Latest casino expansion bill won’t generate big revenue

Courtesy of Jamie Adams
Source: Jamie Adams/Creative Commons

As lawmakers push to pass yet another version of a casino expansion bill, SB 1739, analysis shows that it will rake in less money for the state than previous bills and will fall short in helping alleviate Illinois’ pension crisis.

The latest version would allow for a casino in Chicago and four other casinos including one in the south suburbs, Waukegan, Rockford and downstate Danville. In addition, casinos would be added to the six operating racetracks in Illinois.

Policy analysts say the latest bill in its current form isn’t likely to generate significant new revenue and may even produce less than earlier versions.

“It’s difficult to say how much revenue is going to come out of the [new] bill until I see the final product,” said Eric Noggle, senior analyst at the Commission on Government Forecasting and Accountability. “But the amount of revenues aren’t going to be as high as some people think.”

Total recurring revenue – revenues generated every year under current law –was estimated at $335 million for the previous bill, SB 1849, according to the commission, a bipartisan group that analyzes any type of legislation that impacts state revenue.

According to Noggle, only 1,200 gaming positions are allowed in SB 1739 while its predecessor  included 1,600 positions. A graduated tax structure for riverboats – which leads to more money being accumulated with a higher tax rate – is negatively affected by fewer positions being available.

“When you’re not allowed to add more positions to your current casinos, then you’re not accumulating revenues like you normally would,” he said. “So this particular bill…is going to bring in less money than what you’ve seen in past versions.”

State Sen. Terry Link (D-Waukegan), primary sponsor of both casino expansion bills SB 1849 and SB 1739 says the important point is that new casinos will keep gamblers in the state and add to Illinois’ bottom line.

“Basically, what we’re doing is not only enhancing opportunity for gaming in the state,” Link said. “It also would keep this money in the state that is going to Indiana and Wisconsin.”

Link describes SB 1739 as a two-part bill, the first part increasing the number of casinos, and the second introducing “I-gaming,” or internet gambling. According to Link, all the revenue generated from “I-gaming” would be directly funneled into the pension system.

“I describe it very carefully, more like frosting on the cake,” he said. “It’s not going to solve our pension problems but…it helps alleviate the burden.”

According to Noggle, under the new legislation, there are no revenues from casino expansion that go directly into the pension system. However, the bill does provide that a portion of the revenues from “I- gaming” go to the Pension Stabilization Fund. Estimates of how much that will be are still unknown.

Critics say another problem is that new casinos may simply cannibalize on the older ones.

“It’s like putting up new houses when the housing market is crashing and there’s no one to buy the houses,” said Tom Swoik, executive director of the Illinois Gaming Association.

Swoik says he is not against casino expansion as long as it’s reasonable.

“If you got another option that’s so close, then people will go to the newer casino and not go to the older casino as much,” Noggle said, citing the year-old Des Plaines casino as an example. “So while the new casino has brought in a lot of money, it’s hurt the other casinos,” he said.

SB 1739 is currently being reviewed in the State Senate.

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