Video gambling in Illinois
Video gambling is a major issue in Illinois. Commercial casinos became legal in the state in 2011, when racetracks were allowed to offer gaming machines on their premises and video gambling was also legalized.
Since 2012, more than 30,000 video gambling machines have been installed throughout Illinois in the likes of truck stops and bars. Many people are blaming the rising levels of problem gambling on this move.
Tax increase for video gambling
The Illinois General Assembly is considering raising the tax rates on these gaming machines. According to ProPublica, a number of legislators who will be part of this decision-making process have links to the gambling sector. Among them are Bill Brady, the senate minority leader, and Antonio Munoz, the assistant senate majority leader.
The state has been desperately looking at ways of quickly raising new revenues. Increasing the tax rate on gaming machines is a quick way to do it.
Naturally, video gambling stakeholders do not want this happening. They are pitching a move to increase the maximum allowable bet on these machines to $4 from $2. They also want the limit on the number of these machines allowable in a single location to be increased from five to six machines. They claim that such moves would generate significant additional tax revenues.
The industry has been lobbying heavily to try and avoid this tax hike. Governor Pritzker outlined his plans to raise about $89m (£70m) through this tax increase for video poker and slot machines.
The video gambling industry is saying that such a tax increase would be an attack on the area’s small businesses. However, many major companies have become involved in this sector. The leading five operators of video gambling make up almost half of the entire market. They have earned almost $1bn (£790,000) since 2012 as a result of this share.
The current tax rate for these machines in Illinois is 30%, one of the lowest in the United States. Most of this tax revenue goes to state coffers, with a small portion going to the local government.
Lawmaker industry links
As per ProPublica, internal records from the gaming board in Illinois shows that Brady has links to Midwest Electronics Gaming. This is one of the biggest video gambling firms in Illinois. Since 2012, the company has had revenues of over $80m (£63m) in the state. Brady is listed as “a person with significant influence or control,” so he receives a portion of video gambling proceeds.
However, on the disclosure statements at the Illinois Gaming Board, Brady is not listed as being “a person with significant influence or control.” He is a sales agent instead, acting as the middleman between operators of video gambling and destinations looking to install these machines.
There is no need for a license to operate as a sales agent and they do not have to disclose their remuneration. However, if there is a revenue-sharing agreement in place with a sales agent, the gaming board considers them to be “a person with significant influence or control.”
Payments to Brady from Midwest Electronics Gaming go through Brady Ventures, so Midwest Electronic Gaming does not appear on his list of economic interests.
Response from Brady
Brady has yet to answer questions about this issue, but he issued a statement:
I have an interest in a company that has a contractual agreement with a video gaming company and have disclosed such. Any information I offer regarding this issue during discussions is based on my personal knowledge of the industry, and I act in what I believe to be in the public interest. When deciding how to vote on any legislation involving video gaming, I consult with my ethics officer and either abstain from voting or vote in the public interest as required by the Illinois Governmental Ethics Act.”
Other political links include Munoz’ son being a sales agent in the industry and Senator Thomas Cullerton being a sales agent for the Global Gaming Industries.
What happens next?
Studies show the negative effect that raising maximum bets on video gambling machines can have on gambling addiction levels. The state already has more of these gambling machines outside casinos than any other state in the US. They are also number one in the rankings for the number of locations where you can gamble. Therefore, there are a lot of reasons supporting a tax hike and not going down the alternative route.
The current legislative session ends on May 31. Therefore, this tax increase must happen by then or it will have to wait until the fall.