CHAMPAIGN, Ill. – Instead of increasing income taxes on its citizens, the cash-strapped state of Illinois should look to dramatically raise casino licensing fees, which are conservatively calculated to be worth between $250 million and $500 million apiece, not the $100,000 they were valued at in the gambling expansion bill recently voted down in Springfield, says a leading national gambling critic.
University of Illinois professor John W. Kindt says receiving less than fair-market value for a casino license represents a “giveaway” to gambling interests at the expense of Illinois taxpayers.
“From 1991 to 1993, the state of Illinois charged only $25,000 plus minimal background fees for each of its 10 casino licenses,” said Kindt, a professor of business and legal policy at the U. of I. “In retrospect, those 10 licenses were given away for peanuts. In current dollars, that was about a $5 billion giveaway. Now they’re selling new licenses for $100,000 each, which is another $2.5 billion giveaway. These licenses are worth a lot more than what the state is charging for them, and they’ve basically been giving them away to political insiders.
“So if the state is looking for money, they need only look to the licenses they already gave away as well as bumping up the price for any new gambling licenses.”
Licenses for new slot machines would also be an easy target for new revenue, says Kindt, a senior editor of the United States International Gambling Report, a multi-volume series released between 2008 and 2010.
“The state could also charge a lot more for each slot machine position the casinos have,” he said. “In Cook County, the proposed charge is $25,000 per machine; outside of Cook County, it’s $12,500. That’s still millions of dollars that the state is leaving on the table.”
Kindt says the state could pass a law that would allow them to go back and, retroactively, assess billions of dollars in lost licensing fees from casinos and other gambling facilities.
“If you legalize them, you can also recriminalize them,” he said. “All the state would have to do is pass a bill saying casino owners now have to pay fair market value for their licenses, like they do in many other states.”
If casino owners were to balk at paying such a hefty price tag and threaten to leave town, Kindt says both the building and the land could be used for something else.
“In fact, they already did this in Nebraska, where they changed a disused racetrack into an educational facility,” he said. “They had a racetrack that was going out of business in Omaha, but the owners wanted to convert it into a racetrack-casino. Instead, Warren Buffett and government officials ensured that the land was sold to investors, who bulldozed the racetrack to build a high-tech office park with classrooms for the University of Nebraska at Omaha.
“So the former Aksarben racetrack became Aksarben Village. Since then, they have added an entertainment complex, townhouses, recreational facilities and – ironically – the new business school for the University of Nebraska.”
According to Kindt, retrofitting or repurposing disused facilities isn’t all that uncommon.
“Look at what the city of Atlanta did after the Olympics,” he said. “You can pick these buildings up for pennies on the dollar afterwards and turn them into something useful, something that would be a net-gain for society.”
