and Trump eventually withdrew under pressure from gambling regulators.

Yelton said yesterday he has no concerns about Blue Sky's ability to line up the financing quickly and get started on the project.

"The financing is not going to be an issue," he said.