- The Washington Times - Wednesday, April 13, 2005

ELGIN, Ill. (AP) — Ornate black and gold street lamps line the newly paved sidewalks of Elgin’s downtown, and dozens of stately Victorian homes have been repainted in their traditional yellows, greens and blues.

The source of the once-struggling river town’s rejuvenation is docked a few blocks away — the Grand Victoria casino has pumped $250 million in taxes into Elgin during the past 10 years.

Although riverboat gambling has been an economic jackpot for Illinois — generating billions of dollars for casino owners and for state and local governments hurting for cash, the industry is at a crossroads.

The nine casinos have watched the state take larger and larger cuts of their earnings — the graduated tax now reaches 70 percent — the highest in the nation and twice any other state’s — and Gov. Rod R. Blagojevich, a Democrat, has no plans to lower it.

The casinos’ response could be a lesson to other states looking at gambling as easy money to get through the economic hard times.

Many of the riverboats cut jobs and services to maintain their earnings after the state tax took a giant leap in 2003, increasing from a top rate of 50 percent to 70 percent. Their attendance has dropped sharply since then, while neighboring states’ casinos have thrived.

States across the country have been hitting up casinos for higher taxes to weather economic hard times.

Thirteen states tax casinos, and others are considering legalizing them for the revenue. Texas lawmakers have talked this year about adding casino-style gambling to bolster their troubled school-finance system. Lawmakers in Indiana have proposed increasing their casino tax by 1 percent to help fund a new professional football stadium.

In Illinois, the result of the tax increase was an economic slide in the state’s casino industry.

The casinos cut more than 3,000 jobs, sliced wages and benefits by $50 million and cut back hours, services and improvement projects. Some raised fees for parking and admissions. Although the tax helped the state face down a multibillion-dollar budget deficit, the casinos’ adjusted gross receipts dropped more than 6 percent in the next two years, admissions plunged 18 percent, and local tax revenue from the boats fell 8 percent.

The only casino number to increase statewide was the state’s take of the revenue, but the 26 percent rise in tax dollars was only about half what lawmakers had expected.

Illinois lawmakers authorized riverboat casinos in the early 1990s as a financial boon for decaying river towns, and it quickly paid off.

More than 245 million people have boarded the casinos since the Alton Belle opened in 1991, the Illinois Gaming Board reports. They have left behind $16 billion at the slot machines, blackjack tables and roulette wheels, and the casinos have paid more than $5 billion of that to state and local governments in taxes.

“We spend $4 million, we get $40 million in private investment, and we get our money back in new property taxes in three to four years,” said Elgin Mayor Ed Schock. “After that, everything’s gravy.”

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide