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Illinois Raked In More Gambling Tax Money, Despite Casino Decrease

Domas Mituzas
via Flickr CC BY 2.0

Illinois brought in more tax money from gambling in the fiscal year that ended in June. That’s just one of several highlights from a new reportreleased Monday.

The state received around $1.4 billion in gambling taxes, up more than three percent from last year. The uptick in revenue is thanks in part to more than 3,000 new video gaming terminals that have come online this year, which brought in an additional $48 million to Illinois' coffers.

That and other revenue round-ups in the report, from the Commission on Government Forecasting and Accountability, demonstrates a shift in the way people are gambling. More people used video gaming machines in the last year, while fewer placed bets at casinos and racetracks. Tax money from riverboat casinos dipped by several million dollars this year alone, and racetracks accounted for only a small fraction of the take.

The new tax data comes as Illinois lawmakers have given the green light for six new casinos, and legalized sports betting, in a sweeping gambling expansion bill signed into law in June. The move is expected to provide the state more tax dollars and generate jobs for local communities.

But Eric Noggle, a state revenue analyst and one of the authors of the report, cautioned lawmakers and others not to be overly-optimistic. Based on this year’s tax numbers, he believes gambling expansion might not be the jackpot some have trumpeting.

“We may, at the end, be slightly disappointed in how much money we're actually generating from it," he said. "But, I don’t think it’s going to be something that we’re going to look back [at] and go, 'we lost revenue on this.’”

The report warned competition from other states and over-saturation within Illinois might make all the new gambling options, particularly the new casinos, less lucrative.

"We're investing in something, especially with the casinos, that has been on a downward trend," Noggle said.

Others have suggested the high tax structure set by law for a coveted casino within Chicago's city limits will sour any deal, and reduce revenue potential. The CGFA report points to an effective tax rate of nearly 72 percent for such an operation, with profit margins for an operator at a mere one to two percent.

During the upcoming veto session, state lawmakers may consider changing that structure to make the casino more appealing.

Meanwhile, the state approved five more licenses for new casinos downstate. But a few would be near the border of states with either an established operation, or one that may open soon. To complicate matters further, there are already 10 casinos throughout Illinois, and downstate communities like Springfield and Decatur already boast flourishing video gambling businesses.

In all, Noggle pointed out, new casinos may not make much of a difference overall.

“Everybody likes to go to a new thing, so I think that the new casinos will do well." Noggle explained. "But if you’re an existing casino, I have a lot of concern that they are really going to be impacted. The cannibalization could be significant to these casinos."

Noggle said he’s optimistic about a newly-legalized sports betting network, but so far it’s unclear when gamblers will be able to place bets. That kind of gambling, when it’s operational, is expected to give the state an extra $50 to $100 million a year in tax money.

Sam is a Public Affairs Reporting intern for spring 2018, working out the NPR Illinois Statehouse bureau.
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