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Business owners wage preemptive fight against video gambling tax hike

No bill filed yet, but governor has voiced support for raising tax on gaming revenue

Barry Gregory, who along with his wife, Patti, owns Crehan's Irish Pub in Belleville, said video gambling revenue helped his business come back after losing profits and customers when smoking was banned in public places in Illinois.
Barry Gregory, who along with his wife, Patti, owns Crehan's Irish Pub in Belleville, said video gambling revenue helped his business come back after losing profits and customers when smoking was banned in public places in Illinois.

SPRINGFIELD – Randy Rehmer, owner of Waterloo’s Double R Bar just south of East St. Louis, said raising taxes on video gambling will eat at the $70,000 he makes each year off the machines alone.

Besides bringing more customers to his business, Rehmer said video gambling revenue has helped him remodel the building, hire an extra employee and give his staff pay raises.

“I’ve got nothing against raising the minimum wage,” Rehmer said. “But the state is telling me to pay people more at the same time that it takes money away.”

Rehmer joined several other small-business owners at a news conference Wednesday morning. He was referring to a possible tax increase on video gambling terminals, which are in almost 7,000 establishments across the state. 

Although no legislation has been introduced, a tax increase has the backing of Gov. J.B. Pritzker, who first mentioned it in his February budget address.

Companies that own and operate terminals pay a 30% tax on video gambling revenue. The remaining money is then split, with half going to the retailer and half to the operator.

Pritzker’s proposal, advocates say, would raise the tax rate to 50%, leaving less money for businesses and video gambling operators to collect.

Advocates at Wednesday’s news conference, organized by the small business coalition Bet on Main Street, compared those rates with the tax rates for casinos and racetracks, saying video gambling operators already pay their fair share. 

Casinos have a graduated tax rate, with rates starting at 15% and rising to 50% depending on how much money is made.

In the most recent numbers available from a report by the Commission on Government Forecasting and Accountability, taxes on video gaming brought in $351.6 million compared with $311.8 million from taxes on casinos in fiscal 2018.

Local governments, on the other hand, received about $10 million more from casino taxes than video gaming taxes – $80.5 million compared with $70.3 million.

Racetracks, taxed at 11%, brought in a much smaller $12.6 million to both state and local governments in calendar year 2017, the latest numbers available.

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