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Big guys dinged a bit, but little guys helped a lot

Friday, Aug 29, 2014

* For decades in this state, a small number of casinos had a complete, legal and state-protected monopoly on slot machine gaming. The public benefits of those monopolies have mainly been confined to a handful of communities, although the state has brought in money as well. Meanwhile, local bar owners have been hurt by the state’s smoking ban and by competition from the casinos in those areas, so legalized video poker has saved a whole lot of small business owners from ruin. Yeah, there’s some slippage at the former monopolies, but the little guys are benefiting, so I’m not sure I see a crisis or anything yet

Tony Mossuto, owner of the Double Play Saloon in the Chicago suburb of Blue Island, said bars have struggled to cope with higher liquor taxes and a 2008 smoking ban. His five slot machines have attracted a new, older clientele that is keeping his establishment open and 10 employees working.

“It’s saved our industry,” he said.

Casino revenue in Illinois fell 5.3 percent in 2013, the first full year with the new competition. Sales fell similarly in July, marking 11 straight months of decline, according to Bloomberg Intelligence data. The first casino opened in the state in 1991.

Las Vegas-based Boyd, which owns the Par-A-Dice Hotel Casino in East Peoria, cited the burgeoning competition as one reason for a shortfall in second-quarter profit. […]

Casino operators are now focused on keeping truck stops from having more than five machines and developing restrictions that limit the competition to places like bars and social clubs.

Your “position”?

- Posted by Rich Miller        


36 Comments
  1. - SAP - Friday, Aug 29, 14 @ 10:20 am:

    I am for the little guy on this one. But I thought the conventional wisdom was that the bars have been paying out on their machines forever and that we finally got around to regulating and taxing them.


  2. - OneMan - Friday, Aug 29, 14 @ 10:20 am:

    The other interesting question would be the impact on the NW Indiana casinos…


  3. - Anonymous - Friday, Aug 29, 14 @ 10:20 am:

    Quit whining. You took a gamble. And still making out ok or better


  4. - Just Observing - Friday, Aug 29, 14 @ 10:21 am:

    My position: We should have minimal barriers to gambling. I don’t think the state should be encouraging or relying on gambling revenue, but I believe in free choice.


  5. - Mason born - Friday, Aug 29, 14 @ 10:21 am:

    Should have been expected. Question are the video slots taxed the same as casinos? I wonder how this affects jobs. I.e. casinos hire less but more bar/truck stop.


  6. - Bunson8r - Friday, Aug 29, 14 @ 10:26 am:

    At first I found them to be an eyesore and distracting, but now I don’t even notice them at my usual hangouts. If it can help small businesses keep jobs, I think that outweighs any negativity.


  7. - Dan Johnson - Friday, Aug 29, 14 @ 10:31 am:

    That’s a good way to think about it. I also think SAP is right — the mob was already paying out in some bars, so it’s great to take a revenue stream away from organized crime and direct it to public infrastructure.

    Random question: is there a limit as to how big and fancy the video poker machines can be? Last time I was in Vegas they had like a huge full screen poker machine with life-life “dealers” that was a lot more fun to play than the standard 80s-style TV that I’ve seen in most bars that have video poker. I wonder whether the regulators capped the size of the machines or whether the bar owners just went a little cheap (in the places I’ve been to - small sample size).


  8. - OneMan - Friday, Aug 29, 14 @ 10:31 am:

    Mason born…

    Question are the video slots taxed the same as casinos?

    No the ownership and tax structures are very different. The facility that hosts the machines is not allowed to own the machines, they split the revenue 50/50 with the machine owner.

    Fairly sure the casinos still pay a per player tax (that is everyone who steps on the floor) that I think goes primarily to the municipality. Also I think the counties see some of the boat tax revenue, that is not the case for machines unless they are in an unincorporated area.


  9. - JS Mill - Friday, Aug 29, 14 @ 10:40 am:

    The video slots actually provide a local benefit, one that any municipality can allow with out a massive capitol outlay. People will still go to the boats for the variety of gaming that they provide, slots are profitable and a big deal but only part of the picture. The well managed boats/casinos are still reaping large profits, even when considering some pretty significant fees and taxes. I do not blame them for trying to limit numbers, that is what big business often does, create barriers for competition. I do not support the barriers.


  10. - Marty Funkhouser - Friday, Aug 29, 14 @ 10:49 am:

    Three thoughts:

    1. The casinos should quit whining.
    2. There’s a social cost to these machines being everywhere that bothers me greatly, but it seems like that ship has sailed.
    3. Really? The bars are still complaining about the smoking ban six years later? If they’re still in business, I’d say the smoking ban didn’t kill them.


  11. - Tom - Friday, Aug 29, 14 @ 10:52 am:

    Finally the State of Illinois does something to help the ma and pa little businesses in this state. I’m tired of the rich corporate giants whining and trying to blame the small taverns because some guy has a beer and plays a slot machine for an hour. Maybe the riverboats should clean up their establishments. Have you been in one of those dumps lately? Makes the Butternut Hut look like the Taj Mahal.


  12. - Gantt Chart - Friday, Aug 29, 14 @ 10:55 am:

    1. Get the remaining license sold.
    2. Remove the requirement that the casinos be “floating” non-land-based structures.
    3. Remove the restrictions on the number of gambling “positions” per casino. Let the businesses taking the risk decide how big or small their casino should be.
    4. Roll back their tax rate to original levels and don’t punish them for success.
    5. Absolutely, positively, prohibit the city of Chicago from OWNING a casino (it’s a recipe for corruption).
    6. Exempt casinos from Illinois’ no smoking laws.
    If you do this, profits will increase and so will taxes.


  13. - anon - Friday, Aug 29, 14 @ 11:01 am:

    Where’s the empirical evidence that the smoking ban has decreased business? Every study I have seen says bars do better because the non-smokers stay out longer. If the smoking ban doesn’t extend to casinos, it should.


  14. - independant - Friday, Aug 29, 14 @ 11:03 am:

    Gambling today with high tech machines which are engineered to get humans to continue playing over and over, make the idea of free will to gamble mute. Its another way to exploit people for economic gain.


  15. - Robert Lincon - Friday, Aug 29, 14 @ 11:03 am:

    The state needs revenue. Lets legalize and tax gambling, marijuana, drugs, prostitution…. After all, its for our children’s future.


  16. - Mokenavince - Friday, Aug 29, 14 @ 11:16 am:

    I live in Mokena we have legalized gaming, small business love’s it. Big time casinos like the ones in Joliet can get PO’D all they want. They never gave a dime to the small towns around Joliet.
    All those river towns kept every dime for themselves.
    Big Casinos cry me a river.


  17. - Mason born - Friday, Aug 29, 14 @ 11:18 am:

    Oneman

    If so then isn’t the state losinv revenue when gamblers switch to video machines?


  18. - A guy... - Friday, Aug 29, 14 @ 11:21 am:

    If this saved your business, chances are it hasn’t saved it for long. If someone nearby gets newer machines, you have to keep up. Even so, your business is sharing it’s pie with others as they proliferate. They’ll increase the number of machines over time and race toward the apex of diminishing returns. Every policy in Illinois these days is designed for the very short term. This is just another one. In the meantime, real social damage gets done. I’d avoid any place that has them.


  19. - steve schnorf - Friday, Aug 29, 14 @ 11:25 am:

    the first question should be where are we net-net? Does video gaming plus casinos tax revenues exceed or fall short of casino only tax revenues before legalized video gaming? As to the question 5 is plenty, including truck stops, except I would give the fraternal organizations 3 to 5 more, because they put their revenues back into their communities, sponsoring charitable events, little leage teams, help for indigent veterans, etc.


  20. - Formerly Known As... - Friday, Aug 29, 14 @ 11:29 am:

    == Casino revenue in Illinois fell 5.3 percent in 2013 ==

    That is approximately $79,500,000 now flowing through the “little” guys instead of the “big” guys. Assuming casinos have large margins, this should not be a huge hit to their bottom line.

    To “position”, we should draw the line where it is with the possible addition of one or two more casino licenses. When gaming is in candy stores, you risk crossing the line from “accessible” to “oversaturation”.


  21. - VanillaMan - Friday, Aug 29, 14 @ 11:29 am:

    Fact is, we wouldn’t even be doing this at all if our economy was going well.


  22. - Belle - Friday, Aug 29, 14 @ 11:35 am:

    I think the interest in gambling might be running its course and is on downward slide. Every dog has its day.
    If you don’t have a lot of money, why count on losing what you have?


  23. - CircularFiringSquad - Friday, Aug 29, 14 @ 11:52 am:

    It is more fun to read the reports
    At random, take Par A Dice in east Peoria
    They are down about $1 million a month —- but still grabbing $8.2 million — or 2 million a week or $285,000 a day!
    All of the East Peoria slots did $879,000 in a month. Looks like enough for all


  24. - Just Observing - Friday, Aug 29, 14 @ 11:53 am:

    === Really? The bars are still complaining about the smoking ban six years later? If they’re still in business, I’d say the smoking ban didn’t kill them. ===

    Doesn’t mean they aren’t struggling. Not saying they are, but the mere fact that they may still exist after six years isn’t proof that the ban hasn’t hurt them.


  25. - Just Observing - Friday, Aug 29, 14 @ 11:55 am:

    === Gambling today with high tech machines which are engineered to get humans to continue playing over and over, make the idea of free will to gamble mute. ===

    Really… no free will at all? So because tv commercials are produced to manipulate you into buying the product being advertised, you have zero ability to control your wallet and are compelled to buy the products? Are you a robot?


  26. - Coach - Friday, Aug 29, 14 @ 12:05 pm:

    It is time to make it fair and allow the race tracks to have slots or that industry will be done by next July!


  27. - anon - Friday, Aug 29, 14 @ 12:07 pm:

    Study that same customers came anyway even with smoking ban. http://www.stltoday.com/business/columns/david-nicklaus/smoking-ban-didn-t-hurt-illinois-casinos-study-says/article_9167c7d2-a143-11e0-8f59-001a4bcf6878.html


  28. - Anonymous - Friday, Aug 29, 14 @ 12:15 pm:

    Just because they are seeing less growth doesn’t mean they arent super profitable.

    Mr. Bluhm’s Rivers Casino in Des Plaines, which marks its second anniversary next month, raked in $417 million before taxes from its games last year, nearly double the $212 million earned by the Elgin Grand Victoria, the next-strongest performer. Growth has been sluggish so far this year at Rivers, with $174 million in receipts through May, an increase of less than half a percentage point over the first five months of 2012, according to the Illinois Gaming Board.

    Nevertheless, the casino has some of the most lucrative slot machines and table games in the U.S., according to an analysis conducted for Crain’s by GamblingData, a unit of London-based Gambling Compliance Ltd.

    The $6,338 in adjusted gross receipts the casino makes per day from each of its table games was tops last year among a group of 18 casinos whose receipts are publicly available, including the Borgata in Atlantic City, N.J., and the MGM Grand in Detroit. So was the $802 per day Rivers culls from each of its slot machines, the analysis shows………Mr. Bluhm’s partners are happy. Rivers’ owners made one-and-a-half times their investment in the property between July 2011 and last December, one investor, Toronto-based Clairvest Group Inc., said in February.

    http://www.chicagobusiness.com/article/20130622/ISSUE01/306229974/how-neil-bluhms-bet-on-rivers-casino-has-paid-off


  29. - Demoralized - Friday, Aug 29, 14 @ 1:14 pm:

    ==Fact is, we wouldn’t even be doing this at all if our economy was going well.==

    Baloney. These things exist in states regardless of their state economies. It’s about gambling and the gambling industry making money. If the state gets a side benefit then so be it. But this was coming regardless.


  30. - Bemused - Friday, Aug 29, 14 @ 1:45 pm:

    I think if you talk to folks who go to the boats on a frequent basis they will tell you that the casinos have gotten very tight to maintain profit levels. When walking thru the gaming areas you do not hear the same number of people whooping and hollering over big wins. Looking at the posters of winners you see them acting like a $1000.00 win is a big deal. In the past those posters gave more numbers like $5000.00 or better. Some folks do not feel they get enough play time for the money they lose. No wonder folks are not driving a long distance for that experience.
    Good for the small guy and we wish them the best but my wife does not go to them. She does not feel it is like the Casino atmosphere.


  31. - wordslinger - Friday, Aug 29, 14 @ 2:12 pm:

    –Fact is, we wouldn’t even be doing this at all if our economy was going well. –

    There’s legalized gambling all over the world. And illegal gambling has been part of the economy in the United States forever.


  32. - VanillaMan - Friday, Aug 29, 14 @ 2:16 pm:

    These things exist in states regardless of their state economies.

    There are six others.

    Nevada
    West Virginia
    South Dakota
    Oregon
    Montana
    Louisiana

    Great company!


  33. - Anon - Friday, Aug 29, 14 @ 2:35 pm:

    The new store front gambling businesses sprouting up were not the bars and restaurants that the legislature intended to assist. In fact, the newbies are taking business from the other establishments.


  34. - Formerpol - Friday, Aug 29, 14 @ 3:03 pm:

    I have no sympathy for the erstwhile casino monopolies that make their living on rigged games to cheat their customers. I hope they all fail when gambling becomes too widespread!


  35. - illinoisboy - Friday, Aug 29, 14 @ 3:14 pm:

    I am a longtime Republican Conservative and Business owner as well as a vacationer to the Vegas area when I can. The Nevada Smoking Ban was one of the best things that ever happened to Nevada. God bless everyone that helped to make it happen in 2008!


  36. - Demoralized - Friday, Aug 29, 14 @ 3:31 pm:

    ==that make their living on rigged games to cheat their customers==

    Dude, have a bad day at the casino? You can’t look cross-ways in a casino without a regulator being all over you. They are constantly monitored. It’s called GAMBLING for a reason. Sometimes you win and sometimes you lose. Don’t gamble if you don’t want to. Nobody is forcing you too. But don’t whine about “cheating games” because that’s just asinine.


Sorry, comments for this post are now closed.


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