Lawmakers Expect Rockford Casino To Boost Local and State Revenue

Jul 11, 2019

Illinois Gov. J.B. Pritzker signed a bill at the end of June that allows six new casinos and legalizes sports betting. Rockford is the site of one such casino, and it could significantly contribute to local and state revenue.

A comprehensive gambling bill has been a repeated priority in the state legislature for several years. One of its biggest supporters has been Republican State Sen. Dave Syverson. He says a major concern is gambling dollars being lost to surrounding states. 

"Last year, a little over $1.5 billion left Illinois to go to the five surrounding states, who have all built casinos on the borders," he said.

Syverson worked in tandem with Democratic Sen. Steve Stadelman, whose district comprises much of Rockford. One of Stadelman's priorities was funding a state capital plan, and some possible funding streams -- like a tax on streaming videos -- weren't well received by the public.

"Eventually, most people came to realize that we could fund the majority of this capital plan through gaming expansion, and, to me, that was the key to passing the larger package," he said.

Stadelman says initial estimates on casino revenue would add at least $500 million for the capital fund.

Syverson adds that the capital plan sends the money to very specific sources. "That includes things for universities, K-12 school projects, state facilities, state parks. It's really dealing with deferred maintenance," he said.

Municipalities like Rockford will also get a share of each casino's revenue. Stadelman explains:

"70% for the City of Rockford, 20% for Winnebago County, and 5% for Loves Park and Machesney Park, so they'll divide up the amount that a local casino would bring," he said.

Both senators say it's better for that revenue to remain in-state, rather than go across the border. Syverson is also concerned that cross-border casinos can open up more quickly because they aren't taxed as heavily as their Illinois counterparts. He uses the planned Ho Chunk Casino in Beloit, Wis., as an example.

"Rockford would clearly be at a big disadvantage because the Indian casino -- by not paying taxes -- makes a lot more money and can subsidize either their water park they're talking about, or subsidize their hotels, or they can pay larger winnings," Syverson said.

Stadelman adds that the lost revenue isn't necessarily coming from the wallets of out-of-staters.

"So we had Beloit to the North and Indiana casinos to the east, and I think any given day you look in the parking lots of those casinos in Indiana -- all Illinois license plates," he said.

Even with the state's legal blessing to expand casino gambling, the revenue estimates aren't perfect. Also, there are different tax regimes for different types of gambling. Stadelman says the video gaming machines commonly found in bars and restaurants are taxed at a flat rate of 30%. This doesn't apply to casinos.

"But there's a progressive element to it, so the more revenue it brings in, it's taxed at a higher rate," he said.

Furthermore, the introduction of sports gambling brings in questions of what tax rate is ideal. 

"I think the idea is that you don't want to have the tax rate too high for sports betting. Otherwise you can't compete with the black market or the offshore betting sites," Stadelman said.

Casinos are also devising different ways they can provide sports betting in a legal setting, while still appealing to the convenience of certain ways it's done, such as with mobile apps. Gov. J.B. Pritzker says regardless of method, there's money to be made.

"The ongoing revenue -- not insubstantial -- from tax revenue, from sports betting, as it ramps up is, I believe, between 20 and 40 million dollars a year," the governor said. "Not a small amount of money, but relative to some other things, maybe smaller."

Finally, a portion of the tax revenue from Illinois casinos goes toward treatment for gambling addiction. Stadelman says that amount will be significantly higher than in the past.

"Under this plan, the state would provide $6.8 million in treatment and services and therapy for gamblers who do have addictions," Stadelman said. "That's a 750% increase over what's currently provided. I think the current amount is $800,000."

At this point, Rockford kicked off an application process for parties interested in building and running the new casino. The city can send multiple applications to the Illinois Gaming Board for approval, but only one party will ultimately receive a state license. Once the Gaming Board makes its decision, the casino will set up a temporary site while their main building is under construction. Sen. Syverson hopes that can be done by the end of the year.