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Best of John G. Brokopp

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Tax Exploitation of Casinos Counterproductive

26 October 2003

The hardball approach that Illinois has chosen to take against gambling not only has negatively impacted the people who attend casinos, it has placed the future health of the industry in jeopardy as well as stifling its development into a regional travel and tourism destination.

To put the 70 percent tax on the state's most successful riverboat casino operations into proper perspective, let's take a look at the tax structures of the 10 other states that have commercial casinos:

Colorado: Graduated tax rate with a maximum of 20 percent. Indiana: Graduated tax rate from 15 percent to 35 percent. Iowa: Graduated tax rate with a maximum of 20 percent. Louisiana: 21.5 percent. Michigan: 18 percent tax plus state and municipal services fees of $12.3 million per casino. Mississippi: Graduated tax rate with a maximum of eight percent. Up to four percent additional tax may be imposed by local governments. Missouri: 20 percent. Nevada: Graduated tax with a maximum of 6.25 percent. New Jersey: Eight percent plus a community investment alternative obligation of 1.25 percent. South Dakota: Eight percent.

According to the American Gaming Association's 2003 State of the States survey of casino entertainment, this is no time for Illinois to play games with an industry that has the potential to stimulate such economic growth and stability.

For example, the survey reveals that the acceptability of casino gambling is at its highest level in years, with the highest approval ratings among adults ages 21-39. Also, nearly three-quarters of Americans believe that casino gambling is an important component of a community's entertainment and tourism options.

The commercial casino industry contributed more than $4 billion in direct gross gaming taxes in 2002. Furthermore, the casinos in some states pay millions of dollars over and above what they in taxes, averaging more than $32 million annually, as part of community investment obligations.

Is taxing such a viable industry into oblivion any way to treat a friend? I don't think so.

More than 51 million people, roughly one-quarter of the U.S. population over the age of 21, visited commercial casinos in 2002. The casinos themselves employ some 350,00 people.

As other states explore casino gambling legislation and the competition for tourists increases, it would serve the interests of Illinois much better if we preserved what we have by providing fertile ground for expansion and development rather than throwing up barbed wired tax fences.

CASINO NEWS: If the results from the first full month of operation under Illinois' new oppressive tax hike on casino revenues are any indication, the gaming industry in this state is in serious trouble.

Adjusted gross revenues for July dropped 2.13 percent compared to June 2003, and they plummeted 9.45 percent when compared to July of 2002.

The Hollywood Casino in Aurora experienced the most economic damage. Its AGR for July dipped 18.43 percent from June and a staggering 29.67 percent from a year ago according to the Illinois Gaming Board's monthly riverboat casino report.

Curiously, Hollywood was the first to go public with announcements regarding operational cutbacks as well as admission, beverage, and parking fees.

The Grand Victoria Casino in Elgin, which chose not to pass costs on to its guests, was the only Chicago-area casino in Illinois to show an increase in revenues in July over the previous month. Elgin's top line rose 5.19 percent, although it fell 6.38 percent when compared to July 2002.

Argosy's Empress Casino & Hotel in Joliet showed a 6.09 percent decrease for the month, halting the momentum it had been building since the grand opening of its new twin-level permanently docked barge facility earlier this year.

Harrah's Joliet Casino & Hotel experienced a 5.64 percent decrease for the month, and a substantial 16.43 percent drop from a year ago, an indication that the new tax increase has only served to fuel what was already a downward spiral for the gaming industry in this state.

Unlimited gaming positions at casinos in Indiana (Illinois license holders are restricted to 1,200 positions each), no admission charge, and the fact that casinos there recently went to 24-hour 'round the clock operations only magnifies the problem.

John G. Brokopp

John G. Brokopp's gaming column appears in Chicago Sun Times (Chicago, Illinois), The Times (Northwest Indiana), The Quad City Times (Davenport, Iowa), The Courier News (Elgin, Illinois), The Gazette (Southwest Suburban Chicago) and Senior Wire (Denver, CO). He's also a regular contributor to The Colorado Gambler, Midwest Gaming & Travel, Casino Player and Strictly Slots. John possesses 28 years of experience as a professional handicapper, publicist, freelance writer, and casino gaming correspondent. He is also the author of two very popular books, The Insider’s Guide to Internet Gambling and Thrifty Gambling.

Books by John G. Brokopp:

> More Books By John G. Brokopp

John G. Brokopp
John G. Brokopp's gaming column appears in Chicago Sun Times (Chicago, Illinois), The Times (Northwest Indiana), The Quad City Times (Davenport, Iowa), The Courier News (Elgin, Illinois), The Gazette (Southwest Suburban Chicago) and Senior Wire (Denver, CO). He's also a regular contributor to The Colorado Gambler, Midwest Gaming & Travel, Casino Player and Strictly Slots. John possesses 28 years of experience as a professional handicapper, publicist, freelance writer, and casino gaming correspondent. He is also the author of two very popular books, The Insider’s Guide to Internet Gambling and Thrifty Gambling.

Books by John G. Brokopp:

> More Books By John G. Brokopp