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Reason Foundation

Will Illinois kill a cash cow?

Ted Balaker
December 8, 2003, 11:11am

Since we've seen it unfold across the nation, everyone knows how the story goes. This time the role of desperate politician will be played by Illinois Governor Rod Blagojevich. In a desperate attempt to close a huge budget deficit the governor raised taxes on floating casinos. The result? Less business for casinos, and less tax revenues: After more than a decade as one of the state's most reliable cash cows, the casinos have ratcheted down their operations to limit their exposure to Illinois' tax rates, which were the highest in the country even before the Blagojevich administration raised them. Casinos are scaling back hours, reducing the number of labor-intensive table games, charging for admission and curtailing the freebies and promotions used to lure customers. As a result, their gross receipts–the pool of money from which the state draws its taxes–fell 10% from July to October, compared with the same period in 2002. Casino operators say they can't afford to lavish complimentary perks such as free food or drinks on marginal customers as long as the state takes as much as 70 cents of every dollar they collect above $250 million. Maryland should take note.

Ted Balaker is Producer


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