Wednesday, Sept. 3, 2003 | 9:09 a.m.
CHICAGO -- Illinois gambling industry officials say riverboats have brought in less money and attendance is down in the two months since higher state gambling taxes went into effect.
But gambling critics charge that casinos, which have laid off hundreds of employees and reduced hours to cut costs because of the higher tax, are using the issue to gain leverage for an expansion of gambling.
The two sides sparred Tuesday during a four-and-a-half-hour hearing before the Illinois House Gaming Committee in which most of the testimony came from casino executives, former employees, business people and community leaders who were against the higher tax that Gov. Rod Blagojevich hopes will bring in $200 million a year to help solve a roughly $5 billion deficit.
But a report expected to be released this week by the Illinois Economic and Fiscal Commission estimates the state will bring in only $160 million from the higher tax, said Dan Long, executive director of the commission.
He also discussed another new report that showed Illinois casinos had a 4.6 percent decrease in attendance and brought in 2 percent less in revenue in fiscal year 2003, while surrounding states with gambling had increases.
"Reduced hours, less promotion and congestion in getting certain gaming slots has an impact in Illinois," he said.
Rep. Robert Molaro, D-Chicago, said the same report shows Illinois still got about $100 million more in taxes from the boats. He said casino executives should not have started charging admission fees soon after the higher tax went into effect because it made it hard to determine the tax's real effect.
"I thought that was a little premature and it does seem like blackmail," he said. "When you did that, you knew that you were going to go down (in attendance). It had to happen."
Blagojevich, who has said he opposes expansion of gambling, last month accused some riverboat casino owners of a "cynical" attempt to avoid paying higher state taxes by reducing profits.
Casino executives denied that, saying they laid off workers, decreased the amount spent on capital development and reduced operating hours to cut costs.
"If we took no action to mitigate the tax hike ... this property would be headed into bankruptcy," said Bill Clifford, senior vice president of Penn National-Hollywood Casino in Aurora. "We're not opposed to paying our fair share of taxes, but the current tax structure is destructive."
Ralph Martire, executive director of the Center for Tax and Budget Accountability in Chicago, said the boats still make a profit because the 70 percent tax rate is only 20 percentage points higher than what the boats paid last year on revenue of more than $250 million.
"While we do have the highest tax burden assessed on casinos throughout the country, it's not out of line. I think there's still profitability here," he said.
Gambling opponents agreed, adding that lawmakers should demand to see casino company's books so profit levels are made public.
"Casinos are trying to protect their profits and using workers as leverage to, in the end, expand gambling," said Anita Bedell, executive director of Illinois Church Action on Alcohol and Addiction Problems.
Committee Chairman Rep. Lou Lang, D-Skokie, who sponsored legislation to expand gambling in the Legislature's spring session, said he did not call the hearing to "bash the governor" or pressure him to roll back the taxes.
"This hearing was held to look at the numbers, see where we've been and see where we might go," said Lang, who opposed the higher tax.
He said he does not know what will happen during the fall veto session with gambling legislation that he proposed this spring or with the higher tax rate. He added that the higher tax will reduce the value of the state's unused 10th casino license.
"I wanted to call this meeting because I wanted to lay out the facts," Lang said. "We aren't doing the best job we can do to enhance revenue in the state of Illinois."
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