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A new report from the Illinois Gaming Machine Operators Association suggests Evanston is losing more than a half million dollars a year in tax revenue because of its ban on video gaming machines.

Evanston moved quickly when the state chose to legalize video gaming in 2009 to opt out of the program and has left the local ban on the books ever since.

While the city has long come to terms with Demon Rum and anticipates taking in nearly $2.5 million in liquor tax revenue this year, the aldermen showed no inclination in 2009 to take a risk on Lady Luck.

Mayor Elizabeth Tisdahl, the city’s liquor commissioner, said she doubted the city would make much money on gambling, and added “the social consequences would be devastating.”

Since then the number of muncipalities around the state that alow video gaming has grown from 288 when the first video gaming terminals went into operation to 899 at the end of 2014. That leaves just 400 communities that don’t allow gaming — with the City of Chicago being the biggest holdout.

The new study — conducted by Union Gaming Analytics — projects that if all the communities that now ban video gaming opted in, local tax revenue from the machines would total $118.8 million a year by 2020, compared to $49.4 million a year if no additional communities join.

Based on Evanston’s population as a percentage of the state’s total population, that would work out to roughly $692,000 a year in new revenue for Evanston.

The reports makes various assumptions about the pace at which revenue growth would slow as more communities joined the program and the market for video gaming came closer to saturation.

It also claims that sales tax revenue from eating and drinking places has increased in communities that have legalized video gaming.

Related document

Illinois Gaming Machine Operators Association Economic Impact Study

Bill Smith is the editor and publisher of Evanston Now.

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13 Comments

  1. Well, Hey…
    While you’re at it, how much are we losing by not having a casino? Or a hydraulic fracturing well?

  2. The mayor’s concern

    I appreciate the Mayor's concern that Evanston video gaming would have 'devastating social consequences.  However, we don't need to talk about the social impact of gaming.  Look at the economics.

    Illinois Gaming Machine Operators Association issues the "report" supporting itself.  That's not news; its propoganda.  Here is what urban planning and economic development policy says about gaming:

    1. Tax revenue at riverboats is non-existant.  The riverboats have no positive economic impact to the supporting community.  The boats are revenue islands with no connection to land.  Patrons spend on the boat and not in the community.   Ironically, the majority of patrons are from a 5 mile radius of the riverboat.  That means displaced dollars/jobs/revenue from the community to the boat.

    2.  Riverboats are not highest and best use.  Why?  See above.

    3.  Riverboats provide fewer permanent jobs/square foot than retail/commericial.  Why?  See #2

    4.  Video gaming is like a little river boat in every bar, with one economic land mine:  all patrons are from the community.  No outside revenue = total displacement of investment from the bar to the gaming machine in the bar.  Sales revenue declines in the bar and that lost revenue is felt by the City.  City services and obligations do not decline, but revenue does.

    5.  Tax increase.  Why?  See #4.

     

    1. Careful there Evanston Now….
      I love you Evanston Now! Your coverage is fantastic and I read you often, but don’t pass on dribble like this. At best these are industry taking points, at worst they are misleading falsehoods. Point is, I don’t have any context to evaluate if gaming, which is no small social ill, should be allowed in my community. Don’t just pass on industry information- break it down for us- something you usually are great at!

    2. No one visits Evanston?
      So I am to understand all bar business is Evanston residents? I beleive the we have a university and many visitors to this community. We have three hotels that apparently cater to customers who have a house down the street. Not buying that logic.

  3. Bill,  good controversial

    Bill,  good controversial post. You can legally gamble in the State of Illinois but not at a licensed liquor establishment in the Republic of Evanston. Evanston is not a revenue smart city. We have attempted to legalize marijuana with just a ticket and small fine that can be circumvented with some form of community service or nothing at all. But don't get caught with alcohol underage. That's a mandatory $500 fine. Not sure anybody will pay that anyways unless your a NU student. Don't forget tobacco is bad too. Not saying we shouldn't have alternative forms of punishment but no consistency equals nothing accomplished. Evanston has the taboos of society a little mixed up. 

    1. Follow-up

      I am happy to clarify my comment re: the economics of gaming.  When you think of the gaming industry, you are thinking about Las Vegas and Atlantic City and cruise ships.  Those economies have as their base, gaming.  The other parts of the economy are built upon the gaming base.  We are not talking about an economy with a gaming base in Illinois.  We have a traditional mixed-use base in Illinois (manufacturing, commerical, industry, financial, etc)

      The gaming economy requires external investment (for example, tourism or on-line betting.)  That external investment must be dedicated to the gaming industry:  it cannot piggiy-back on other types of spending (for example, parents weekend at NU, homecoming, Rotary International meeting, NU visiting faculty, etc).  The gaming industry must be integrated in the local ecomony – it cannot be tacked on to existing businesses.  Here is why:

      1. If we add gaming to Evanston, every dollar spent on gaming is deducted from the base economy.  When that dollar is spent on gaming, there is no local sales tax generated.  The 500K nonsense is based on a pie-in-the-sky state share of the gaming taxes.  If Evanston trades gaming for the projection of 500K from the state, it is delusional.

      2. Gaming ventures all fail.  Look at history.  Gaming is supported by PRIVATE INVESTMENT.  When the profits wane, the investors remove their equity and the venture fails.  If we are talking about a state run gaming industry:  look no futher than the Illinois Lottery and how it has failed to meet revenue goals.

      3. Evanston does not have the regulatory infrastructure to manage gaming. You can fight all you want about tobacco, marijuana and alcohol, but you need to concede that Evanston has these three 'social evils' under control administratively.  The gaming administration requirement is light years apart from that of tobacco, marijuana and alcohol.  Can we afford to build the infrastructure? See #1 of this post.

      1. Deductions

        Hi PJ,

        Your economic argument assumes that no Evanstonian who likes video gaming is now traveling to far off Morton Grove to engage in the passtime now and that no one from other communities would come here for video gaming if it were available in Evanston.

        See a map of Chicago-area video gaming establishments published by the Tribune last October.

        — Bill

        1. Gaming revenue

          Bill,

          No, I am not saying that no one in Evanston gambles.  I am saying that people who want gaming will travel only if the experience is worth the trip.  For example, residents of Des Plaines will not drive to Elgin unless the Des Plaines riverboat sunk. Evanstonians who travel to Morton Grove for video poker do so because its closer than Elk Grove.  And if Evanston had video gaming, Evanstonians might stay in town or might not.  However, it is not a guarantee that gamblers from Skokie, Wilmette, Glenview, etc will play video poker in Evanston.  And to assume so to justify a 500K projection is naive.  For the record, Morton Grove's share of their gaming in 2014 was $114,493.  The State's share of the Morton Grove receipts was $572,467.  Elk Grove's share was $118,676

          1. Gaming revenue

            Hi PJ,

            Just because I reported what the industry claims revenue might be doesn't mean I accept that as gospel. It's the basis for possibly starting a conversation, not the end of the discussion.

            But if you scaled up the Morton Grove actual last year revenue number you cite to adjust for Evanston's larger population size you'd have $371,000. Project some continued growth and inflation and throw in Evanston's more lively nightlife scene and $500,000 in 2020 doesn't seem totally implausible.

            Of course if we're convinced gambling will destroy the community, then we won't opt to pemit it.

            — Bill

  4. Gaming stay away

    Not stated are the economic costs and pains that are associated with facilitating gambling within a community. Think about it… $500,000 tax revinue is small potatoes compared with the human toll, need for increased police force, crime, rehab programs ect.

    1. But Who will Play ?
      I know the appeal of casinos is different than the lottery and it may be a very different group would go there.
      But look who plays the lottery. If the pot is large enough many middle and perhaps above people may by a ticket and office pools may buy one ticket for each person in the pool. But in day to day play, if you go to the stores who sell them, you will find many who don’t look like they can afford to play and they plop down quite a bit of cash per play. If they loose and can’t afford the ‘necessities’ of life or things to make their lives better, who pays ? transfer payments [welfare, food stamps, etc.] or the public through crime if their habit is bad enough.
      Given the odds, the only game you stand a chance of even breaking even [payout * odds] is Powerball and only if the prize is greater than $175 million. Then if more than one person picks the winning number, it is number of winners * $175 million. More over the prize is paid over a 29 year period which makes the Present Value much less or as a lump sum MUCH less than $175 million [or share of that if more than one win]. Then the tax rate make it even less valuable.
      In other words the State tells people to make a stupid bet.
      =======
      Depending on skill and the game, casino odds may be better but you can–and most do—loose a lot very fast and before they realize it and may be ‘hooked’ and not able to quit. Then not only money is lost but psychological problems can result—and social such as friends, spouse, jobs. And even turning to crime.

    2. Thank you for protecting me from myself

      I am so grateful that you are able to keep me from the demon of gambling fever.  If it were not for your kind insights into my potential faults, I might gamble away the rent money, along with the family food budget and the monthly car and utility bills.  I hope that when I am as old as you are (I'm just a tad over sixty) that, God willing, I will be as wise and protective as you are.  Many Thanks!  

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