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* The setup…

Video poker machines at taverns, restaurants and fraternal clubs throughout the state could pay out winnings legally under a measure pending in the Illinois House.

The legislation would allow every tavern and restaurants with a liquor license to have three machines that would be tied into a centralized system to track income. Fraternal organizations, such as the Elks and the Veterans of Foreign Wars, would be able to have five machines in their facilities.

State Rep. Frank Mautino said by taxing something that is currently being done under the table, the state could generate $300 million in revenue that would help fund construction of schools.

“They are there and turning your head doesn’t do any good for anyone,” said Mautino, D-Spring Valley, who is sponsoring the legislation. “We’ll take what comes in and use it for areas most in need.”

Anti-gambling groups call the proposal a massive expansion of gambling.

“It’s illegal, and if you legalize it then more people will participate,” said gambling opponent Anita Bedell of the Illinois Church Action on Alcohol and Addiction Problems.

* The Question: Good idea or not? Explain.

posted by Rich Miller
Thursday, Mar 26, 09 @ 10:34 am

Comments

If we tax cigarettes, are we encouraging smoking? What if we passed laws allowing more public places to be open to smoking, because by doing so, more Illinoians would smoke, more cigarettes would be purchased, and more tax revenue would be generated?

Isn’t this similar to what we are doing with gambling?

We know gambling isn’t good for anyone, but since we get some tax loot from the addicts, we’re opening up more places for them to exercise their addiction, and lose more.

This can’t be a good thing.

Yeah, we need the cash, and it seems to be OK right now to punish sinners with sin taxes, but I believe there is a tipping point where the expected benefits from increased taxes, is offset by the social costs exacted from our communities.

Proceed with caution. I’m unwilling to gamble on this one.

Comment by VanillaMan Thursday, Mar 26, 09 @ 10:44 am
Either enforce the law or tax them and collect the fees. I think only have three machines in a tavern would reduce the amount of gambling where I live. Many taverns have five or more machines and this would keep the machines out of convenience stores etc.

Comment by bourbonrich Thursday, Mar 26, 09 @ 10:47 am
I have posted many times my disdain for sin taxes like this. I’ll opt for brevity and just tag onto the end of what VMan has already posted.

Comment by Ghost Thursday, Mar 26, 09 @ 10:47 am
If the machines were not already out there, I would oppose video poker. However, they ARE out there, and many (most?) do have an under-the-table payout. People are playing video poker already, whether you or I like it or not, so the social ills are already happening. Let’s legalize and tax it.

Comment by cover Thursday, Mar 26, 09 @ 10:51 am
I think it is a great idea.Will this be akin to what is done at the casinos as far as keeping track of the payouts? It might also drive more folks into their local taverns and increase the business that was lost when anti-smoking laws were passed.Perhaps we could also sell licenses to open smoking establishments that sold liquor and had poker machines as well. There would be some real money generated.

Comment by Loyal Alumn-Uof I 65 Thursday, Mar 26, 09 @ 10:52 am
I am 100% for legalizing video poker gambling.

1. It is going on every day as it is. Let’s stop turning a blind eye from it and confront the issue.

2. I don’t believe legalizing video poker gambling would bring in copious amounts of tax dollars. But what the heck, a few extra pennies doesn’t hurt.

3. I do not want to jump off the speculation bridge here - but I would argue that since video poker gambling is ongoing, it is better that the state regulate these activities.

Comment by HoBoSkillet Thursday, Mar 26, 09 @ 10:53 am
I agree with bourbonrich, either enforce the law or tax the machines. This is like the concealed carry controversey–anyone who wants to carry a gun is already doing so and those who want to play video poker at the tavern are already doing that. I can’t see that legalizing it would do any additional harm given the lack of enforcement.

Comment by Cinho Thursday, Mar 26, 09 @ 10:54 am
I like the status quo. I can go into a certain bar, gamble (illegally), and there are no taxes paid! Moonshine and Cuban cigars are just better for that same reason!

Comment by Heartless Libertarian Thursday, Mar 26, 09 @ 10:58 am
A few years ago, the president of one of the many lake clubs in Springfield mentioned they’ve refurbished their club to the point they don’t know what to do with all the $$$$ from their poker machines…Five machines. Tax the hell out of them. If you want less of something, tax it.

Comment by You Go Boy Thursday, Mar 26, 09 @ 10:58 am
The state needs a comprehensive gaming bill that includes expansion at the existing boats, slots at the race tracks, a Chicago casino, north & south suburban boats and boats in any city with over 50,000 people outside of Chicago. This may sound like a Christmas tree bill that some say gets too heavy but I think unless everyone who has an interest is included or you do individual bills such as this, then it will sink. If all parties are on board, a major gaming bill can and should pass. People gamble whether legal or not. Access is no problem so just legalize it.

Comment by Been There Thursday, Mar 26, 09 @ 10:59 am
The logic of allowing a given activity because it generates taxes is bankrupt at the core.

If use the logic of ;they will do”x” anyway, so let’s tax it, lets troll the prisons and legalize all the behavior that landed folks in prison in lieu of taxes.

Imagine the money we could make by closing down all those prisons.

The Representative needs to learn what business development is before he touts it as his expertise.

Yet another bad idea brought to you the Democrat Party

Comment by Plutocrat03 Thursday, Mar 26, 09 @ 10:59 am
There should be a way to determine how many machines are already operating in Illinois. If the total is capped there, the machines moved out of convenience stores and the bars where more than 3 currently reside can be distributed to those places that want some. Then there would be no expansion of gambling but the state could collect the revenue on existing machines.

I am against any expansion of gambling but this would keep it from expanding.

Comment by Lefty Lefty Thursday, Mar 26, 09 @ 11:02 am
There was a great articel from the States Atorney in peoria detaling the increase in white collar crime and bankruptcies following the addition of a casino to peoria. increasing gamblin has an increased cost. For every dollar we bring in we send out x number of dollars for prosectuins, to cover losses from embezzlement, increased police to cover the crime necessary to pay for the gambling habits, unemployment, bankruptcy etc.

increasing gambling may cost the State far more money then it raises. Not to mention it impacts those with lower income the greatest.

Comment by Ghost Thursday, Mar 26, 09 @ 11:04 am
I’m generally against the state running the market for financial crack. About the only real benefit I see to this is that it would remove an income stream from The Outfit, just as the state lottery ended its Policy Wheel racket.

Before I’d sign on in support, I’d have to see what the racetracks and casinos would demand.

For an interesting history, pick up “Kings, The True Story of Chicago’s Policy Kings and Numbers Racketeers.” It tells the story of how when South Side black gangsters ran the numbers, they reinvested the profits in the community, opening banks, stores and groceries.

When The Outfit murdered its way in and took over the racket, all the money bet in the black community left and never came back.

Comment by wordslinger Thursday, Mar 26, 09 @ 11:10 am
Good for Rep. Mautino. I know that his legislative district has more than its fair share of these machines. I think this is a fairly brave proposal. I support it. Is it really that much different than the casinos?

Comment by Jake from Elwood Thursday, Mar 26, 09 @ 11:18 am
Question, exactly how was the $300mill figure arrived at? Really, how do you estimate how much is going under the table? Do you ask someone who is under the table? After Blago all revenue numbers are going to have to be explained and proven.

Comment by Belle Thursday, Mar 26, 09 @ 11:26 am
I suppose I would rather tax video poker than to have another casino in this state. I would rather that than an income tax increase. I would say yes!

Comment by Levois Thursday, Mar 26, 09 @ 11:31 am
I think it is a great idea. The machines are in a LOT of bars/clubs/resturants, they pay out, why shouldn’t the state take a cut to help fill the gap. Should have happened a long time ago.

As far as people who say it will cause more gambling, the people are already gambling, only this will make it legal.

Comment by He Makes Ryan Look Like a Saint Thursday, Mar 26, 09 @ 11:33 am
Why not? They bring in a lot of money, might as well put it back in the State, we now have a $1 trillion dollar more deficit than once previously predicted. Also they need to get the last Casino license out there, think of all that money we are loosing on that?
We are now loosing money on the Empress due to a fire.

Comment by Third Generation Chicago Native Thursday, Mar 26, 09 @ 11:37 am
Fantastic idea. It promotes corruption as it stands now. Might as well tax it and get a little taste.

Comment by Stuck with Sen. CPA Thursday, Mar 26, 09 @ 12:01 pm
I do not care one way or the other with gambling expansion in the sense of more casinos but do not think expanding gambling legally to places children go (especially in smaller towns) is not something that should be done.

Two things I am not sure the bill addresses.

1) So what encouragement would the places have to not continue having the machines “under the table”? They are getting away with it now and not paying a gambling tax and probably not paying any Federal or State Income Taxes on the earnings. A friend of mine recently mentioned to me that part of the reason the establishments currently get away with this because they say the machines are for amusement purposes only. The definition of the “Video gaming terminal” does not seem to change anything regarding amusement purposes only. Encouragement being more machines? I have been to a place that already has 3 machines. Skimming through the bill, it seems like the establishments would have to spend money to either modify existing machines or buy new ones to meet certain standards.

2) What about underage persons? Will all people under 21 be banned from the establishments? I do not know if it is laws or voluntary for the riverboats (at least Empress in Joliet) but last I knew anyone under 21 can not even use the restaurant. That could be a large issue for smaller towns where there are only a handful of places to eat or get gasoline. A lot of people also rely on the VFW halls and such for wedding and funeral receptions, so what happens then?

Comment by KPK Thursday, Mar 26, 09 @ 12:25 pm
Why yes! Legitimize the live-for-today, casino mentality taking this nation down the crapper. So much for frugality, investing for tomorrow, and saving for a rainy day. Take the short cut, cheat and be happy. Nice lesson for the kids.

Comment by vole Thursday, Mar 26, 09 @ 12:26 pm
Pluto:

As opposed to “You can’t do something even though you are the only victim, because it offends me” — that’s the great GOP idea.

If people want to gamble, let them. It doesn’t hurt me and it won’t raise my insurance premiums.

It is like they are voluntarily agreeing to pay more than their fair share of tax. Be my guest. This sounds like a great idea to me.

Comment by Skeeter Thursday, Mar 26, 09 @ 12:32 pm
It is a good idea. He sets the number at right about what the taverns and clubs already have.

BTW, this also saves money when the police aren’t tied up trying to catch the bar owners and the courts don’t have to deal with the extra caseload.

I also like it because it spreads the money around instead of concentrating it in the casinos. AND…by bringing these machines above board, it reduces the likelihood of control by organized crime.

As to the comment about underage players, with the machine labeled as a “game” kids can play it (why not? it’s not gambling…). When it is a gambling device, it would be more clear to everyone that they shouldn’t be playing.

Comment by Pot calling kettle Thursday, Mar 26, 09 @ 12:33 pm
>The Representative needs to learn what business development is before he touts it as his expertise.

That’s harsh. He’s the son of a former st. rep. and he worked as a house aide before taking dad’s seat at age 29. If you set the bar too high, what COULD he claim as his area of expertise?

Comment by lincoln street Thursday, Mar 26, 09 @ 12:41 pm
It makes a lot of sense. Montana and South Dakota has similar systems and revenues are meeting expectations. Why not let local businesses get a shot at a small piece of gambling revenues and not just big out of state casino owners/operator?

Comment by downstate hack Thursday, Mar 26, 09 @ 12:43 pm
The tavern that I frequent has at least a dozen machines and they payout on all of them. Given that the tavern owner would have to get rid of nine of the machines, deal with the bureaucracy of it all and the public would have to pay taxes on them, why would anyone support such a measure? As for less enforcement, I would argue the need for enforcement would go up.

Comment by Slick Willy Thursday, Mar 26, 09 @ 12:55 pm
My friend owns an amusement company that puts these machines in place. The dollar amounts generated by these machines in just our small county is staggering!!!

He said they would actually prefer that they were legalized and taxed rather than having to operate in the grey area of the law.

One area fraternal organization took in so much money from their machines that they ended up buliding a brand new building, as they didn’t know what else to do with the money.

Legalize them and tax them!!!

Comment by Downstater Thursday, Mar 26, 09 @ 1:10 pm
To those that rail against gambling, I’m with you. I don’t gamble. But from a religious perspective, weren’t the soldiers ‘rollin’the bones’ at the foot of the cross at Christ’s crucifixion? Which is to say it will ALWAYS be with us (like the poor - I’m sure there’s a connection here somewhere). If it’s here and will always be, then take some and put it to better use than shoveling it toward those that nefariously profit big time from this activity

Comment by You Go Boy Thursday, Mar 26, 09 @ 1:10 pm
Legalizing and sanctioning video poker in bars and taverns will be a money maker. Not huge, and some of the income will be at the expense of casino revenues. The real cost will be social: ‘convenience gambling’, that is the easy availability of poker machines, has led to significant addiction problems in Australia. The income/social dislocation paradigm is much more negative than any other form of gambling that Illinois has introduced. Beyond those issues, there is a rather small finite group of ‘gamblers’ in Illinois and with this measure we are giving them more and more opportunities to gamble. It remains an open question as to whether $300 million in new revenues to the state would be created…that $300 million must be measured against the decline in revenue from horse tracks, the lottery, and existing casinos.

Comment by walter sobchak Thursday, Mar 26, 09 @ 1:26 pm
At this point we have so much gaming in this state (the casino’s, the lottery) I don’t know how much of the pie is left to take but we might as well do so.

Also it might help the groups that have been hit hard by the change in the state smoking laws.

Comment by OneMan Thursday, Mar 26, 09 @ 1:58 pm
Let’s say it again so everybody understands. . . these things ALREADY EXIST! At least downstate, it’s very common-very very common–for social clubs, taverns, etc., to have machines that “are just for fun ” (wink, wink)! Let the ones that already have more than 5 keep what they have. And it WOULD be a big money maker–tax the machines (at $5,000 per license plus a percent), most places wouldn’t blink an eye, as the take from them is many times that!), plus the establishment paying income taxes, plus the bigger winners paying income taxes, that’s a lot of taxes being paid for something that is already happening! To the extent that legalziing the macines actually brings more people in the door (and I really don’t believe that will be many, since those that are inclined to be serious gamblers are already doing it). . . that’s more business at a time when most places need more business! Look, I don’t particularly like gambling, and I realize it can be harmful, especially to the less educated, but Mautino is talking about taxing activity that’s already taking place! Go for it Frank!

Comment by IVote Thursday, Mar 26, 09 @ 2:23 pm
===It’s illegal, and if you legalize it then more people will participate===

Whatever. I’ve never seen anyone in a bar/tavern not play a machine because they were frightened of being arrested. What a lame statement.

I’ve trumpeted on CF about this issue. I think legalizing and taxing is just fine. The only issue is the number of machines a location can have. 3 won’t cut it. I’ve seen as many as 9 people playing on all 9 machines in one establishment.

I think it will get into the establishment’s cut of the machines…the amusement companies aren’t going to lose money on this one.

Comment by BandCamp Thursday, Mar 26, 09 @ 2:29 pm
a pol who suggests we can expand gambling our way out of our fiscal problems has admitted their bankruptcy of ideas

Comment by BannedForLife Thursday, Mar 26, 09 @ 2:31 pm
Someone will figure out a way to get around the 3 machine limit, just like the taverns who opened up a “tobacco shop” next door for their patrons who smoke. Anyway, I recommend “Starved Rock Stories” which, among other stories contains a history of gambling in the Illinois Valley, years before Frank Mautino was born.

Comment by Six Degrees of Separation Thursday, Mar 26, 09 @ 3:03 pm
“Starved Rock Stories” is great. The chapters on Kelly and Cawley is particularly pertinent to this topic. “Capone’s Cornfields” is another good read on the links between the Illinois Valley and organized crime and provides another viewpoint on the history of gambling in Mautino’s (and neighboring) districts.

Comment by HoBoSkillet Thursday, Mar 26, 09 @ 3:51 pm
It is beyond dispute that gambling results in addiction, bankruptcy, divorce, crime, and moral decline.

Most posters seem to have no problem with expanding opportunities to gamble.

Most of the posters single interest appears to be additional revenues for the state or other governmental entitity.

So the obvious question is why?

It would be interesting to see just where their paychecks come from.

Say it ain’t so Joe.

Comment by True Observer Thursday, Mar 26, 09 @ 4:10 pm
You have misunderstood my comment. I said the arguement is morally bankrupt. I do not condone or condem gambling as an entertainment activity. I just want folks to follow the existing laws.

My only point is that if the logic of decriminalization of an activity is that people do it, so why not tax it is faulty. I can create a long list of things that are illegal that could be taxed and decriminalized.

I tend to lean in a libertarian direction, but unlimited gambling is not going to benefit the social fabric of the state and as such I would oppose the legalization of video poker gaming outside the confines of a casino.

Comment by plutocrat03 Thursday, Mar 26, 09 @ 4:22 pm
True Observer
====It is beyond dispute that gambling results in addiction, bankruptcy, divorce, crime, and moral decline===

The same can be said about alcohol, and it’s legal, and we are making money off the taxes.

Comment by Third Generation Chicago Native Thursday, Mar 26, 09 @ 4:42 pm
I think it is pretty funny seeing all these right winger complaining about the nanny state –

until we start talking about activity they don’t like.

Comment by Skeeter Thursday, Mar 26, 09 @ 5:00 pm
you can hardly increase use when presently you must lineup to use them

Comment by bugs Thursday, Mar 26, 09 @ 6:04 pm
The legislation as proposed will only allow 3 machines per establishment in bars, and 5 in fraternal organization facilities.

The bill calls for machine credits of $.05, $.10, and $.25 with a maximum wager per hand of $2. In order to raise the projected $300 million in revenue, the machines would have to generate $1.2 billion in play action.Based on a pro-forma projection of $250 in play per machine/per day it would take some 13,100 machines at almost 4,100 locations in order to hit these numbers.

How many license liquor establishments are there in Illinois? How many fraternal halls and truck stops? Would they all take them or would some local ordinances prohibit them? If this happened obviously then the remaining locations would have to either increase their machine count considerably, or greatly exceed the $250/machine/day average.

How dillutive would this be to the existing riverboat licensees, lottery agents and racetracks? Do they believe the $300 million would be new money that is currently not being acptured, or would some cannibalization come into play?

The bill also allows for a local option prohibition at the municipal level, or a county-wide prohibition, but leaves those in an unicorporated Township subject to the mercy of the whims of the County Board and eliminates their local control.

I question the projected numbers, and regardless of what anyone thinks about the bill on a public policy basis, I don’t think it has a chance of becoming law.

Comment by Quinn T. Sential Thursday, Mar 26, 09 @ 6:14 pm
Sure, why not? Gambling isn’t evil (think about your NCAA pool), people losing money they can’t afford is evil. Just set intelligent limits.

In late 80’s early 90’s I did business with a company in North Dakota. Customer took me to a bar where they had blackjack and keno (this was before all the states had gambling, even before Illinois). The tables were owned by local charities, who hired real dealers. I don’t think the bar owners got anything, but they liked the traffic. Minimum bet $.50, max $2.00. I either won or lost $10.00 and spent $20.00 on drinks. A good time was had by all. No one at the tables lost the ranch…it wasn’t phyically possible to lose much money with those limits.

If a bill is done right (and not totally screwed up in conference like the original Illinois casino bill) it would be fine. You can set a minimum that makes it still a game, and a maximum bet that will keep even a drunk bad card player from losing more than about $100.00 a night. Bars get traffic, the state gets some $$, and maybe that geek who plays poker all night gets the courage to go talk to that woman at the end of the bar.

Just don’t spend the $300MM until it comes in. That’s $15.00 tax just from video poker for every man, woman, and child in the State…not gonna happen.

Comment by Bobs yer Thursday, Mar 26, 09 @ 6:33 pm
“It is beyond dispute that gambling results in addiction, bankruptcy, divorce, crime, and moral decline.”

T.O. - It is not 1910 anymore. Heck, I must’ve been a junior or senior in high school before someone even told me that gambling was illegal. It was quite a shock to me. I don’t know where you get your facts from but through my personal experience, all the gamblers I have known, whether done legally or illegally, have never gone down the road you just described. Or if they have, gambling was not the cause of it.

The Progressive Era died about 75 years ago my friend, so please think before using the rhetoric that early 20th century Progressives used. It is a futile exercise.

Comment by HoBoSkillet Thursday, Mar 26, 09 @ 7:26 pm
QTS
about 28000 liquor licenses.

The fraternal clubs I know couldn’t stay open with 5 machines and the revenue taxed.

Comment by steve schnorf Thursday, Mar 26, 09 @ 8:34 pm
As some who works in taxation, I have to ask:

What about the federal tax laws? Casinos are required to keep track of how much you win and issue a 1099-G when you go above $600/year. How will the local tavern/VFW/etc. keep track of this, and how will we ensure their compliance (mailing out forms, reporting to Feds)?

Comment by Lynn S Thursday, Mar 26, 09 @ 9:43 pm
Steve,

Even with that many liquor licenses, some would be exempt from consideration. The law excludes Riverboats, Tracks, OTB’s, those within 1,000 ft. of a church or school, and those municiplaities or counties that would back out of it as well.

The proposed tax rate is a flat 25%, which is what would make it difficult for some places. If you got the $250/day gross, then net is $189, which is then split 50/50 between the machine owner and the location operator, so for your $250 gross, you get to keep about $95/machine/day.

That is of course before the property tax, the utlities, rent/mortgage, payroll tax, retail sales tax on F&B, etc.

Comment by Quinn T. Sential Thursday, Mar 26, 09 @ 9:45 pm