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Video gaming operators float alternative to Pritzker’s tax hike

Friday, May 10, 2019

* Grant Morgan

If the state of Illinois wants more revenue from video gambling, one gaming industry executive said Thursday, lawmakers should loosen betting restrictions rather than raise video gambling tax rates.

Ivan Hernandez, who heads the Illinois Gaming Machine Operators Association, offered that proposal to the state House Executive Committee, which is considering several alternatives for increasing state revenue from video gambling. […]

Video gambling machines are taxed at 30%, with the remaining money split evenly between the machine operator and the establishment housing the machines. Pritzker’s plan would increase the state’s tax rate to 50%, resulting in more than $100 million in new revenue for state and local governments. […]

Elements of Hernandez’s proposal include raising the bet limit on single plays from $2 to $4, increasing the maximum winnings on a single play from $500 to $1,199, allowing games with higher jackpots, and increasing the number of gambling terminals allowed at one location from five to six.

Those measures, Hernandez said, would create $210 million in new tax revenue the first two years, without changing the tax rates.

I dunno. Maybe they can combine the two ideas somehow, while exempting small establishments from an increase and then give local governments a bigger share of the take for property tax relief or something.

As with sports betting, cannabis, etc. I think the more they’re talking about details, the better the prospects are. But only up to a certain point. May 31st is three weeks from today. That’s almost an eternity in General Assembly World, but it’s still just 21 days away.

…Adding… It’s Ivan Fernandez, not Ivan Hernandez. Hannah Meisel got the name right and has this context

Along with the revenue enhancements, video gaming operators also floated the idea of allowing the state to use additional revenues to plug budget holes for the first two years, and assuming a progressive income tax passes — Pritzker’s number one priority — the money could then be funneled to “vertical” infrastructure projects, like building and maintenance of new construction projects around the state.

Those vertical projects are being pushed hard by colleges and universities, who point to old buildings as evidence the state hasn’t properly invested in every aspect of higher education.

- Posted by Rich Miller        

7 Comments
  1. - wordslinger - Friday, May 10, 19 @ 11:17 am:

    –That’s almost an eternity in General Assembly World, but it’s still just 21 days away.–

    And a whole lot of fire-stick juggling going on.


  2. - City Zen - Friday, May 10, 19 @ 11:31 am:

    $1,199: $1 below the $1,200 threshold to report slot machine winnings as income.


  3. - OneMan - Friday, May 10, 19 @ 11:39 am:

    So $110 million in new revenue a year. Last year the state’s cut of video poker was $375 million, so they are projecting a 29% increase in the state share.
    That can’t be coming from the additional machine alone by any stretch, so some of it would have to come from the increased bet limit and as a result more betting.

    This is where the math gets more complicated

    To get 29% more out, you need 29% more to go in one way or the other. Last year $5,825,164,502 in funds went into terminals, assuming a consistent payout rate year to year (the locations are surprisingly consistent across the state in payout rate). But the amount going into the machines may not need to go up that much since $18,542,103,451.12 was the total amount played last year. Most of what is played are winnings from play by the player that are not redeemed for cash but used to place bets.
    So if you were to assume that everything stayed the same and just funds in resulted in more revenue you would need $7,514,462,207.58 to go into the machines (funds in) to get an extra $110 million in state revenue (btw that would also be about a $435 million increase in net terminal revenue or $305 million for operators and owners after the 30% tax). Not necessarily a great assumption but some increase in ‘money in’ would be assumed (why else add a machine).
    Realistically you are looking at a 29% increase in losses by players to get the 29% increase in revenue. You are not likely going to reduce payouts, so you need more money to be played and lost.


  4. - Jibba - Friday, May 10, 19 @ 12:00 pm:

    Funny how people always seem to have an alternative to themselves paying more money. By happenstance, the video operators make a lot more money as well as they try diligently to help the state.


  5. - Been There - Friday, May 10, 19 @ 12:14 pm:

    ===Along with the revenue enhancements, video gaming operators also floated the idea of allowing the state to use additional revenues to plug budget holes for the first two years, and assuming a progressive income tax passes — Pritzker’s number one priority — the money could then be funneled to “vertical” infrastructure projects, like building and maintenance of new construction projects around the state. ====
    I always found it was best not to propose how to spend the peoples money. That is not up to the video gaming operators. Coming up with ways to produce the revenue is one thing. But let a legislator propose how to spend it. All you are doing is ticking off other legislators who think it should be spent differently


  6. - Leslie K - Friday, May 10, 19 @ 12:15 pm:

    The betting and payout limits in particular are designed to mitigate/control the social harms of gambling (e.g. the allure of a big payout causing people of precarious means to play, losing more per play). I don’t know how the current limits were chosen, so there may be legitimate wiggle-room. But the industry might have well also suggested lowering the payout percentage/return to player. Let’s just increase the social harms and we’ll make more money for you to tax…


  7. - Enviro - Friday, May 10, 19 @ 1:06 pm:

    ==Let’s just increase the social harms and we’ll make more money for you to tax…==

    Video gambling operators can be counted on to find more ways to increase their profits on the backs of those who can’t afford to gamble. This would be a most regressive tax idea and will hurt the poor and lower middle class.


Sorry, comments for this post are now closed.


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