Photo: Michael Tercha/Chicago Tribune
You hear those bells and whistles? The gentle collision of dimes and quarters? It’s the sound of another push for expanded gaming in Illinois.
While Michael Madigan and the Illinois House dealt with pension reform this week, the state Senate took a crack at gambling, passing through its chamber SB 1739 by a 32-20-1 margin. The vote goes to the state House next, and then potentially on to the Governor.
If signed into law, the bill would authorize the construction of casinos in Chicago and four other cities, permit the installation of slot machines at Illinois racetracks, and give the state’s 10 existing casinos the opportunity to scale up their operations. (Block 37 and the Old Main Post Office have been bandied about as potential Chicago sites, among others.) Stripped out was a a controversial plan that would have allowed the Illinois Lottery to offer casino-style wagering online.
Gov. Pat Quinn has previously vetoed two gambling proposals, and he hasn’t thrown his support behind this one, either. That said, he sounds more sanguine about the idea than ever before, applauding the upper chamber yesterday for making “progress.” Mayor Rahm Emanuel, for his part, called the legislation “vital” and urged lawmakers to pass it before the end of spring session.
Quinn’s objections have generally centered on oversight and ethics. State Sen. Terry Link (D-Waukegan), the bill’s sponsor, thinks this version should assuage the governor’s concerns:
Waukegan Democratic Sen. Terry Link, who sponsored all three of the gaming bills, said he made the changes in response to the governor’s criticism of past plans. The latest version of the bill bans casino license holders from contributing to political campaigns, something the governor has pushed for in the past. It also gives the Illinois Gaming Board the last word in oversight on the proposed Chicago casino. A body would be created to own the casino, so it would not be directly owned by the city. Under the plan, the Chicago Casino Development Authority would contract with an operator that would actually run the facility. However, Quinn said he was worried that the authority might try to circumvent the regulatory power of the Gaming Board.
Six other gambling states don’t allow political contributions from gambling interests, and courts have split on the constitutionality of the approach. (Why single out casinos as opposed to other industries that do business with the state?)
Common Cause published a report in 2011 showing that over a 10-year span, gambling interests gave state lawmakers more than $10 million in campaign cash collectively. That’s a lot of money, no doubt, though the flow was not one-sided. Existing casinos—fearful of potential competition—were almost as aggressive as proponents of expansion, and were able to work reduced tax rates into this bill as a result.
Let’s just say SB 1739 gets lucky. How much additional revenue would the sucker generate?
The state would receive $1 billion up front in various payments from casinos required under the proposal. After that, Link points to a report from the Commission on Government Forecasting and Accountability pegging the figure at about $268 million annually. (Currently, commercial casinos produce $489 million in gaming tax revenue each year.) Of the bump, about $128.7 million would be slated for education. Some of the money will be passed along to local governments. And the windfall for the financially beleaguered state government would be muted when compared to what gambling entities would collect, given the “smorgasbord of tax cuts and tax breaks” they’ll receive if the bill becomes law:
In response to questions from the Tribune, the commission conducted a more detailed analysis and concluded that with the new gambling venues, local tax revenues would grow annually by $110 million, or by 102 percent. That income is expected to double because it’s tied to a $1 tax paid at the door by each casino patron, money that would increase because of the expansion in gambling locations.
The state’s annual revenue would increase by $104 million, or just 19 percent, according to the estimate. At the same time, gross revenue for casinos would more than double to $3.76 billion from $1.8 billion per year thanks to the dramatic expansion of gambling locations, to 21 from 10, according to the same forecast.
The bill does set aside money ($13 million) for “depressed communities,” a request of black legislators, along with $5 million in funds for compulsive gambling treatment. Historically, Illinois has done an awful job providing programming for gambling addicts; in 2010, Illinois spent $960,000 on hotlines and treatment programs, the third-lowest amount of any state with land-based and riverboat casinos, according to the Chicago Reporter. As Whet Moser has researched before, it’s an open question whether or not casino gambling is economically regressive. Chance games, like slots, tend to be.
One benefit? The expansion could buoy the state’s horse racing industry, which has been in steady decline for ages but still supports some 37,000 jobs, from jockeys and trainers to veterinarians and feed sellers. Racetrack owners have consistently lobbied for slot machines, arguing it’s the only way they can afford to raise purses and attract potential bettors. Natasha Korecki and Dave McKinney’s 2011 piece in the Sun-Times lays out the bitter economics of horse racing in detail:
Virtually every financial measure of the sport has trended downward since the 1990s because casinos siphoned away bettors, and higher purses in states that allowed slot machines at racetracks lured the best horses away … In 2010, the state took in only $7.4 million from horseracing, an 84-percent slide from three decades ago. Total wagering in 2010—nearly $725.7 million—dropped by 44 percent compared with 1992 and represented the lowest amount of betting since the early 1970s, according to the Illinois Racing Board’s soon-to-be-released 2010 annual report.
As a result of less wagering, racing is not as lucrative for horse owners. Total purse money—nearly $54.3 million—has slid 54 percent since 2002. Harness racing purses dropped by 62 percent since 2002.
Mayor Emanuel, for what it’s worth, has pledged that 100 percent of revenues from the Chicago casino would go to pay for Chicago school infrastructure. There’s certainly enough empty buildings left to maintain.