Convenience gambling — video machines on nearly every street corner — continues to boom in Illinois.
Destination gambling — driving to one of the state’s 10 casinos — continues to decline in popularity,
But the two vices combined are setting new records in terms of revenue generated and tax receipts paid to state and local governments.
That’s one of the conclusions contained in a recent report prepared by the state Commission on Government Forecasting and Accountability.
Since 2012, the first year of video gambling in Illinois, the number of machines in operation has jumped from 2,293 to 33,294. During that same time period, the income generated by the terminals has increased from $12.3 million to $1.677 billion.
While revenue generated by video machines has been going straight up, revenue collected by the 10 casinos has gone straight down. The casinos generated $1.354 billion in the 2019 calendar year, less than the $1.375 billion collected in 2018 and way less than the $1.639 billion collected in 2012.
The decline, commission analyst Eric Noggle stated, “marks the seventh consecutive calendar year that AGR (adjusted gross revenues) have fallen in Illinois compared to the prior years.”
While video gambling operators are celebrating and casino operators weep, state and local officials continue to benefit.
The commission report states that “gambling as a whole has actually increased statewide by a significant margin” — from $1.651 billion in 2012 to $3.031 billion in 2019.
Given the legislature’s decision last year to dramatically expand gambling in Illinois, those revenues seem certain to continue to increase. At the same time, it is unclear who will benefit from the expansion.
Legislators approved increasing the number of casinos from 10 to 17. New sites include Chicago and Danville. It also permitted casinos to increase their numbers of gambling positions from 1,200 to 2,000.
Two new “racinos” — race tracks expanded into casinos — also got the nod from legislators.
Video gambling parlors were allowed to increase their number of seats from five machines to six. Since there already are 7,180 gambling parlors in Illinois, “it is expected (that the number of machines) will increase significantly in 2020,” the commission stated.
Finally, legislators also approved sports gambling, opening up what they hope will be a whole new source of state and local tax revenue.
Money-hungry legislators are usually wary of picking taxpayer pockets themselves, sometimes relying on third-party cutouts (gambling entities) as a means of generating tax revenues. That’s because taxpayers, as a retired legislator once explained, deeply resent tax increases while, at the same time, are willing to line up around the block for a chance to gamble.
Gov. J.B. Pritzker, however, has taken a different approach. He favored the gambling expansion while instituting a series of new taxes, including those on gasoline, cigarettes and license fees. He’s also proposing to raise state income taxes via a progressive income tax amendment that will be on the fall ballot.
The question, of course, is just how much money gambling will generate in taxes for state and local governments. While gambling revenues total in the low billions, the state’s budget deficit, unpaid bills and pension under-funding are in the high billions.
One of the biggest potential sources of new gambling revenue is the casino proposed for the city of Chicago. That project, however, has been slowed because legislative rules applied to that proposal impose taxes that are so high, no potential licensee has stepped forward.
Chicago Mayor Lori Lightfoot is attempting to work out a compromise agreement with Pritzker and legislators. The issue will, no doubt, come up during the current legislative session.
