Illinois Gaming Hearing Gets an Earful

A town hall meeting set up by pro-gaming Rep. Robert Rita (l.) last week demonstrated the rift that still exists between those favoring gaming expansion in the state and those how are opposed. Current casino execs complained about the video poker machines in bars and restaurants, saying those games account for as many as 10 new casinos.

Just ahead of the legislative session, Illinois state Rep. Robert Rita recently held a town-hall meeting to gather input on his expanded-gambling bill, which supporters said, could generate tax revenue of 0 million to billion annually. More than 250 people packed the conference hall at the Casino Queen in East St. Louis. Among the most vocal was Casino Queen President and General Manager, Jeff Watson, who said, “I want to be very clear. We are not in favor of any expansion that is going to dramatically affect our business. Despite popular opinion, gaming is not a cure-all.”

Watson is concerned about a proposal in Rita’s bill that would add slots at Fairmount Park racetrack in nearby Collinsville. The measure also calls for five new casinos in Chicago, Rockford, Danville, Chicago’s south suburbs and Lake County and slots at Chicago’s two airports. Watson noted the region’s six casinos—two in Illinois and four in neighboring Missouri near St. Louis–are cannibalizing the other, and legal video games in Illinois plus a shaky economy cost his market $76 million last year. “There’s no question there’s been an impact. The St. Louis gaming market is fully saturated, and any time you add more gaming positions into a saturated market, you’re just diluting the existing operations. Basically, you’re just cutting the pie up into more and more pieces,” Watson said.

The Casino Queen has pumped $1 billion in tax revenue into local jurisdictions and the state over 20 years, Watson said. Adjusted gross revenue there was $101.9 million in 2013, down about 6 percent from 2012 revenue of $107 million. Since 2006 Casino Queen revenue has dropped from $174 million to $124 million last year. Illinois’ 10 casinos combined saw adjusted gross revenue fall 6 percent from $1.27 billion in 2012 to $1.19 billion in 2013.

Watson pointed out the casino has not had to lay off employees in the past year, although the staff was reduced by 35 through attrition, to 667 employees, more than half minorities. The property had 1,200 employees at one time but Watson noted in addition to new competition, loss limits and the statewide smoking ban also have had an effect.

So has video gambling. Watson stated within a 30-mile radius of the Casino Queen, neighborhood bars and restaurants operate about 650 video gaming machines, which have generated a combined total of $1.5 million in revenue. “That’s basically revenue that would have come to the Casino Queen,” he said. The bars and clubs are each allowed to have up to five gaming machines. Estimates are that there could eventually be up to 70,000 machines at the bars and clubs statewide.

Watson concluded, “From our perspective, the Casino Queen is the only employee-owned casino in the United States, and the only locally-owned casino in Illinois and the St. Louis market. When we have initiatives to add additional gaming positions to this market, you’re not hurting a large, faceless corporation, you’re hurting the people who work here–the people who deal cards, the people who serve food.”

Tom Swoik, director of the Illinois Casino Gaming Association, backed up Watson’s concerns about video games. He said with 12,000 machines online across the state at licensed bars, restaurants, truck stops and fraternal clubs, there now are more gaming positions at those establishments than at casinos. “That’s equivalent to 10 more casinos in the state. It’s had a significant impact,” Swoik said. The games had revenue of $269.7 million between December 2012 and November 2013. The total for November alone was $36 million.

Rita also heard from East St. Louis Mayor Alvin Parks Jr. “We don’t need anything that diminishes the revenues produced by the Casino Queen. Without the Casino Queen, just from an operational standpoint, we don’t know what the city of East St. Louis would do, quite frankly,” Parks said. The casino is the largest private employer in the city of 26,000, and local tax revenue from it accounts for 42 percent of the city’s general fund.

Arguing for gambling expansion, Fairmount Park Racetrack President and General Manager Brian Zander told Rita, “We’re just really looking to survive.” He said track operators in neighboring states that allow slots at racetracks have been able to substantially increase prize payouts to jockeys and horse owners compared to Illinois, where attendance has decreased and race seasons have been shortened.

Zander said if the racetrack also could offer slots, “We envision creating a first-class horseracing and large entertainment facility that could host horse shows, rodeos and top-tier performers. We would focus on becoming a premium horseracing facility that has slots as opposed to a casino that happens to have horse racing. It would result in the ability to retain hundreds of jobs currently held by the horsemen” and others at the track, Zander said, as well as generate millions of dollars of investment in construction and infrastructure improvement.

Since the state’s critical pension issue was addressed last year, Governor Pat Quinn said he could turn his attention to expanded gambling and support a bill if it had sufficient ethical protections and provided funds for education. Quinn vetoed two previous gambling expansion bills.

Rita said the political climate may be more favorable now for a gambling bill to succeed. “I’m a firm believer that gambling expansion can provide great benefits to the state of Illinois and the communities where it comes. But it is important that we put a bill together that is transparent and that deals fairly with taxpayers and all of the interests involved. My hope is these hearings put us on the path to getting that done this spring. We believe we’re in a good position now to pass the gambling bill and get it to governor to sign it,” Rita said.

Meanwhile he said he plans to hold “a couple more” public hearings in Illinois. “We wanted to hear from locals. We’ve been hearing from the industry,” Rita said.

Also in Illinois, lawmakers passed and Quinn signed an extension to an online betting law that will allow horseracing tracks to keep their schedules intact this year. Arlington Park General Manager Tony Petrillo said the bill will preserve the jobs of the estimated 15,000 horse owners, trainers, jockeys and stable-hands in Illinois. “With Quinn’s signature many people can plan on going back to work knowing that there will be a full racing schedule in Illinois, not only for 2014, but for the next several years as well,” Petrillo said. The three-year extension includes a surcharge on wagering.

Finally, the $4 million, four-month renovation of the 20-year-old Grand Victoria Casino in Elgin has been completed. Marketing Director Suzanne Phillips said the Victorian-era drawing room décor at “Aunt Vicky” has been replaced by a contemporary design that’s lighter and airier with bold pops of color. Gone are the doors and turnstiles, remainders of the riverboat’s cruising days. Phillips said, “It is very different. The entire casino has a completely different feel. It is more open, cleaner, even the wall coverings.”

Future plans include renovations at the casino’s restaurants. However, some updates have been put on hold as the casino recovers from temporarily losing gambling space and decreased revenue during the renovation. Illinois Gaming Board numbers indicate between December 2012 and December 2013 adjusted gross receipts dropped 18 percent from $16,766,174 to $13,673,605.

In fact, all Illinois casinos reported decreases in December 2013 compared to December 2012, according to the gaming board. December admissions were down among all casinos nearly 17 percent during that period.