Don’t bet on more gambling dollars

Making a buck in the Illinois gambling industry is becoming a tougher bet.

According to a new report from the General Assembly, taxes generated from all wagering decreased by almost 6 percent in the past fiscal year that ended June 30.

Many blame the diminishing returns on the tens of thousands of new video gambling machines that have cropped up during the past three years at bars, restaurants, fraternal organizations and gaming parlors across Illinois.

State lawmakers legalized video gambling outside of casinos in 2009 to generate more revenue.

But the report, from the Commission on Government Forecasting and Accountability, showed that while video gaming generated $81 million in additional tax revenue during the 2015 fiscal year, that was not enough to offset the $24 million loss in riverboat casino revenue and $125 million drop in lottery revenue. Meanwhile, the state’s horse racing industry remained stagnant and generated $7 million in tax revenue.

These revenues are transferred into several major state funds, including the Common School Fund and the state Capital Projects Fund.

In fiscal year 2015, the state’s share of tax revenue from wagering in Illinois reached $1.184 billion, a 5.8 percent decrease. That’s slightly more than in Iowa but less than Missouri and Indiana take in.

To give you an idea of the growth in video gaming, there were 20,730 terminals across Illinois in the 2015 fiscal year, up from 17,467 in 2014 and 7,920 in 2013.

Riverboat casinos taking it on the chin

The Illinois Gaming Board reports that the Casino Queen in East St. Louis reported a 4 percent drop in adjusted gross receipts between July and August and a 9 percent drop from August 2014 to August 2015. Attendance at the casino declined by almost 6 percent between July and August and almost 19 percent between August 2014 and last August.

Casino Queen General Manager Jeff Watson was not available for comment. But the leader of the state’s casino association, Tom Swoik, said the proliferation of video gambling does not attract new customers or generate new gambling dollars, just more places for gamblers to place their bets.

“We’re not creating any new gamers, we’re just moving them around from one location to another,” said Swoik, executive director of the Illinois Casino Gaming Association. “They don’t go to casinos anymore. They just go down the street.”

Swoik said the additional 20,000 video gambling machines in Illinois is the equivalent of 17 additional casinos. In the past year, Illinois added one new casino, in Des Plaines.

Another issue is that these video gambling machines pay a 30 percent flat tax, while casinos pay a graduated tax of 15 percent to 50 percent. Swoik said that as video gambling increases, the state’s ability to generate revenue in the casinos becomes more difficult as less tax revenue is available.

Smaller field means fewer race dates

At Fairmount Park, in Collinsville, the field of horses per races has been dropping as horse owners head to neighboring states, such as Iowa and Indiana, where daily purses are greater. Because the metro-east track and the other Illinois tracks have struggled to retain a steady field of horses, race dates awarded and regulated by the Illinois Racing Board have dropped significantly at the state’s horse racing venues.

Fairmount Park will host 12 fewer live racing dates next year — 42, down from 54 this year — the Illinois Racing Board decided Tuesday in Chicago.

The Illinois horse racing industry is in such a dire situation that the board unanimously voted to not have any races at two Illinois tracks next season — Balmoral and Maywood.

Lanny Brooks, who has served as the executive director of the Illinois Horseman’s Benevolent and Protective Association in Collinsville for the past 13 years, said he was stunned by the board’s decision.

“We went up with five tracks and left with three,” Brooks said. “That was a dramatic turn of events.”

Brooks has long lobbied for adding video gaming machines at Fairmount Park and the state’s other horse tracks. He and other proponents have twice pushed bills in both houses of the General Assembly that wound up passing but failed to get the governor’s signature.

Brooks also supports a recent proposal to form a partnership between Fairmount Park with the Casino Queen that would bring video gambling to the track, which in turn would share a percentage of the generated revenue with the casino. He said it is the only way the horse racing industry can survive in Illinois.

“It’s just a matter of continuing to get a gaming bill passed that puts us on the same playing field as Indiana, Iowa, Pennsylvania, West Virginia and all other states with electronic gaming at the tracks,” Brooks said. “We feel the effect of it. Each year it gets worse and worse and worse.”

The decreasing field of horses at Illinois tracks has forced the track owners and administrators to get creative and retain their viability. Next season, races at Fairmount Park and other tracks will field one less race to ensure each race has at least eight horses. The racing board recently decided to only have seven races for each live event instead of the standard eight races at each track.

“We have had a hard time filling a full field of eight races,” Brooks said. “All seven will have eight, nine or 10 horse races, instead of having only five horses in each race. Most bettors will not bet on races with only four or five horses in them. When there are eight, nine or 10 horses per field, the wagering will increase.”

Brooks said the level of purse money available next season will remain the same as last season but will still be difficult to compete with neighboring states. He only sees one solution.

“Until we get electronic gaming, I think the industry is in trouble,” he said.

This story was originally published October 2, 2015 at 12:21 PM with the headline "Don’t bet on more gambling dollars."