Gaming nearly took another giant leap forward in Illinois. According to the Chicago Tribune, “It is something of an unofficial tradition in Springfield: As lawmakers inch closer to the end of the spring legislative session, a proposal to expand gambling pops up with the promise of generating tons of cash.” On the day after the Memorial Day Weekend, a legislative committee heard a bill proposing six new casinos, slot machines at race tracks, Midway and O’Hare airports and an additional VLT in all locations where VLTs are authorized. The committee listened for 90-minutes, but failed to move the bill forward. The bill failed by a very thin margin of one vote.
The sponsors of the bill did not provide any scope to the expansion and neither did the articles in the Sun and Tribune. However, it is possible to make some guesses. There are currently 9,920 slot machines in the ten existing casinos in the state. The proposed six new casinos could be expected to add 5,952, but of course a casino in Chicago could easily support two or three times that number of machines. There are three horse racing tracks in Illinois. Using the same averages they could add 2,976 slot machines. In total, there are 6,458 locations currently operating VLTs; that brings the number of additional slot machines and VLTs proposed under this bill to 15,386. Currently in Illinois there are 28,942 VLTs and 9,920 slot machines; the new total would be 54,248, an increase of 44,248 since the first VLTs were installed in 2012. The VLTs have reduced casino revenue by more than 30 percent in those six years, so you can imagine how the existing casinos feel about any plan for further expansion.
One supporter of the bill had little sympathy for the casinos, State Senator Terry Link said, “I think this is a win-win situation for everybody, and for those who have a little bit of a problem, I’ll just say one thing: Suck it up, because you are still going to make money in this industry and you know you are.” He said they are always building new casinos in Las Vegas and no one is going out of business. Senator Link’s attitude is typical of lawmakers around the country. In their minds casinos make so much money that nothing bothers them – not the tax rate, the size or location restrictions or the competition. It is very dangerous thinking for the gaming industry.
This year, it appears the industry in Illinois dodged the bullet once again; but when the same bullet is fired every year, eventually it will hit its mark. There is no avoiding the repetitive introduction of new legislation; it is a fundamental element in the democratic process. Casinos always have to be on their guard and employ lobbyists to represent their point of view. Expansion is a very complex issue and the owners and managers of casinos are on both sides of this issue. So, for example, if a company thinks it has an opportunity to put a casino in Chicago, it would support the legislation, even if it had a casino in another part of the state. The major casino companies have supported expansion in New York, Florida, Maryland, Massachusetts, Texas, Georgia and Virginia. Additional casino gaming expansion in any of those states will or has hurt existing casinos in nearby states.
There is no easy solution to this challenge, but I would suggest a couple of ideas. First, even if legislation appears to be a benefit, look closely at the details. High tax rates, casino license fees and onerous operating restrictions will become intolerable in time. Even if the property is initially profitable, conditions will change. The economy may go into recession or the legislation may go back to the well and raise taxes or add competition, all of which have happened to the casinos in Illinois. Second, do not make plans as if the casino were being built in Las Vegas; most, if not all, jurisdictions in the United States are volatile and unstable in the long-term as Illinois, Indiana, West Virginia and Pennsylvania illustrate.
The democratic process is at the very core of our society, it gives us freedoms both personal and economic that are difficult to match under other systems. But it does have some built-in, unintended consequences, such as the recurrent legislation; once a bill is passed into law it creates a fixed state, but one that is defeated does not necessarily stay defeated; it can return over and over again. Every time the legislature meets it pays to be on guard, in pursuit of money or personal agendas lawmakers can be relentless.
