by Steve Norton
CEO, Norton Management

Illinois gambling proposal would add casinos in 6 places

My comment:

As a gaming executive, that was in Illinois at the start of gaming, and have since been following Illinois and all gaming jurisdictions; I would have to say that this State has been the most inconsistent in casino gaming in the entire US. Presumably Video Gaming Machines were approved in 2012 to raise new tax revenue for a State in desperate need of new taxes. But when I study the issue, I find that 9 riverboat casinos in 2007, produced more tax revenue that a combined 10 riverboats and 5,726 video license holders with 24,480 machines in 2016. In 2007, the 9 riverboats with around 250 table games and just under 10,000 slot machines, paid $833 million in taxes on $1.92 billion in casino win (a tax rate of 43.3%).

But the big shock, when the video slot law was passed in 2012, the bill proposed a tax of only 30% on the win, on a gaming business that only has to purchase $100,000 worth of slot equipment. But, on average with 5 machines, slot revenue will exceed $230.000 annually or $162 thousand after tax.

Other states that passed casino bills, like Pennsylvania, New York and Maryland have tax rates on slot win that is 55% in PA, with a up front fee of $75 million; initially 67% in Maryland and over 70% at the NY horse tracks of Yonkers and Aqueduct.

For the IL riverboats, project investment ranged from $ 20 million to over $100 million and the original tax of 20% (plus a $3 entry fee). at one time reached 70% on higher levels of win.

So it is obvious that tax revenue was not the real motive for the Illinois Legislation that approved up to 5 slots at places that possessed an IL liquor license. The riverboat casino taxes were $832 million in 2007, and would have easily passed the $billion mark, with the addition of Rivers Casino, in Des Planes; which by itself paid over $305 million in 2015.

It would seem the liquor industry in Illinois has a strong lobbying organization. It interesting that many businesses have added liquor sales to non traditional operations, like hair salons, bowling alleys, coffee shops. Even a senior citizens residence applied for a license, but may have been denied.

If the State is in such dire financial shape, it would seem a logical solution to raise the video gaming tax, like the State has done to the riverboat casinos on multiple occasions.

Now new Legislation is contemplating adding more riverboat casinos, increasing the gaming positions allowed from 1,200 to 1,600 and allow slots at race tracks. While putting a few existing riverboats into bankruptcy, it might also be a good time to correct a gross error and raise the video tax on liquor establishment and truck stops to at least 50%. .