Jim Dey | Video gambling paying off in a big way for state

Jim Dey | Video gambling paying off in a big way for state

People love convenience — even if it makes it easier for them to lose their money.

That's one conclusion to draw from a recent report by a state legislative commission on gambling in Illinois.

The comprehensive report prepared by the Legislature's Commission on Government Forecasting and Accountability shows that increasing access to video gambling machines throughout the state is drawing more and more players. As a result, video gambling — in existence in this state since just 2013 — trails only the state lottery as a revenue generator.

State revenues from video gambling have increased from $24 million in the 2013 fiscal year to $347 million in FY 2018 (July 1, 2017, to June 30, 2018). During that same period, state revenues from the lottery fell from $815 million in FY 2013 to $732 million in FY 2018.

Tax revenues from the lottery, horse racing and riverboat casinos have declined over the past five years while video gambling revenues have skyrocketed — from $114 million in FY 2014 to $347 million in FY 2018.

Over the past two years, "the continued growth of video gaming tax revenues ... was more than enough to offset the relatively stagnant performance from lottery transfers (down $6 million to $732 million), riverboat gaming transfers (up $2 million to $272 million) and from state-related horse racing revenues (held flat at $6 million)," the commission report states.

The commission issues annual reports that examine "legally sanctioned forms of wagering as a means of determining their economic impact as well as the potential for further expansion."

Horse racing, once a leading generator of revenue, is barely surviving. There are just three race tracks left in Illinois. An industry that generated $63 million in state revenues in 1975 produced just $6 million in FY 2018.

At the same time, video gambling also has taken customers from the riverboats. In 2005, riverboats generated $689 million in state revenues. Last year's $272 million represents a $417 million decline. Just two of the state's casinos (Joliet and Des Plaines) saw their overall revenues increase last year.

Clearly, "convenience" gambling — the term machine operators use to characterize easily accessed mom-and-pop gambling parlors — is crushing "destination" gambling — the term used to describe forays to the state's 10 riverboats, like those in Peoria or East St. Louis.

Although Chicago does not allow video gambling, the city is ringed with 5,071 gambling terminals, making Cook the county with the largest number.

Lake, Will, Sangamon and Winnebago counties round out the top five.

Sangamon County has 1,213 terminals at 271 locations that generated a net term income of $57 million, tax revenue of $17.1 million — $14.2 million for state and $2.8 million for local governments in FY 2018.

In East Central Illinois, Champaign County has 666 terminals at 148 locations. They generated an income of $32.4 million and $9.7 million in tax revenues. The state received $8.1 million while local government received $1.6 million.

In Vermilion County, there are 412 terminals at 94 locations. They generated an income of $17.4 million and tax revenues of $5.2 million. Of that $5.2 million, $4.3 million went to the state while nearly $875,000 went to local governments.

Smaller counties also are in the game.

Ford County plays host to 81 terminals at 19 locations. They generated $1.7 million in revenues and $534,000 in taxes. The state received $445,000 while local governments collected $89,000.

Going forward, the question is how much more gambling — and in what form — will state elected officials approve in their desperate search for more revenue.

Gov.-elect J.B. Pritzker has spoken approvingly of a vast expansion of gambling, particularly in sports betting.

At the same time, however, declining revenues at eight of the state's 10 casinos reveal those operations are not the gold mines they once were perceived to be.

Here's another caveat for those who perceive more gambling — hence, more gambling revenue — as one of the solutions to the state's ongoing financial crisis.

Last year, the state's total gambling revenue was in excess of $1.3 billion.

On one hand, that's a tremendous sum of money. But in the context of Illinois' financial problems, that $1.3 billion would barely cover the estimated deficit in this year's 2017-18 state budget.

Critics, of course, warn the social costs exact a high price for making it easy for people to lose their money. But revenue-hungry legislators have adopted an increasingly Darwinian approach to the question — they congratulate the winners on their good luck, dismiss the losers' tough luck and hope the overall tax revenues keep going up.

Jim Dey, a member of The News-Gazette staff, can be reached at jdey@news-gazeette.com or 217-351-5369.