How gambling expansion would change the suburbs
SPRINGFIELD — Former Elgin Mayor Ed Schock said the city knew it was playing a big hand when it came to the money it would get from the Grand Victoria Casino.
The money largely would be used to build things — a new police station and downtown redevelopment, for example — instead of paying for ongoing city expenses like salaries.
“When the money was spent you could look and see the result, and it would be there for a long time,” said Schock, a casino supporter who started on the city council in 1993, the year before the casino opened.
That way, if casino revenue ever declined — and it has in a big way since 2008 — the city budget wouldn't be dependent on the casino's success.
So, if Gov. Pat Quinn decides to approve five new casinos and thousands of slot machines at horse racing tracks throughout Illinois, Schock's got a simple piece of advice for state government.
“Don't count on the money,” Schock said.
But the money is a key reason lawmakers and some local officials want Quinn to sign a massive expansion plan to add to the existing 10 casinos, several tracks like Arlington Park, and the Illinois Lottery — cementing Illinois' reputation as a gambling state.
When Quinn recently said that a huge gambling expansion could turn Illinois into the “Las Vegas of the Midwest,” it wasn't hard to let the imagination go, envisioning a changed Chicago area. Much of the expansion would take place around the city, where, in the Vegas imagery, tree-lined streets and neatly planned subdivisions could be crowded by neon casino signs and oversized hotels.
If Quinn signs the gambling proposal that lawmakers approved last week, it won't be like that in the suburbs. New slot machines will be contained within the walls of Arlington Park and a new casino would be built in Lake County's Park City.
Arlington Park's 1,200 slot machines would make the track as big a casino gambling operation as the Grand Victoria and the Hollywood Casino in Aurora, two in Joliet and the soon-to-open Des Plaines casino, which all are allowed 1,200 positions now.
If the tracks and casinos expand to the largest point the new law would allow, Illinois would go from being a state with an allowed 12,000 gambling positions — either slot machines or seats at table games — to one with more than 39,000 spots. A vast majority of those positions would be slot machines.
By comparison, Nevada has at least 190,000 slot machines, according to the American Gaming Association. And in the Nevada, the association says, people spent about $10.4 billion on casino gambling last year. They spent about $1.4 billion in Illinois.
Sen. Terry Link, the Waukegan Democrat who helped engineer the gambling plan, said he met with Quinn's staff even before lawmakers approved the proposal to address that “we would not be the next Las Vegas by any means.”
For Illinois, the gambling wild card remains the idea of video gambling machines at bars — a law whose fate is tied up in the Illinois Supreme Court, but could allow for tens of thousands more machines.
Those slot machines are why former state Sen. Steve Rauschenberger, an Elgin Republican, said Quinn's criticism of the latest gambling package as “excessive” rings hollow.
“I think we crossed that bridge when he signed and permitted video poker machines,” Rauschenberger said. “Who's he's kidding?”
And don't forget the Illinois Lottery. All but four states have lotteries, and Illinois' lottery sells more than $2 billion in tickets a year. They've also hired a private manager to, among other things, research selling lottery tickets online.
Lawmakers' expansion plan doesn't involve the lottery, but instead focuses on slot machines that have critics howling the loudest. They point to the social costs of gambling addiction.
John Kindt, a University of Illinois University professor of business and legal policy, said that without the shows and other entertainment common at Vegas casinos, Illinois casinos simply become a place for people to lose money.
“We would be a seedy Las Vegas,” he said.
Vegas doesn't have horse racing tracks, though. And Arlington Park's slot machines are intended to help save the facility, which has been hurt from the nationwide decline in interest in horse racing and gambling competition.
At Arlington in particular, live betting has dropped 40 percent in the last decade. A new revenue stream could help the track survive.
But critics of slots, like Rauschenberger, say the machines are no guarantee of long-term success for the horse racing industry. For one, slot machines themselves might not generate interest in the sport of horse racing, and in Indiana, two tracks that have slots filed for bankruptcy protection this year.
In the casino industry, the economic downturn has hit hard. In Atlantic City, officials missed numerous opportunities to diversify its offerings, widen its customer base and fend off competition, which has led to a slump.
“The atmosphere was a total irrational exuberance; it truly was,” said Robert Griffin, CEO of Trump Entertainment Resorts, who worked at Trump properties in Atlantic City in the 1980s and 1990s. “There was a feeling that there was no end to the good times, and that the money would never end.”
Then, disaster struck the nation's second-largest gambling market. A perfect storm of competition right on its doorstep in Pennsylvania, New York and Delaware, coupled with the recession, pummeled Atlantic City worse than any other casino market. In four years, a billion and a half dollars vanished, along with thousands of jobs and tourists. Pennsylvania, with its 10 casinos, is poised to knock Atlantic City into third place at some point next year.
That's what Illinois expansion supporters hope to do to casinos in Indiana and Wisconsin — lure gamblers from those states to places like Lake County and the South suburbs.
Des Plaines Mayor Marty Moylan is set to see a new casino open in his city in weeks. The gambling environment in Illinois was much different nearly 10 years ago when the city started trying to win the state's 10th casino license.
Now, the state's most popular casino in Elgin, as an example, has seen its yearly take drop from $437 million in 2007 to $287 million last year, a 34 percent decline.
Moylan said the casinos still make money, though, and that means the towns where they're located do, too. It's just not as much.
“It's still a good thing,” Moylan said. “You just have to figure that in.”
Rauschenberger said Schock's approach was the right one: Don't get too attached to the money.
“(Former Mayor Ed) Schock and his predecessors have done a good job of not fooling themselves,” he said.
“I think we ought to be real careful,” Rauschenberger said. “It's like pretending the stimulus program is economic activity. It's not growth. It's not production. It's not creating wealth.”
The state's estimates for the revenue-generating possibilities of the gambling expansion plan show at least some money coming in.
A report from the bipartisan Commission on Government Forecasting and Accountability, a widely trusted agency that provides lawmakers with budget estimates, predicts the gambling expansion plan would net government about $446 million more a year in taxes once all the new machines are up and operating.
For perspective, that would be a bit more than 1 percent of the state's total proposed budget for next year.
The same group estimates the state could get about $1.1 billion in upfront cash from new slot machine and casino licenses — money that could go toward paying down the state's unpaid bills, a cost estimated to reach $8 billion by the end of June.
But those estimates all disappear if Quinn vetoes the gambling expansion approved by lawmakers. Clearly, he has a lot to think about.
Schock says that if Quinn signs the legislation, he should follow Elgin officials' lead and prepare for the possibility that the amount of gambling money available in the future could fall.
“That's what happened,” Schock said.
Ÿ Daily Herald news services contributed to this report