By Steve Norton
CEO, Norton Management

Illinois Raked in More Gambling Tax Money Despite Casino Decrease

My comment:

Illinois not only cost itself substantial tax revenue from its riverboat casinos but then passes a new form of gaming with Video Gaming Terminals at a lower tax rate in spite of the enormous differential in development cost per gaming position.

In 2007 there were 9 riverboat casinos, that won $1.983 billion, paid taxes of $834 million (42% tax), enjoyed annual admissions of 16.5 million visitors, employing about 8,000 persons. Instead of growing during the next 10 years after the state introduced VGTs, those 9 riverboats saw their win decrease by $1.008 billion (down 51%), taxes declined by $525 million (-63%), and employment losses exceeded 3,000 persons (almost 40%).

The new VGTs in 2017 were at 6,359 locations, with 28,771 machines, and won $1.3 billion, but with the ridiculously low tax of 30%, only produced $391 million in new taxes, not offsetting the $525 million lost from the original 9 riverboats.

Looking at New York, Pennsylvania, and Maryland, VGT's could have easily been taxed at 50 to over 60% and still been very profitable for the establishment owner and route operator. The VGT deal was so good that many businesses, like bowling alleys, beauty salons, and cafes, applied for liquor licenses, easily approved by communities who were to benefit from a share of the new tax revenue. The state recently raised the tax rate on VGT's to 33% but continues to potentially lose $300 million or more annually by playing politics.