Did Illinois Make The Right Move on Gambling Expansion? Expert Says It's Complicated

Sep 20, 2019

Newly-released tax data from Illinois’ gambling businesses shows an industry in flux. 

Though video gambling is flourishing, traditional shops like casinos and racetracks have been losing money for the last several years.

The data, detailed in a report by a state commission, comes on the heels of a sweeping gambling expansion bill that makes games of chance a big part of Illinois’ push to bring in more tax money.

To better understand what’s going on, reporter Sam Dunklau spoke with Tom Swoik, Executive Director of the Illinois Casino Gaming Association.

He says the gambling industry can help Illinois shore up its finances, but there may already be too much of it to make a difference.

SD: Can you give me a little context about what's been going on with casinos?

TS: Back in 2006 and 2007, we had some pretty good years. And then the first thing that hit us was in 2008, the smoking ban went into effect. Our revenues in 2008 dropped almost 21 percent. Then, the economy started falling off about the same time, so part of that was because of the economy. We saw that revenues continue to go down until about 2011 or 2012. Revenue started to go back up at some of the casinos, and this was happening nationwide. Then, all of a sudden, video gaming started in 2012. In 2013, it really took off and then start going down again.

I think our admissions have gone down something like four million a year. Basically, people are going to local establishments to gamble, rather than just taking a trip to the casinos.

SD: And that that shift is due in part to just a proliferation of video gaming?

TS: Yeah! You know, there are 33,000 machines across the state. That's the equivalent of some 20 additional casino statewide.

SD: There's a bit of an implication of this report: gambling across the state is slowly increasing, in terms of the amount of tax revenue that's providing to the state, albeit in a different form. But, a big part of this new legislation is six new casinos [that] could be built within the next several years.

Given the downward trend of casinos, is that going to be a sure bet for the state?

TS: I think it is. You know, we have opposed that kind of expansion for years. Going from 10 casinos, to the potential now with "racinos," you're talking like 21. We're actually doubling the number of casinos. We believe that what you're seeing already, and I think the report points this out in some places, is not only are many of the areas saturated, but you're seeing cannibalization: just a shift of dollars from one one venue to another.

I think that's going to absolutely be the case when with the new ones that may be built. When you're talking about Rockford, Waukegan, Danville, I think one of the things you're going to see is that having a casino there is going to decrease the video gaming, to the extent that some of the smaller businesses that have survived because of video gaming may go out of business now, because some people are going to go to the casinos in those locations.

Rockford has got the second highest number of video gaming in the state, and [if] all of a sudden you're going to open a nice casino, people are going to go to the casino.

Since 2012 we've gone from basically 12,000 gaming positions at the casinos in the state...now, all of a sudden, with the video gaming, you've got 45,000 positions. Now with this new legislation, we're going from 45,000 to potentially up to I think 83 or 84,000. So you're doubling again! I think this works out that there will be a gaming position in the state for every adult for every 124 or 134 adults over the age 21.

You know, at some point, too much is too much.

SD: State regulators, state lawmakers, even local municipalities are relying on this new gambling expansion to provide an economic engine. Your thoughts on that?

TS: They'll always be some growth. I mean, anytime you have a new facility, it's going to take revenues from others, but there's going to be some growth. You saw that with with Rivers when they opened up, so those always be some new growth.

I think you're starting to see some of the problems with this new bill already...Arlington pushed for 20 years to have a "racino," and spent a lot of money on lobbyists over the years to turn Arlington racetrack in a racino. Now they're saying because they own part of Rivers, and are also bidding on the new casino in Waukegan, that they're not going to turn Arlington into a racino because it'll be just too much more competition. That makes sense.

I think you're going to see some some of the same things going on. There's concern about the one in Danville, because Terra Haute may be opening up a new casino, and even if Rockford opens up, you're going to have one right across the border in Wisconsin.

I don't believe you're going to be talking about same kind of facility that we have now; I think you may see a lower-level facility. I think you're going to see lower bids; I've seen members saying that they're anticipating $200 million to $300 million per license bid. I'm going to be surprised if some of these areas even have two [companies] bidding on them.

So, I think I think what you're going to see is there'll be some increases in revenues, but it's not going to be nearly what people are anticipating.

SD: From from your vantage point, what would be the ideal gaming situation in this state? One that would not only allow casinos to be profitable, but the state to reap the tax reward? Did we get any closer with this expansion package?

TS: That's a really good question. You know, for years, we were looking at expansion. There was a time before video gaming and before the market changed so much [that] my members probably would have would have worked to put votes on the Chicago-only casino. If there was expansion and it was just for the city of Chicago to have their their casino, and to open up the number of gaming positions for the existing casinos, that made a lot of sense to us seven or eight years ago before video gaming started.

Once video gaming started, if video gaming would have been allowed, but would have been restricted by some mileage or some way around where casinos were...in other words, still have video gaming but you know, if you've got casinos in Joliet, no video gaming within [say] 50 miles...that would have benefited the smaller communities downstate and around the state. Video gaming would have still generated new revenues for the state without necessarily taking them away from casinos.

I've been doing this now, between the Gaming Board and the [Illinois Casino Gaming] Association for almost 25 years; that would make the most sense to me.

Illinois has not been necessarily a gambling industry-friendly state. You never know what the hell is going to happen. You know, we've been [fighting expansion for] 15, 20 years, and it finally got done. But you never knew when it was going to happen, or what it was going to look like from year to year.

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