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Cover Story: Illinois Gambling Expansion

Wed, Jul 20, 2011

Suzanne Hanney, Katie Hills
StreetWise Editor-In-Chief and Contributor

Photo: www.infobarrel.com

Illinois lawmakers have passed the largest gaming expansion bill in Illinois since 1991, but negotiations are in play to avoid a veto from Gov. Pat Quinn, who has said the bill is excessive.

Supporters of the bill see it as a viable option to minimize the sizeable state budget deficit, and to combat an unemployment rate of 9.1 percent. The bill would allow a casino within Chicago’s city limits, along with four new casinos (near Danville, near Rockford, in Lake County, and in south suburban Cook County), slot machines at both O’Hare and Midway airports, and it would turn all six race tracks into “racinos” with new electronic gaming there. Supporters of the bill, including the Chicagoland Chamber of Commerce, expect $200 million to $400 million capital in-vestment at the six racetracks alone.

State gaming revenue has declined since 2007, part of a nationwide trend cited in a 2009 study by the Rockefeller Institute of Government, yet legislators say they welcome the jobs new casinos could bring. “A portion of the bill for disadvantaged communities was one of the things we negotiated,” said state Rep. LaShawn Ford, a Democrat from the Austin neighborhood.

“We want to make sure there’s dealer jobs for all people, especially in the city of Chicago and in minority areas where casinos may be built,” Ford said, referring also to front office, security, janitorial jobs and others that do not demand high skills.

Ford also cited what he termed a “fair and balanced approach to hiring” in the bill, “with contracting jobs available for minority contractors and subcontractors: women, black and brown.”

“You never have a perfect piece of legislation,” Ford said. “I just hope it doesn’t have adverse effects by causing people to become [gambling] addicted. I hope people will be responsible. I hope this will do more good than harm for the city and the state of Illinois.”

The ability to capture tax revenue from Illinoisans who gamble in neighboring states was important to framing the bill, according to Illinois Senate President John Cullerton and state Rep. Lou Lang, (D-Skokie) who authored the bill.

“A lot of people don’t like gambling, like me, and I voted for it, as we’ve discovered that there’s people from our state going to other states and gambling,” Cullerton said. “So we have the worst of both worlds,” he continued in an exclusive interview with StreetWise at the Museum of Broadcast Communications opening June 16.

“We’re losing money, so that’s one of the reasons that bill was passed, to keep tourists from Illinois from going to Hammond, Indiana,” Cullerton added. “If you bring in new money, or you keep money in the state, that’s a positive. And we now have gambling surrounding us. And they have a lot more gambling positions per capita than we do. So people are leaving to go to Indiana and to go to Wisconsin. And so if we keep them here, that’s keeping the money in the state and that is creating more jobs. And the state will make money as well, it’s a form of taxation and it’s a sin tax. People don’t have to gamble if they don’t want to. And if they choose to, it’s entertainment. We will make money to help us pay for our debt, pay for our schools.”

Both houses of the General Assembly passed the gambling expansion bill just short of a two-thirds, veto-proof majority on the last day of the session. The bill has literally something for everyone — a Chicago casino, money for county fairs and 4H — so that insiders had expressed concerns the bill could fall apart if legislators were forced to renegotiate it in the October veto session. But rather than let the 90-day clock start ticking towards a possible veto, Cullerton filed a motion to reconsider the bill and to hold it in the state Senate pending discussions with the governor.

Asked about possible concessions, Cullerton responded, “Well, it’s not concessions, there are changes. You could change the number of gambling positions, you could change the taxes, you could add things. There’s all sorts of things that the governor might want to do and that’s what we’re going to talk about.”

Although it had been widely reported that Quinn was looking for a smaller bill and concessions, “none were discussed,” Lang said in a telephone interview the day after meeting with Quinn, Cullerton and state Sen. Terry Link (D-Lincolnshire).

“The meeting was a fact-finding meeting, with a lot of questions why this was in the bill or that in the bill and we emailed more facts and statistics that he asked for today,” Lang said June 17. “While some thought the meeting would lead to conclusions, I didn’t think it would. I was pleased he asked the questions he asked and I hope it will lead to further meetings and the governor signing the bill.”

Although the bill was voted in a hurry, “it was very carefully drafted and negotiated,” Lang said. “Change it in some ways and you jeopardize it, other ways not. If you took horseracing slots out, it would fail. If you took Chicago out, it would fail; if it were only Chicago, it would fail. Many other components, in large and small ways, would have an impact on the ability to repass it if you changed it.”

What about slots at O’Hare and Midway?

“I actually think that’s the most important part,” Lang responded. The airport slots would be in secure areas, he said, where only people flying in or out of Chicago could access them. “You can’t get in a cab and gamble there.” Lang added he had heard that federal law could mean that money spent on airport slots has to stay with airport authorities.

“I appreciated the governor’s questions showed a desire to understand the bill better before he makes a decision,” Lang said. The suburban Democrat said he emphasized to the governor the relatively low density gambling would have in Illinois proportionate to its population.

“I told him, there are 26 states in America today that have 10,000 or more gaming positions,” Lang said. “Illinois is 25th and if this bill were to pass, we would only be 20th. There are still 19 of 26 states that have more gaming positions per person than we do and that includes all the states surrounding us: Indiana, Iowa, Wisconsin, Missouri. I think that tells a big story whether this bill really is too big or not too big. The governor listened to those statistics and I gave him a piece of paper that laid it all out. We’ll see what happens next.”

Lang was also asked to comment on a report from the Rockefeller Institute of Government in 2009 that said tax revenues in eight of 12 states with commercial casinos declined by $412 million, or 8.5 percent in fiscal 2009. “Illinois and New Jersey reported the largest declines at 23.8 and 14.1 percent, respectively,” according to the report.

New Jersey officials blamed competition from a new casino opened in 2008 in neighboring Pennsylvania, according to the Rockefeller Institute. Illinois officials in the report, and Lang, say an Illinois casino smoking ban sent local gamblers to neighbor states. There was also a fire at the Joliet Empress Casino in 2009.

“While it is clear that gaming revenue has gone down, in some states it has not gone down,” Lang said. “There’s more reasons than just the recession.”

Combined state revenue from the Illinois lottery, horse racing and riverboats reached a high of $1.37 billion in fiscal 2006, then dropped 3.9 percent (to $1.31 billion) in fiscal 2007, according to Wagering in Illinois, a 2009 update from the Illinois Commission on Government Forecasting and Accountability (COGFA). Two more years of decline left 2009 revenues at $1.06 billion.

Horse racing revenues have steadily declined nationwide (18 percent in Illinois between 2008 and 2009) but revenue from racinos “represent the fastest growing element in states’ gambling portfolio,” largely because of new facilities, according to the Rockefeller Institute report. These include two Indiana racinos opened in 2008.

The Illinois expansion bill would bring 1,200 slots each to Arlington, Hawthorne and Maywood Park race tracks and 900 slots each to three tracks outside Cook County, according to the Chicagoland Chamber of Commerce. The Chicagoland Chamber estimates revenue from casino expansion would mean an additional $536 million to $785 million annually for the Education Assistance Fund, $68 million to $105 million annually for the Capital Projects Fund.

For Lang, an equally important issue is job creation. Casino expansion, he said, could mean 20,000 and possibly 50,000 new jobs.

“We’ve had pull tab, lottery, horse racing and for the last 20 years, casinos,” Lang said. “The issue is settled. Illinoisans believe gaming is an industry like any other.We have a responsibility when we are talking abut creating jobs and economic development to look at all the possibilities. Give this industry a chance to grow, to create hotel jobs, restaurant jobs, all kinds of jobs in ancillary industries, such as purveyors to restaurants, a huge ripple effect. Say I built in the south suburbs, there would be off ramps, hotels, gas stations and movie theatres. If private people want to spend billions of their money in private industry in Illinois, why should we not let them do it? We wouldn’t say there are too many Starbucks, too many shopping malls.”

Unions such as the Illinois AFL-CIO, Cook County Building & Construction Trades Council, Service Employees International Union Local 1, along with the Teamsters, Operating Engineers and Electrical Workers, all back the bill, according to the Chicagoland Chamber.

David Merriman, associate director of the University of Illinois Institute of Government and Public Affairs, doesn’t believe casinos will mean more jobs, however. “What you’ll have is more jobs in the gambling industry, but maybe less in other industries,” he said.

Merriman says that casinos hurt the local economy rather than help it. “Money spent on gambling is money not spent on other ventures; it competes with more conventional spending like movies, tour boats and other recreational activities,” he said.

A June 15 survey by the Chicago Crime Commission found 55 percent of Chicago voters opposed to the proposed gaming bill. Statewide, the same percentage said casino expansion would hurt the quality of life in Illinois, and that gaming revenues in the State’s treasury “will not offset human problems and negative impact on society associated with casino gambling in places like Las Vegas and Atlantic City.”

“If the average voter would sit down with the Governor, they would tell him that this legislation is bad and that they had little input into the decision making process,” said J.R. Davis, chairman and president of the Chicago Crime Commission.

“When asked, Illinois voters also said they feel the gambling expansion will have a negative impact on the quality of life and that it will add to human misery, without offsetting financial benefits,” Davis said.

-Brittany Langmeyer contributing

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