Illinois Lawmakers Bet on Gambling; Governor Threatens Veto

Illinois Lawmakers Bet on Gambling; Governor Threatens Veto
June 18, 2011

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)

Illinois lawmakers have placed a huge bet on gambling to boost the state’s economy.

It’s a bet the chairman of the Illinois Gaming Board calls “garbage.”

Lawmakers at the end of May passed legislation that covers more than 400 pages and more than triples the amount of casino gambling now allowed in the state. Among other things, the legislation would allow:

•    Chicago to build and own a casino;
•    construction of four new casinos elsewhere in the state;
•    expansion of the number of casino gambling positions from 10,800 to 38,000; and
•    slot machines at Midway and O’Hare airports in Chicago as well as at six horse racing tracks in the state.

This is in addition to 45,000 legalized video gambling positions that lawmakers approved two years ago and that are still coming on line.

Veto Threat
Gov. Pat Quinn (D) has threatened to veto the measure. Lawmakers say they will look for ways to scale back the bill to avoid a veto.

Even with the possibility of a smaller gambling bill, Gaming Board Chairman Aaron Jaffe told reporters for the Chicago Tribune, ”You can’t make perfume out of a pile of garbage.”

Jaffe noted the legislation names the cities to receive new casinos. Until now the gaming board has made those decisions after months of deliberations and vetting of prospective casino operators. The law also ends fingerprinting of slots operators to aid in criminal background checks. And while the state would see a huge expansion of gambling, there is no provision for a similar increase in gaming board resources.

‘Gambling Giveaway’
“I think the biggest thing the people of Illinois should realize is that if the gambling facilities in Illinois had been taxed reasonably over the last 20 years, Illinois would have at least another $20 billion in tax revenues,” said John Kindt, professor of business and legal policy at University of Illinois. “While everybody’s taxes are going up, gambling taxes are going down again. This is a giveaway.

“The bottom line is Fortune 500 companies know this. They know Illinois does not have stability of government, does not have fiscal responsibility, is not business-friendly, and is not family friendly,” Kindt said. “They’re not going to come to Illinois because of gambling. We’ve done studies on that. Just as companies won’t locate in high-crime areas, they’re not going to locate in high-gambling areas.”

Gambling Divisions
The bill has divided the state’s gambling industry and local governments, with operators of existing casinos – and cities with existing casinos – opposing more gambling out of fear their customer base and tax revenues will be diluted.

Kevin Stahr, public information coordinator for the City of Aurora, home to the Hollywood Casino Aurora, said city officials lobbied against the bill because they “fear this would seriously impact revenues. We haven’t put a dollar figure to it yet but feel the impact could be significant.”

Aurora in 2010 received $10.5 million in gambling revenue, down from $15.4 million in 2007, he said. He attributes the decline to the recession that hit in 2008.

“People don’t have as much disposable income,” Stahr said, adding the disposable income gamblers are spending could be spread thinner with the gambling increase.

Bare Minimum
The bill passed with the minimum number of votes needed for approval. Its chief sponsor was Sen. Terry Link (D-Waukegan), who argued it would create jobs, boost tax revenues, and keep Illinois gamblers from going out of state to gamble. The bill includes a new casino in Link’s district.

"The one group I'm going to put out of business is the bus drivers," Link told reporters upon the bill’s passage. "They're carrying Illinois people. And they're not going half empty. They're going full. Every day of the week. And they're going with our taxpayers and our tax dollars."

Rev. Phil Blackwell of First United Methodist Church of Chicago has long opposed gambling as a member of the Task Force to Oppose Casino Gambling in Chicago.

Gambling’s Costs
“Tripling the state's dependency on gambling is based on the false notion that it is ‘free money,’ Blackwell said. “The pushers of the legislation that passed in Springfield acknowledge only one side of the ledger -- receipts . . . What they refuse to admit is that there are dollars-and-cents costs, too. Either they are naïve and do not know it, or they are sly and do not want to admit it.”

He cited research by economics professor Eric Grinols, author of “Gambling in America” (Cambridge University Press, 2004).

“He allotted the casinos the most favorable result concerning receipts, and then totaled the costs, both direct and indirect, but all attributable to the impact of gambling, and concluded that the community pays about $3 for every $1 it makes. The costs, however, are spread across a wide range of regulatory bodies, law enforcement agencies, court systems, and social service agencies, so they are hard to see at first glance.”

He added, “The insidiousness of a Chicago-based casino owned and operated by the city is devastating to anyone who stands for good government. The idea that the local government would become ‘The House’ is cynical, since it requires the very people sworn to ‘serve and protect’ the citizens of the city to create more and bigger losers.

“Some proponents claim that a Chicago casino would attract tourists, but the city's own studies over the past decade have shown that between 65 percent and 80 percent of gamblers at a Chicago casino would come from Chicago," Blackwell said. "It is a way of the city cannibalizing its own people.”

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing editor of Budget & Tax News.

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)