NCPA - National Center for Policy Analysis

State-Run Casinos in Illinois?

September 19, 2003

Illinois has been subjecting its lakefront and riverboat casinos to absurdly high tax rates and strange regulations, says Joe Bob Briggs in Reason magazine, and politicians are even discussing seizing all casino licenses and letting the state own and run the gambling industry.

Though casinos in cities like Joliet, Aurora and Elgin are profitable and attract tourists to once-barren suburbs, constantly changing laws and punitive taxes are threatening the industry and stopping new development:

  • Illinois originally assessed a 35 percent tax on casinos' gross revenue, much higher than the six percent collected in Nevada or nine percent in Atlantic City.
  • The state recently increased the rate to 50 percent.
  • MGM Mirage, the world's largest casino company, withdrew its offer to pay $615 million for a casino license after the recent tax rate increase.
  • "Limited gambling" laws stipulate that riverboat casinos can only have 1,200 gambling positions each and must leave the dock and cruise during operations.

Whereas most city and states welcome rich corporations because they employ lots of people and bring revenue to the area, Illinois is discouraging the casino industry by imposing unreasonably high tax rates and tightly controlling the distribution of gambling licenses, says Briggs.

On the other hand, if Illinois wants to make casinos state-run enterprises, how would it cope with profit volatility? "If the state becomes reliant on gambling for revenue," asks Briggs, "does it announce that garbage collection will be suspended because a Hong Kong high roller won $3.6 million at the baccarat table?"

Source: Joe Bob Briggs, "Socialized Gambling," Reason, July 3, 2003.

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