States across the USA have started to legalize gambling both in-resort and online, mostly due to the country’s recognition of how lucrative the industry can be.
There are currently ten casinos across the state of Illinois, with a bill now headed to Gov. J.B. Pritzker’s desk to open more.
Senate Bill 690 will allow for another six casinos to open, including a mega-casino, all in Chicago.
Sports betting will also be legalized statewide if the bill is passed.
However, a financial analysis released by the Illinois Gaming Board has claimed that the state’s lawmakers have made it impossible for casinos to flourish.
The local government plans to tax the resorts at 72%, which the board has said makes it ‘not feasible’ for casinos to open.
The bill would allow for sports betting and slot machines in Chicago O’Hare International and Midway airports on top of the new casinos, but it would be hard to make much profit.
It soon emerged that whoever decided to take the project on would have to pay up to $120 million for license fees as well as handing over two-thirds of gross gaming revenue to the state.
The rate is much higher than that in other parts of America – in Nevada and New Jersey (which netted over 4 billion in gambling revenue in 2019), the tax rate currently stands at just 6.75-8%.
Casinos in Pennsylvania currently pay 54%, while New York takes 45%.
Union Gaming Analytics recently concluded that a Chicago casino has the potential to become the highest-grossing gambling venue in Illinois, but only if owners aren’t hit with huge tax bills.
The consultant estimated state taxes and licensing fees, then added a ‘privilege fee’ of 33.3% – totaling up to around 72%.
The law has also tripled the number of positions for casino and sports betting venues in the state, which could cause already-established resorts in the state to see a huge knock in takings.
The Chicago-northwest Indiana gambling market saw profits of $1.95 billion in 2018, trailing behind only obvious favorites Las Vegas and Atlantic City.
However, its commercial casinos were down by 2.45 percent, caused mostly by an increase in interest for gambling online and in bars.
Tim Wilmott, the CEO of Penn National Gaming Inc., has agreed that such a high tax rate could stunt casino growth in the state.
His company is the state’s largest gambling operator.
In an interview, he said: “An already saturated market is going to get a lot more supply.
“It’s going to make the Chicago casino a very difficult investment to make.”
It is thought that the high pay-out casino companies would have to make to the state might put them off of opening venues in Chicago, a similar situation to that of Pennsylvania.
Recently Pennsylvania offered 13 online gambling licenses at $10 million each, but only 9 casinos applied for licenses.
Chicago Mayor Lori Lightfoot praised the bill back in June for its ability to create jobs and help pay pension funds, but she has become skeptical since the latest tax report was released.