According to the Illinois Gaming Board’s recently released 2016 report, revenue from the state’s 10 casinos dropped 1.7 percent from .439 billion in 2015 to .414 billion in 2016. Casino admissions declined 4.5 percent, from 12.9 million people in 2015 to 12.3 million in 2016. And the state’s share of taxes collected from the casinos also fell 2 percent to 4 million. The reason, according to most observers, is the spread of video gambling terminals in gas stations, bars and restaurants, truck stops, fraternal organizations and storefronts named Lacy’s Place and Dotty’s. And the video gambling industry still has a long way to go before it reaches saturation in the state.
The gaming board’s report states, “By the close of 2016, video gaming expanded to 5,726 locations throughout Illinois, with a total of 24,840 active video-gambling terminals; a figure equivalent to the number of positions at almost 21 casinos. Video gaming in Illinois has proven to be both a regulatory and technical success as well as an important adjunct to state revenues.”
Former Governor James Thompson signed legislation allowing casino gambling in 1990. Former Governor Pat Quinn authorized video gambling in 2009. The number of actual video gambling terminals increased by 12 percent from 22,135 in 5,222 locations in 2015 to 24,840 in 5,726 locations in 2016, according to the report. In addition, “the 2016 year-end net terminal income was $1.108 billion compared to $913 million in 2015, an increase of 21.3 percent,” the report said.
It also noted in 2013 slightly more than one in four Illinois residents lived in a community that allowed video gambling. As of 2016, that number rose to one in two Illinois residents. And there’s room for growth since the city of Chicago doesn’t allow video gambling. The gaming board said it “continues to receive” applications for video-gambling licenses and last year “conducted thousands of investigations of individuals and entities.”
In fact, the report stated, “The success of video gaming has caused local communities that previously had prohibited it to reconsider their earlier bans.” One reason is the tax revenue the games bring to local communities. State and local tax revenues from video gambling grew from $274 million in 2015 to $332 million in 2016. The state requires a 30 percent tax on net terminal income, with five-sixths going to the state and one-sixth to the municipality. The host establishment owner and video machines owner evenly split the profit from the terminals.
The report stated Springfield ranks number one with 638 terminals in 144 establishments; those numbers have since grown. The city collected $1.4 million in video gambling tax revenue in 2016.
Graham Enterprises of Forest View ranked number one in terms of income, collecting $1.6 million in net terminal income in 2016, a 246 percent increase from 2015.
Casino revenue is taxed at an escalating percentage of gross receipts, starting at 15 percent up to $25 million, up to 50 percent tax on receipts in excess of $200 million and so on. In 2016, state and local tax revenue generated by casinos fell for the fifth consecutive year. In 2010, Illinois casinos paid $574 million in total taxes, and just $477 million in 2016. Rivers Casino in Des Plaines led the competition with gross receipts of $427 million in 2016. Harrah’s in Joliet came in second with gross receipts of $183 million.
