Gambling companies arguably owe the Illinois Treasury between $10 billion and $47 billion. The Illinois legislative leadership needs to exercise its integrity and collect these billions of dollars before frightening public servants and state voters with specters of dishonoring earned benefits, such as via proposed Constitutional Amendment 49.
While a state senator during the 1990s and as a U.S. senator, Peter Fitzgerald, R-Ill., repeatedly joined with a legislative minority to complain about the billions of dollars which the gambling companies should have paid to Illinois. U.S. Sen. Paul Simon, D-Ill., and U.S. Rep. Henry Hyde, R-Ill., were so concerned by Illinois gambling that they sponsored the bipartisan U.S. National Gambling Impact Study Commission, which exposed serious budgetary problems when states partnered with gambling interests.
For example, the original 10 Illinois casino licenses, which were worth a fair market value of $5 billion in 1990 ($9.5 billion in 2012 dollars) were legally granted to political insiders for $25,000 per license, including one political insider who will soon be a prison insider as part of the Gov. Rod Blagojevich scandals.
The current gambling expansion proposals include giving away more billions of dollars by charging only $100,000 per license (plus minimal fees per slot machine). For this monetary reason alone, Gov. Patrick Quinn was justified in vetoing the last gambling expansion bill -- apart from his justifiable concerns that Illinois gambling legislation not contain "loopholes for mobsters."
Touted by Springfield PR as a pension fix, Constitutional Amendment 49 was rejected by the Illinois voters during the Nov. 6 election. Labeled a "pension head-fake" by the Chicago Tribune, the defeat should have served as wake-up call to its legislative sponsors.
Unable to transfer responsibility via Amendment 49 for its own budgetary irregularities, Springfield's leadership appears poised to propose new Draconian legislation, emulating the 67 percent state income tax increase which was fast-tracked through the 2011 lame-duck legislature.
During the time leading to the 67 percent state income tax increase, the taxes on Illinois gambling interests were being reduced. Current proposals would further reduce the taxes on existing gambling interests via a maze of legalese.
The 2009 bill gives owners/operators of electronic gambling machines and slot machines 70 percent of the revenues with only 25 percent to the state and 5 percent to the local government. In other states, governments take most, of the revenues.
Many of the casino companies doing business in Illinois have operated Canadian casinos/ gambling facilities where the tax rate is virtually 100 percent. The government generally keeps all the revenues while paying management fees to gambling companies.
States like South Carolina and Nebraska, which have rejected EGMs/slot machines have stable budgets. Despite two nearby Iowa casinos, Omaha rejected gambling interests and bulldozed the proposed casino at Aksarben racetrack. Instead, the new Aksarben park contains a $500 million business and family-friendly development, which includes the University of Nebraska College of Business.
Illinois needs to collect the billions of dollars technically owed by gambling interests before attacking the earned benefits and contractual obligations owed to the public servants of Illinois.
University of Illinois professor John W. Kindt is a senior editor and contributing author to the multi-volume U.S. International Gaming Report.
