Has the Illinois casino industry got a deal for Gov. Rod Blagojevich and Illinois legislators! All state government has to do is remove limits on the number of gaming positions at casinos and, oh yes, also cut the casinos’ taxes. By the industry’s reasoning, the extra bucks would allow casinos to expand and–despite that tax rate decrease–generate more tax revenues than they do today.
Well, not so fast. These are the same casino companies that have been whimpering like Dickensian waifs since legislators last year raised the top tax on the state’s most profitable casinos to 50 percent from 35 percent, and raised the casino admission tax by $1 per gambler.
Yes, 50 percent is a stiff rate. However, that rate only kicks in when a casino’s adjusted gross receipts top $200 million. The industry says Illinois’ rate is the highest in the nation. Which suggests that a whole lot of states are leaving a whole lot of money on casino operators’ tables. There are not many lessons for other state governments to learn from Springfield, but raising taxes on gambling is an exception to that rule.
The casino companies love to talk about the competition they face from casinos in abutting states–Indiana, Missouri and Iowa.
But they don’t like to admit they are protected from competition by Illinois law, which caps the number of casinos at 10. The nine now operating–one license remains tied up by the toxic corporate waste site known as Emerald–rely on licenses that Illinois originally issued for next to nothing, and which have yielded untold profits. Untold because the Illinois Casino Gaming Association says that even as its state-protected members cry poor to Springfield, they won’t disclose the profits they reap on Illinois casinos.
Blagojevich generally opposes an expansion of gambling in Illinois. He also has pledged to balance Illinois’ budget without raising taxes. It’s not clear those two positions can continue to coexist. If they cannot, the Tribune believes the latter is more important than the former.
Which leads to a lesser-of-two-evils verdict: Better for Springfield to allow more gaming positions at the casinos and rake in tax proceeds from people who voluntarily gamble than to hike income or sales taxes on all Illinois citizens. So, go ahead, hike the number of gaming slots.
But cutting taxes for casinos who say they then would create more tax revenues is out of the question. What companies couldn’t argue that slashing their taxes would allow them to spend their savings in other ways to generate more taxes in the future?
The industry’s weakest argument is based on the truism that cutting the tax rate would make the moribund Emerald license more attractive to new bidders. That might increase the state’s one-time take from the eventual sale of Emerald’s license by $200 million.
Sounds great–except that keeping the top tax rate right where it is will generate far more money for Springfield from all casinos far into the future. The industry’s response? This would be a fast infusion of money.
No argument here that casino companies know all about fast money. But their ceaseless concoction of new reasons why their taxes should be cut have gone from tiresome to annoying. Many legislators have heard a bellyful from casino operators who turned their cheap, state-protected licenses–which ultimately belong to Illinois taxpayers–into fabulous wealth.
As this page argued in August: The next time casino owners start whining aloud about their financial straits, legislators should instruct them to please do so in the privacy of wherever it is they go to count all the loot.
