Hitting the Jackpot: The Gambling Industry and Illinois Politicians, Part II

Issue Briefing #5

Hitting the Jackpot:
The Gambling Industry and Illinois Politicians, Part II
November 2, 1999

On June 25, 1999, Governor Ryan signed into law a dramatic expansion of gambling in Illinois. Though still the subject of legal wrangling, the law allows a new casino based in densely-populated Cook County. The state's existing riverboat casinos can drop anchor and offer dockside gambling day and night. And finally, the Illinois government will hand over $56.9 million yearly, in tax breaks and subsidies, to the state's ailing horse-racing industry. The Illinois Economic and Fiscal Commission estimates that taxpayers could lose as much as $14 million yearly thanks to the new law.

Initially, a reluctant public was told gambling would raise money for education and other state needs. The new reality is different: the state will subsidize the failing horse-racing industry and its revenues to the state will be reduced to a trickle. It's an ironic twist that of all the industries the legislature could have chosen to subsidize, they chose a so-called "sin industry" such as horse racing.

Here's how the tracks get their $56.9 million yearly from the state. First, tracks will receive $15.4 million in direct payments from Illinois's coffers. Second, tracks will benefit from another $15.4 million from the state to increase the purses paid out to winning horses, to attract more bettors to the tracks. And third, the new law slashes the racetracks' tax burdens, netting them $26.1 million more.

The greatest beneficiary of this crony capitalism is Richard Duchossois, owner of Arlington International Racecourse. Over the years, Duchossois has become one of the largest contributors to state politicians, giving $1,460,886 from 1993 through June 1999. While this amount seems large, it is dwarfed by the estimated total Arlington Racecourse will receive each year in state assistance: $17.2 million dollars. This total includes $7.8 million in state subsidies to the track, $5.6 million in tax breaks, and a $3.8 million real estate credit. (See graph below.)

When viewed side-by-side (see figure below), Duchossois's "investment" of $1,460,886 in our state's politicians appears to be a good one. It will bring him, on a yearly basis, 12 times his original investment, and over a decade 120 times his investment.

The other big winner in the expansion law is Rosemont Mayor Donald Stephens, who gave $501,980 to our state politicians from 1993 through June 1999. The Rosemont casino will bring $4.5 million or more in tax revenues yearly to this small suburb, which has a population of only 4,100.

Illinois's existing riverboats donated $2,104,274 to state politicians, from 1993 through June 1999. These existing casinos weren't thrilled with allowing a casino license to be transferred to populous Cook County. So lawmakers had to throw in a sweetener to get the established riverboats to sign onto the May '99 deal: dockside gambling.

For years the state's riverboats wanted to nix the requirement that they cruise in order to allow gambling. It's a matter of competition, the boat owners say, as neighboring Iowa and Missouri allow dockside gambling. Indeed, since the passage of the new law and the elimination of cruising requirements, profits at Illinois's riverboats have jumped considerably. The intake of the state's nine casinos reached a new record of $131.4 million in July 1999, just after the new legislation took effect.

The next logical step, according to casino owners, is for the permanently anchored boats to give way to glitzy barges, so that more gamblers can be accommodated. The round-the-clock frenzy will be a far cry from the innocent "excursion boats" that riverboat proponents initially promised. "It's now wide open, hard-core, Las Vegas-style gambling," claims Rev. Tom Grey of the National Coalition Against Legalized Gambling.

There was no public clamour for land-based gambling or for more casinos: about 60 percent of Illinoisans were against both. "Our experience is that campaign money speaks louder than the public will," concludes anti-gambling activist Lucy Kokal, of St. Andrew United Methodist Church in Homewood.