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State

Illinois gambling revenue plummets

SPRINGFIELD – State revenue from gambling in the past fiscal year was the lowest in 10 years, the result of both the poor economy and Illinois’ indoor smoking ban, a new report said.

The report came as state lawmakers are preparing a bill that calls for a massive expansion of gaming, adding four new casinos and allowing slot machines at horse racing tracks. The bill is expected to be considered during the General Assembly’s six-day veto session that begins next week.

In its annual report on Illinois gaming, the legislature’s bipartisan Commission on Government Forecasting and Accountability said that in the past fiscal year, the state’s share of gambling revenue dropped to just over $1 billion, a 4.5 percent decrease from the previous year.

The report attributed the drop “almost entirely” to decreasing revenue from the state’s nine riverboat casinos. Revenue from the state lottery and horse racing – the other forms of legal wagering in Illinois – both were flat, the report said.

According to the COGFA analysis, the lousy economy and competition from other states played a role in the “dramatic turnaround” in riverboat receipts in the past three years.

“However, the numbers continue to suggest that the biggest contributor to the drop in Illinois casino revenues is the indoor smoking ban,” the report concluded.

Since the ban took effect in January 2008, adjusted gross receipts at Illinois casinos dropped 28 percent. The report said both admissions and receipts took hits after the ban went into effect.

“Illinois riverboat totals are significantly worse than the riverboat totals of states surrounding Illinois,” the COGFA report says. “Therefore ... it appears that the indoor smoking ban has continued to have a major negative impact on the riverboat industry.”

Tom Swoik, executive director of the Illinois Casino Gaming Association, had a one-word answer to a question about whether the smoking ban hurt casino revenue.

“Absolutely,” he said. “Revenue [in Illinois] is down. States around us still increased some. The economy around us is the same as ours. It had to be the smoking ban.”

But Kathy Drea of the American Lung Association of Illinois wasn’t buying that. She said economic factors were the reason casino revenues have dropped.

“We said all along the casinos in Illinois are different,” she said. “They were purposely put in the lowest economic areas of the state to generate revenue and jobs in those areas. They are not destination vacation places.”

When the economy in a riverboat area turns sour, she argued, there will be fewer players with fewer dollars to wager.

She also pointed to the Rock Island casino, which opened new facilities in early 2009. Its admissions and adjusted gross revenue increased significantly afterward. Both statistics were much better than those of a casino in nearby Davenport, Iowa, where smoking is allowed.

Rep. Lou Lang, D-Skokie, said he wasn’t surprised by the COGFA conclusions. Although he supported the smoking ban, Lang said something might need to be done to ease the burden the ban seemed to have on the casino industry.

“We have an industry that is suffering badly,” Lang said. “It is costing jobs and costing revenue. We need to do something to make some changes to bring Illinois citizens back from spending money in other states.”

That could be easing the smoking ban for Illinois casinos until neighboring states also adopt bans, he said. But Lang acknowledged it was a long shot at best.

“The last time I counted heads on this, it was a loser,” he said.

The chances of easing the smoking ban diminish even more when considering some of the ban’s supporters: House Speaker Michael Madigan and Gov. Pat Quinn both favor the ban, and Senate President John Cullerton was an original sponsor of the bill.

Despite sagging revenue from gaming, lawmakers are poised to consider a major expansion of gambling during the upcoming veto session. The bill calls for four new casinos, one each in Chicago, Danville, the south Chicago suburbs, and Lake County. It also would authorize 6,000 slot machines to be distributed among the state’s horse racing tracks.

“We have not reached the saturation point [for gaming] by any means,” said Sen. Terry Link, D-Waukegan, a principal author of the bill. “This will generate a lot of jobs in the private sector.”

Link said the bill would generate about $1 billion annually once everything is in place.

“That’s a conservative figure,” he said.

Quinn’s office said the governor “is not interested in making Illinois the Las Vegas of the Midwest.”

Swoik said he didn’t think the revenue projections would prove to be accurate.

“With the economy down, it doesn’t make sense,” he said.

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