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Indiana bets on Illinois meltdown

Tuesday, Dec 4, 2007

* Ernest Yelton, the executive director of the Indiana Gaming Commission, worries about how gaming expansion in Kentucky and a casino in Michigan will eat in to his state’s revenues. But he’s not so concerned about Illinois’ proposed expansion plan…

“One of our advantages to Illinois is they, historically, seem to do everything wrong. Everything they seem to do has backfired and it has been to our benefit,” Yelton said.

As an example, Yelton pointed to the passage of Illinois’ statewide smoking ban, which goes into effect Jan. 1. Casinos are not exempted from the law.

“Well, when Don Barden bought the Trump (Casino in Gary) he made one floor smoke-free and within two weeks he had to change it because people wouldn’t go. Gamblers smoke. I don’t like it. I don’t smoke, but they do,” Yelton said.

Yelton pointed out that the disagreements that have dominated Illinois politics come at a time when Democrats control all branches of state government.

“I just see no agreement from those people,” Yelton said.

* Phil Kadner points out one ray of hope

Capitol Fax, published by Rich Miller and an excellent source of inside information about Springfield, reported Monday that Madigan has agreed to also use casino gambling revenue for public education.

Until last week, Capitol Fax reported, Madigan had insisted that all new casino money be used only for capital projects.

* Kadner also quotes state Rep. Lou Lang about the state’s gaming prospects. Lang is one of two House Democratic point persons on gaming expansion…

Since Lang always has been something of an optimist when it comes to casino expansion, I was reluctant to take his words at face value.

“I’m telling you that I’ve been at this for years, and we’re closer to getting it done than ever before,” Lang said.

* So far, at least, opposition to more gaming in Illinois has been muted, ineffective or mostly ignored

The vast expansion of gambling that Blagojevich and the legislative leaders discussed once again Monday is a prospect that outrages some. They’re demanding a voter referendum first.

“They cannot buy the ballot box,” said Rev. Tom Grey, a gambling opponent. “What they can buy are state legislators.” […]

“The massive expansion of public gambling is not what the public wants,” said Lt. Gov. Patrick Quinn. “In fact I think the public ought to have a chance by referendum to weigh in on whether all this gambling — enhanced gambling — is a good idea.”

* Meanwhile, the absolutely bungled 10th license might be back in play

The Illinois Gaming Board is taking preliminary steps to reissue the state’s long-dormant 10th casino license after a recent set of court rulings greatly limited efforts by Emerald Casino officials to open in Rosemont.

Board Chairman Aaron Jaffe said the state will begin soliciting bids from investment bankers to try to find an expert to help sell the license to generate “as much money … as we possibly can.”

“This has been a long time coming,” Jaffe said at Monday’s board meeting. “The 10th license has been dormant since 1997 and cost the state an estimated $1 billion in lost revenue.”

But don’t get your hopes up too high…

While the Gaming Board is moving forward with plans to sell the license, Emerald officials said last week that they will continue to fight in federal Bankruptcy Court.

* More from Paul…

* Editorial: With Gov. Zamboni in charge, state keeps slipping

* Sen. Rutherford audio, expects mass transit to wait until January

* State lawmakers could vote next week on transit, gaming

- Posted by Rich Miller        

  1. - Skeeter - Tuesday, Dec 4, 07 @ 10:29 am:

    Let me get this right:
    Yelton believes that people will choose Gary,Indiana over Michigan Ave. so that they can smoke?
    Anybody who makes that decision apparently has forgotten to exhale.

  2. - Mr. Ethics - Tuesday, Dec 4, 07 @ 10:38 am:

    Indiana profits from all Illinois mistakes. Their border stores are full of Illinois plated cars, but few Hoosiers cross to Illinois to buy anything.

  3. - Ghost - Tuesday, Dec 4, 07 @ 10:42 am:

    Building our source of state revenue on gambling just seems a very bad idead. Every place we have casionos there has been an increase in crime, bankruptcies, embezellments etc. If all we care about is the ends to getting money, and not the means, lets just leagalize prostitution and pop up a few State run cat houses; and we could have State run medical marijuana “clinics”. Lots of vice we can build a budget on. Just imagine the beautful roads leading to state of the art schools, where our criminal or medicocre teachers for life can teach our kids how to shoot craps.

    If Indiana wants to build its economy this way go for it. I think we should look at bringing in buisness to Illinois. Build our revenue on increased enterprise. We “close” corporate loop holes, drive away buisness, then decide we need to replace the lost revenue with gambling money! oi!

  4. - c-rock - Tuesday, Dec 4, 07 @ 10:44 am:

    you a government employee? Sure sounds like it.

    folks who gamble, smoke. That is the market for gamblers. They like to smoke, while losing their money.

    Now in IL, those folks will have to go outside, and they will realize what fools they are, and to cut their losses.

  5. - Bluefish - Tuesday, Dec 4, 07 @ 10:52 am:

    By the second week of January when the casino operators are howling that their revenues have tanked (and Indiana is laughing all the way to the bank), everyone will start to realize that this capital/education plan our legislators are building is just a “house of cards”. Then where are we?

  6. - raisin - Tuesday, Dec 4, 07 @ 11:04 am:

    I’ll be more likely to go back to the casinos when they become smoke free. I gave up on them years ago after hacking and coughing my way through losing my money.

  7. - Levois - Tuesday, Dec 4, 07 @ 11:40 am:

    The lottery was created to provide revenue for the public school but that’s not much good. Why do we even pretend that gaming might provide revenue for public transit? Yeah the smoking ban is bad business, especially if I am to believe that it’s never been proven that second hand smoke kills. That one thing anti-smoking people have based their arguments on.

  8. - Captain America - Tuesday, Dec 4, 07 @ 11:48 am:

    The State of Illinois is desperate for revenue -capital and operating revenue. The problem all along has been the Governor’s intransigence on tax issues. It had to be the gross receipts tax - essentially an all or nothing approach.

    Had he been willing to compromise, there could have been come combination of personal income tax increases and business tax increases to meet the State’s revenue needs.

    Once the Governor forced the session into overtime by his complete unwillingness to compromise with the Democratic legislative leadership, the State’s revenue options were limited by the necessity of getting Republican votes for the required supermajority.

    Consequently, major expansion of gambling has become the option of choice - really the only option. That’s why the opposition to gambling has been ineffective. Gambling is the only way to get a capital bill, whiich has been made a prerequisite for addressing the mass transit funding problem.

    Now we’re in a recession and the state’s revenue options are more constrained because of the recessaion and because it’s an election year. In addition we have substantial operating budget shortfalls, which suggest a fiscal crisis in 2008, even with gambling expansion.

    A fiscal train wreck appears to be invitable in 2008-2009 even if they pass a significant gambling expansion bill next week.

  9. - Louis G. Atsaves - Tuesday, Dec 4, 07 @ 11:52 am:

    Why should Indiana folks shop in Illinois when their sales taxes and prices are lower for the same goods? Why should Indiana folks cross the border to Illinois casinos when they can attend their own? Why should Indiana folks who smoke cross the border to Illinois casinos that forbid them by law from smoking while gambling? Why should Indiana folks by cigarettes in Illinois when they are cheaper (due to lower taxes) in Indiana?

    We can play the “why” game all afternoon. The answers are pretty clear.

    Then we can look north to Wisconsin, west to Iowa and Missouri and ask the same set of questions and get the same set of answers.

  10. - Sacks Romana - Tuesday, Dec 4, 07 @ 11:56 am:

    I still don’t get this.

    We could very simply increase taxes a slight amount on everyone to pay for things. The Center for Tax and Budget Accountability (CTBA) plan raises the income tax to 5% coupled with an earned income tax credit for people making under 50K a year so that they’re still paying the equivalent of 3%. That pays for equal education funding, the structural defecit, puts money back into the pension fund, AND REDUCES everyone’s property taxes.

    Or we could have people take their money out of our local economy entirely by losing it at casinos and then taxing the casinos a small percentage of what our economy is losing. Every dollar lost at a casino isntead of saved or spent at a real business kills our economy a tiny bit.

    Some people cry murder at the mention of higher taxes (again, the CTBA plan would actually give property tax relief), but in this case LESS money overall would be lost by the average person, and the government would have MORE to spend on education, transit, and other programs.

    Oh, and there’s also the chance that if the casinos don’t do as well as expected the state won’t even get its projected revenue. Oh, and we don’t get any revenue until they’re actually built. There’s just no way that the casinos of tomorrow are going to solve the financial problems of Illinois today… or tomorrow.

  11. - Angry Chicagoan - Tuesday, Dec 4, 07 @ 12:03 pm:

    Polk County, Iowa has built up an impressive facility in Prairie Meadows — but the smoking just makes the casino portion of it unbearable. I do think the Indiana guy has a point though; part of Prairie Meadows’ success in the casino business has indisputably been I-80, and those folks passing through smoke at a very high rate and might not spend as much time or money if they were banned from smoking inside. But no question, smoking is a part of why I never got into going to casinos.

    Looking at the bigger picture I just don’t know where Illinois is going to get casino market share, other than finding a new niche in the downtown tourist market. The behavior of these politicians defies belief, but I honestly don’t see them doing anything else unless someone can push through a progressive income tax. And since that requires a constitutional amendment, my prediction is savage budget cuts over the next few years.

  12. - Bitter Sox fan - Tuesday, Dec 4, 07 @ 12:06 pm:

    Kadner’s quotes from Lou Lang read like, “Well, I know that we’ve been emasculated for months by our own political infighting, but now that someone from Indiana is taunting us, we might just get our stuff together and pass a casino bill. So there.”

  13. - A Citizen - Tuesday, Dec 4, 07 @ 12:07 pm:

    Obviously the cure for chronic addicted gamblers is to require them to develop a 3 pack a day smoking habit. That will generate quite a bit of revenue.

  14. - Greg - Tuesday, Dec 4, 07 @ 12:08 pm:

    Thanks Sacks, I forgot that only sales taxes, not income taxes, distort consumption and investment choices.

  15. - c-rock - Tuesday, Dec 4, 07 @ 12:16 pm:

    Sacks Romana,

    take a look at what your saying. Raise taxes??? Come on,

    why keep on paying for blagos Jet flights? Why pay for more waste, and corruption?

  16. - Rich Miller - Tuesday, Dec 4, 07 @ 12:20 pm:

    c-rock, you’re paying for the governor’s flights now.

    Also, the state owns no jets.

  17. - Skeeter - Tuesday, Dec 4, 07 @ 1:04 pm:

    Isn’t there something immoral about balancing the budget using a means that kills people?

    Chronic Obstructive Pulmonary Disease kills 120,000 Americans every year. 12 million Americans have it.
    85% of those cases are caused by smoking.

    And Indiana claims that ILLINOIS is wrong on this issue?

  18. - Loop Lady - Tuesday, Dec 4, 07 @ 1:45 pm:

    I can tolerate alot, but bein’ bested by the Hoosiers is intolerable…

  19. - steve schnorf - Tuesday, Dec 4, 07 @ 2:33 pm:

    I don’t think we are in a recession in Illinois. We are in a time of a decreasing rate of economic growth over the past 8-10 months, but that is not a recession.

  20. - plutocrat03 - Tuesday, Dec 4, 07 @ 2:49 pm:

    OK Rich the state uses multimillion dollar turboprops to haul the Gov around. Is that really different in operating costs than a jet?

    and to Sacks Romana since when is a slight increase in taxes 66%? CBTA’s credibility is lost when they argue that Illinois is a low tax state. When comparing per capita total tax burdens, Illinois is in the upper quartile of the country while providing a lower than average range of services.

  21. - Sacks Romana - Tuesday, Dec 4, 07 @ 4:28 pm:


    The current income tax rate is 3%. You are correct that 5% is 66% more than 3%. If the income rate was currently 1% and was moved up to 3% then by your logic it would be a 300% tax increase. I call it a slight tax increase because it would be asking people to pay only 2% more of their income. I think the fact that it’s coupled with an earned income tax credit for people making under 50K a year makes it even more reasonable. The fact that it provides PROPERTY TAX RELIEF OF AT LEAST 20% for every assessed area in the state makes it a bargain. I think the fact that it adequately funds our schools and eliminates the structural defecit makes it fantastic.

    Forget all that though and get back to my original point about the fallacy of casinos. The state needs X amount of money for schools. They can either tax people directly for it (and I obviously prefer not crying every time I open my property tax bill) or hope beyond hope that enough people throw away their money at a casino so the government can collect a small percentage to fund our public sphere.

    Of course there’s corruption. I think Rich’s point is that we’re paying for that corruption RIGHT NOW. The CTBA plan provides for a dedicated revenue stream as well, unlike Blagojevich’s plans which usually only dedicate the money for the first year, and then funnel it into the general fund where it gets used for pork, waste, corruption, and plane rides.

    The fact of the matter is that education is grossly underfunded, and even taking back all the money that gets wasted on corruption, it wouldn’t be enough to make up that difference. And I can’t possibly conceive how a casino would either.

    I don’t work for the CTBA or anything. I’m an Illinois Green Party member and House Bill 750 (the CTBA plan) is a key piece of legislation we support. I personally think it’s an excellent idea, and I like to remind people that there are alternatives, especially with the intellectual bankruptcy we get from Blagojevich and all the pro-casino folk.

  22. - steve schnorf - Tuesday, Dec 4, 07 @ 7:31 pm:

    Actually, the life cycle costs of the KingAirs are quite a bit higher than jets would have been; a big reason is that the type of jets a state would buy retain much more of their value after several years than the turoprops do (or at least that was the case when we last looked at it around 10 years ago).

  23. - Arthur Andersen - Wednesday, Dec 5, 07 @ 12:06 am:

    To second Steve’s spot-on post:
    -the King Airs can have higher repair and maintenance costs because turboprops (a jet engine with a propeller on the front for folks who aren’t into this stuff) have over 2000 moving parts and a turbofan engine, the “real” jet, only has a very small fraction of that amount, but when a jet has to be repaired, the costs are huge.
    -Those costs are offset by much lower fuel burn for the turboprops-jets (and turboprops to a lesser extent) aren’t fuel efficient at all until they reach very high altitudes.
    -The average “stage length”, or flight route/time, for the State fleet, at least back in my day, was around 185 miles, or roughly SPI/CGX. (Meigs…sob.) A “real jet” (like the jets serving O’Hare from SPI) barely reaches cruise (at an inefficient 15,000 ft cruise level imposed by ATC) before the descent starts. The King Air burs a lot less Jet-A to get there and to cruise.
    -Props (so to speak) to Steve and his colleagues in the Edgar admin.for upgrading the fleet in the 90’s. The King Air 350 has the highest resale value of any turboprop aircraft on the market.
    -Finally, to get the cabin size, comfort, payload, and range the King Air has would approach the 8-figure range in a jet aircraft.

  24. - Common_cents - Wednesday, Dec 5, 07 @ 12:50 am:

    People in Illinois always have an answer for problems; find a new way to raise taxes. They never really think of trying to cut spending. Today the state has the highest deficit of all the states yet the populace and politicians can only think of how to spend even more money. Naturally that leads to highter taxes and consumers at the borders shop in other states to escape Illinois’ ever rising sales taxes and regulations. Life in Illinois…

Sorry, comments for this post are now closed.

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