'No downsides' to legalized gambling for small businesses in Illinois
For the first time, Illinois is now getting more revenue from local video gaming machines than from casinos.
A new state report on the revenue shift referred to it as a “cannibalization effect.”
According to the Commission on Government Forecasting and Accountability, for fiscal 2017, Illinois received a total of $1.31 billion from these four sources:
▪ $6 million from horse racing
▪ $270 million from riverboat casinos
▪ $296 million from video gaming
▪ $738 million from lottery
A local shopkeeper with video gaming said the machines help local businesses and residents by keeping business local.
“It’s nice for local people not to have to drive all the way down to East St. Louis, especially older people,” said Kathy Winkelman, co-manager of Friday’s South in Belleville.
Fiscal 2017 was the first time video gaming had topped riverboat casinos; horse racing held steady.
The tax rate on gambling sources vary. Casino revenues have a graduated tax rate; in 2017 the effective rate for the state’s 10 casinos was just under 34 percent, including state and local taxes. In contrast, video gaming is taxed at a flat rate of 30 percent. The administrative costs for both are paid from riverboat casino taxes.
The full report is on the website for the Commission on Government Forecasting and Accountability.
The state is seeing more money from gaming than any other time in the last 10 years. But because of where Illinoisans are placing their bets, schools are not reaping vast rewards.
Altogether, the state’s wagering ways brought $1.31 billion into the state’s coffers, but transfers to the Education Assistance Fund were at the lowest level since fiscal 1999 because of declines in casino receipts.
“If video gaming causes a reduction in revenues from riverboats, tax dollars are effectively being shifted from the Education Assistance Fund to the Capital Projects Fund,” according to the report.
The 2017 Wagering Report attributes that to the “increased competition from video gaming throughout Illinois.”
In 1993, the second year of riverboat gambling, it outpaced horse racing gambling $54 million to $48 million. Now riverboat gambling has fallen to third place in revenue, behind video gaming and the lottery.
The report says video gaming is expected to continue growing, with 28,000 terminals statewide by the end of fiscal 2018, far surpassing an earlier estimate of 20,000.
“The question that many in the industry have is which form of gaming will have a greater cannibalization effect on the other: video gaming or the casino industry,” the report says.