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The little guys are winning

Thursday, Jan 29, 2015 - Posted by Rich Miller

* State and local video gaming receipts more than doubled last year

According to the Illinois Gaming Board, state revenue from the machines topped $164.8 million in 2014, up from $75.1 million in 2013. Municipalities received $32.9 million, compared to $15 million the year before.

The money flowed in as gamblers poured more than $2.4 billion into the machines over the 12-month period, winning $1.7 billion of that back. Five percent of the revenue goes to cities, towns and counties, while 25 percent goes to the state.

Since the first 61 machines went online in September 2012 at a handful of bars and restaurants, the number of machines and locations has mushroomed to 19,182 machines in 4,675 locations.

While the revenue is helping pay for state construction projects, the spread of the machines is being blamed for a corresponding decrease in revenue for the state’s 10 casinos.

Those casinos had a monopoly and huge profits for a very long time, while local tavern owners faced arrest for offering similar gambling options to their patrons. It wasn’t fair.

* More

The Illinois Gaming Board says revenue from casinos fell nearly $87 million in 2014 from a year earlier. Tom Swoik, executive director of the Illinois Casino Gaming Association, blamed the decline on the spread of video gambling machines.

“I constantly hear from people who say they can just go down to the corner bar and play the slots, rather than driving to a casino,” Swoik said.

Casino admission fell 1.4 million from 2013 to 2014. Lawmakers have long talked about adding more casinos in the state. […]

Video gambling machines are banned in 175 municipalities, down from 200 a year earlier.

* Related…

* Springfield gaming terminals up 46 percent in 2014; revenue hits $1M

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  1. - White Denim - Thursday, Jan 29, 15 @ 10:39 am:

    A win, win, win for the businesses, the state, and municipalities.

  2. - Pot calling kettle - Thursday, Jan 29, 15 @ 10:40 am:

    A great way to tax the poor and poorly educated! The best part is that folks pay this tax willingly.

  3. - Pot calling kettle - Thursday, Jan 29, 15 @ 10:40 am:

    (The “little guys” are actually losing big time.)

  4. - Gathersno - Thursday, Jan 29, 15 @ 10:41 am:

    ..and how much will be needed for addiction services as a result?

  5. - jerry 101 - Thursday, Jan 29, 15 @ 10:45 am:

    now, just legalize weed.

    Grow the Illinois economy, and save money on prisons and policing.

  6. - Robert the Bruce - Thursday, Jan 29, 15 @ 10:47 am:

    I love that “I constantly hear from people who say they can just go down to the corner bar and play the slots, rather than driving to a casino,”
    appears to be his best argument for restricting gambling elsewhere.

    It’s more convenient for people to do what they want - let’s get government to intervene to stop that!

  7. - Amalia - Thursday, Jan 29, 15 @ 10:47 am:

    to those who talk about addiction or spending by those who don’t have the money, I wonder if my avid sports viewing would be seen by some as spending too much. between cable fees that I must pay if I want to see games live, or even via on demand, season tickets, individual games, not to mention sports memorabilia and wearables, it really adds up. It’s how I choose to spend money. others choose gambling. I like choices.

  8. - Leroy - Thursday, Jan 29, 15 @ 10:48 am:

    Everyone wins.

    How can you not love a story like this?

  9. - Anonymous - Thursday, Jan 29, 15 @ 10:51 am:

    Isn’t a big beneficiary of the casino revenues the schools? So by declining Casino profests in favor of local gambling aren’t we shifting funds from education to non-roads capital funds?

    Just looking for clarification

  10. - Team Sleep - Thursday, Jan 29, 15 @ 10:51 am:

    An auto repair and body shop on the north end of Springfield applied for liquor and video gaming licenses. The owner was denied, but that really shows who mainstream this has become. The comments on the SJ-R and WICS Facebook pages were priceless.

  11. - Illini97 - Thursday, Jan 29, 15 @ 10:51 am:

    So, in the last year state revenue from video gaming is up about $90 million. Casino revenue is down $87 million. So, it’s effectively a wash?

    Given that bars aren’t generally employing significantly more people when they add machines and casinos are laying people off with reduced revenue, is this a net loss for the State, actually?

  12. - Wordslinger - Thursday, Jan 29, 15 @ 11:00 am:

    When’s the last time you saw or heard a spot for an Illinois casino?

    Ho Chunk in Milwaukee, the Indiana casinos, even Four Winds in New Buffalo are on the air all the time.

    Illinois casinos have state authority to run house-rules games. They can’t lose. All they have to do is get the people in the door.

    You’re hustlers, so hustle.

  13. - Anonymoiis - Thursday, Jan 29, 15 @ 11:16 am:

    Casinos across the river and state lines have upped their game significantly, while illinois counterparts have done nothing to improve. St Louis has a huge shiny Vegas style casino that has a resort hotel and sponsors sports events and big concerts. A mile east over the river the Casino Queen has a billboard or two. Sure, blame the small bars. Im guessing a good percentage of the revenue from bars was still spent there before, it was just illegal and not reported

  14. - OneMan - Thursday, Jan 29, 15 @ 11:22 am:

    Keep in mind the big winners in the video gaming are the truck stops…

  15. - Stones - Thursday, Jan 29, 15 @ 11:23 am:

    How can the State ensure that bar video games aren’t rigged?

  16. - Bogey Golfer - Thursday, Jan 29, 15 @ 11:27 am:

    The Elgins, Auroras, Joliets and East Peorias are experiencing some lost revenue while many towns have increased a slight uptick. At least the shorter drive reduces the carbon footprint.

  17. - OneMan - Thursday, Jan 29, 15 @ 11:34 am:

    How can the State ensure that bar video games aren’t rigged?

    Well the machines report revenue to the state, and if you look at them, they all have about the same payout rate, so there is that.

    If in terms of the machines being rigged to payout to some folks but not others, they have cameras and licensed techs, again anything is possible but relatively speaking the hassle of doing it vs the reward isn’t really there.

  18. - Mouthy - Thursday, Jan 29, 15 @ 11:34 am:

    Make that parted and not separated. More fast, fat fingers on the “Say It” button.

  19. - DE - Thursday, Jan 29, 15 @ 11:35 am:

    Of course you still can’t play the machines at the ractracks, but most of them will be vacant land soon anyway.

  20. - Todd Gak - Thursday, Jan 29, 15 @ 11:39 am:

    Anon, that is correct. Majority of video gaming revenues go to the Capital Projects Fund, while casino revenues primarily go to Education Assistance Fund.

    The other issue is the difference in tax structures. Flat 30% for video gaming vs. graduated structure dependent on AGR for casinos. 2014 effective rate was almost 35% across all casinos and considerably higher at Rivers.

  21. - Wordslinger - Thursday, Jan 29, 15 @ 11:39 am:

    The machines are “rigged” to be profitable. That’s the point of the exercise.

  22. - Mouthy - Thursday, Jan 29, 15 @ 11:48 am:

    “The machines are “rigged” to be profitable. That’s the point of the exercise.”

    One hundred percent correct just like every other form of government sponsored gambling. They should call it the “Hey lets have some fun and give our money away” tax.

  23. - Springfieldish - Thursday, Jan 29, 15 @ 11:48 am:

    The video poker short game might be paying some, but it is a net loss for Illinois. Free standing casinos mean construction, as opposed to video gambling parlors in store-fronts, living-wage jobs, as opposed to multiple part-time shifts of “attendants” to avoid benefits, and ancillary revenue from restaurants and hotels on-site and in its environs, as opposed to neighboring store fronts seeing a loss of traffic because of perceived “sketchy” presence. The issue is becoming how to get this genie back into the bottle before every casino developer just says, thanks, but no thanks.

  24. - Hacksaw Jim - Thursday, Jan 29, 15 @ 11:54 am:

    Never understood the allure of the one-armed bandit. I prefer dice and cards as my favored form of gambling entertainment. With that said, I haven’t been to a casino in a few of years.

  25. - OneMan - Thursday, Jan 29, 15 @ 12:06 pm:

    Hacksaw Jim

    I would suggest a book…

    Very interesting read.

  26. - Formerly Known As... - Thursday, Jan 29, 15 @ 12:08 pm:

    ==Everyone wins.==

    Except the really little guys who really lose. That $164.8M comes out of someone’s pockets, voluntary and addicted alike.

  27. - bullet - Thursday, Jan 29, 15 @ 12:14 pm:

    the revenue is being spread around for a change,local bar or restaurant,town or village,many employees ,etc.etc..instead of the casino’s and the state only.

  28. - Illini97 - Thursday, Jan 29, 15 @ 12:21 pm:

    I suspect there may be some unintended consequences occurring here. It’s been noted that this is redistributing revenue from Education to Capital Projects. The total change is effectively zero, but the manner in which it is spread is different. Was that the legislative intent?

    As Springfieldish noted, this is also taking down the large buildings, with many employees inside to the benefit of small buildings with (generally speaking) no more employees in them than before.

    I’m not judging either of these things as necessarily good or bad, but they are lasting effects of a policy change. And I’m not sure all of those effects were considered.

  29. - Mouthy - Thursday, Jan 29, 15 @ 12:22 pm:

    “the revenue is being spread around”
    The revenue, as you call it, is people’s money that might have saved it or spent it on something that would actually benefit themselves or their families. The argument that because it’s the local owners that get the cut instead of casinos and the state is really on who gets to fleece the people.

  30. - Demoralized - Thursday, Jan 29, 15 @ 1:23 pm:

    ==who gets to fleece the people==

    How is it fleecing? Nobody is forced to gamble. The only fleecing that takes place is if you choose to let yourself be fleeced.

  31. - Weltschmerz - Thursday, Jan 29, 15 @ 1:23 pm:

    What is really unfair, is that the states got their ideas from The Outfit and there are guys in prison for being visionaries. How long before “Soma” lounges are licensed and taxed?

  32. - A guy - Thursday, Jan 29, 15 @ 1:25 pm:

    The little guys will become victims of the law of diminishing returns soon enough too.

  33. - Anon - Thursday, Jan 29, 15 @ 2:15 pm:

    The biggest losers? Lower income Illinois residents

  34. - Hacksaw Jim - Thursday, Jan 29, 15 @ 2:15 pm:

    Thanks for the suggestion OneMan. It looks like its an interesting read. I’ll make sure to grab a copy.

  35. - zatoichi - Thursday, Jan 29, 15 @ 2:39 pm:

    Spend $2.4B and get $1.7B back which is a 30% loss. Let me have more of that deal. But you can make it up on volume.

    The regular gambling crowd is a fairly static size. More casinos are not going to double the volume of people who gamble. It is just more bucks from the same pot of money.

  36. - Mama - Thursday, Jan 29, 15 @ 2:52 pm:

    “they can just go down to the corner bar and play the slots, rather than driving to a casino,” That is a bad thing??? I believe it is a good thing help my local community earn more money. Who cares if the boats decide to pull their anchors in IL? People still go to Vegas to gamble. Perhaps the boats should start offering entertainment - big bands, etc. to help pick up business.

  37. - Mama - Thursday, Jan 29, 15 @ 3:07 pm:

    I learned something new today, and I’m shocked! All gambling proceeds should be earmarked for education. The schools need those funds. You can not tell me the legislators did not know the schools would lose revenue from the gambling machines when they moved the proceeds from the gambling revenues!

  38. - Mouthy - Thursday, Jan 29, 15 @ 5:23 pm:

    ===How is it fleecing? Nobody is forced to gamble. The only fleecing that takes place is if you choose to let yourself be fleeced.===

    As a group the people that play video poker lose by design. They get fleeced just like the people that “voluntarily” use a payday loan outfit.

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