Thursday, October 20, 2016

What has expanded video gambling done to Illinois?


The Rock River Times


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What has expanded video gambling done to Illinois?

October 20, 2016October 20, 2016 Editorial Staff 0 Comment

By Phil Ciciora
U of I News Bureau Business and Law Editor

John W. Kindt, an emeritus professor of business and legal policy at the University of Illinois, is a leading national gambling critic who has testified before Congress and the Illinois state Legislature about the societal, business and economic impacts of decriminalizing gambling. Kindt is the senior editor of the book “The Gambling Threat to Economies and Financial Systems: Internet Gambling.” He spoke with News Bureau business and law editor Phil Ciciora about the expansion of video gambling in Illinois, which has mushroomed to over 24,000 machines operating in more than 5,600 establishments throughout the state.

According to the Illinois Gaming Board, video gambling has generated more than $811 million in state and local tax revenue since the first machines were legalized for widespread use four years ago. In a state starved for new tax revenue, what’s so bad about video gambling? And what’s not to like about additional tax revenue?

The state of Illinois has more electronic gambling devices than Nevada. Think about that for a second. But the worst part is that Illinois has one of the lowest, if not the lowest, tax rates on video gambling machines. Under the 2009 Video Gaming Act, the machines’ owners and operators take 70 percent of the revenues, while the state treasury receives only 25 percent and local governments only 5 percent.

So state coffers may have been fattened by $811 million during that four-year period, but the owners and operators walked away with $2 billion to $2.4 billion, which the state treasury could have and should have received.

To extrapolate to another level, those numbers only represent a fraction of the total number of dollars wagered on video gambling machines in Illinois. According to video gaming revenue reports from the Illinois Gaming Board, since September 2012, gamblers have wagered almost $34 billion on video gambling machines. That is truly a staggering sum. For context, Illinois’ general funds revenue in fiscal year 2015 totaled $36.6 billion.

Basic economic principles dictate that gambling cannibalizes the consumer economy, reduces overall tax revenues and, most importantly, destroys the economic multiplier effect. The nearly $34 billion that was wagered over those four years could have been much more profitably spent in the consumer economy – on houses, automobiles, appliances, food and clothing. From the average consumer’s point of view, gambling is akin to burning money in a fireplace.

The state of Illinois needs to become more business friendly, expand its consumer base and grow its economy. Which is why, via new taxes on gambling, it should immediately reclaim the billions of dollars owed to the state by gambling interests. The state’s future policy should be to tax gambling, not people.

I think we should follow the Canadian model, in which the government keeps virtually all of the income and only pays management fees to the casino companies. Otherwise, the state Legislature is just giving away billions of dollars to casino companies.

What role have the original casino licenses played in this situation?

The original 1990 legislation authorizing 10 casinos in Illinois granted casino licenses worth $5 billion at the time ($11 billion in current dollars) to political insiders for only $25,000 per license, including one insider who subsequently went to prison for corruption.

Years later, despite multiple warnings about these giveaways of casino licenses to insiders, two gambling expansion bills vetoed by then-Gov. Patrick Quinn raised these license fees to only $100,000 each – when their Wall Street values were and are hundreds of millions of dollars. In subsequent gaming expansion bills in 2013 and 2014, the Illinois Legislature again pegged the value of those casino gambling licenses at only $100,000 per license.

In 2003, financial expert Jeffrey Hooke of the Maryland Tax Foundation briefed the Illinois Legislature on the value of Illinois casino licenses. He cited numerous examples, including a 2002 offer of $615 million by MGM-Mirage Corp. for the Rosemont license; an offer of $750 million by the Illinois Argosy group for a suburban Cincinnati riverboat license; and a $660 million offer for a Detroit casino license.

The bottom line: Whether we like gambling or not, the state of Illinois is seriously undervaluing its casino licenses. It’s tantamount to a $7 billion to $14 billion giveaway to casino companies and gambling interests. In addition, the low tax rates on Illinois casinos since 1990 have resulted in more giveaways of $25 billion to $100 billion, all of which should have gone to the Illinois treasury.

Would a casino change the fortunes of the cash-strapped city of Chicago?

Absolutely not. The effect of bringing a casino to downtown Chicago would be second only to the Great Chicago Fire of 1871 in terms of damaging the city. Illinois lawmakers envision a Chicago casino as a revenue jackpot, but it ignores the other reality: It could just as easily be a huge bust for the city and taxpayers.

Academic studies in the early 1990s concluded that a proposed $2 billion Chicago casino by three gambling companies would be a lose-lose for taxpayers. These rebuffed gambling interests took their sour grapes to Detroit, where they promised to save Detroit’s finances. Instead, in 2013, Detroit became the first major U.S. city to declare bankruptcy.

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Chuck Sweeny: Great Lakes Basin railroad is good for region



Chuck Sweeny: Great Lakes Basin railroad is good for region


Chuck Sweeny is senior editor for the Rockford Register Star and RRSTAR.COM FILE PHOTO

Posted Oct 19, 2016 at 5:18 PM Updated Oct 20, 2016 at 12:36 AM

Although opponents are lining up by the hundreds to object the railroad plan, our local civic, economic development and government leaders must speak up - in favor - of the endeavor because their silence, so far, is deafening.

By Chuck Sweeny
Staff writer

“This isn’t a railroad. It’s a tollway that (Great Lakes) wants to rent to train operators."

That's what an opponent of the Great Lakes Basin railroad said at a forum Tuesday at Winnebago High School, where hundreds of residents came to register their opposition to the proposed 261-mile rail bypass rail bypass around Chicagoland.

Yes, the protester I quoted is correct. Investors think they can make money by building a railroad from southern Wisconsin to northeast Indiana so that trains don't have to navigate through the congested Chicago region, where 1,200 freight, Metra and Amtrak trains travel each day on routes planned in the 19th century.

Freights sometimes take more than a day to get through the city. That time delay is crippling Illinois' ability to compete with other freight routes, including the newly expanded Panama Canal, which can handle the largest container ships afloat, reducing shipping rates.

Great Lakes, helmed by businessman Frank Patton, is betting it can make money by charging a fee to transcontinental railroads to reroute some of their trains on this bypass. In land transportation, time is money.

In the USA., we call what Great Lakes is doing "entrepreneurial capitalism." That is what built this country. The purpose of the railroad, the company says, "is to expedite freight movements across the U.S. and to provide additional capacity for growing railroad traffic throughout the entire Midwest." It's an $8 billion private project that uses no taxpayer dollars.

The protester I quoted is Dustin Kaap, who also said that people should write letters to the U.S. Surface Transportation Board pointing out the railroad's threat to farms, school bus routes and the environment.

I don't agree. Railroads are the most environmentally friendly mode of transportation, and take up far less space than an interstate highway, which features a right-of-way that is more than 100 yards wide.

There's nothing more efficient than steel wheels on steel rails. And I'll put up railroads' safety record against trucks any day of the week. However, people's impressions today are based on what they've seen on the news. So if they've heard about three train wrecks in the past year from coast to coast, they think trains are unsafe.

Let me break it to you: If it's on the news — it isn't normal. There are no breathless TV reporters rushing to break a story saying all 100 trains that came through Rochelle today did not crash into anything.

Nobody who lives along the railroad routes in Rochelle is panicking. Instead, they've taken advantage of their two, transcontinental rail lines by building a city-owned railroad to connect to them. You might call it "a tollway they want to rent to train operators."

Rochelle has convinced Fortune 500 companies that use rail to locate along the city-owned, privately operated railroad that connects two major transcontinental railroads. By charging a fee for switching freight cars between the BNSF and Union Pacific lines, the city earns $1 million a year from the line, while its new industries provide thousands of jobs to people in a six-county area. The city just got a federal grant to lengthen its railroad to expand capacity for more industrial expansion.

The Rockford area could take advantage of that kind of rail access, too, if the Great Lakes plan is approved by the Surface Transportation Board, which has the final say. One of the proposed routes would take the line around the south side of Chicago Rockford International Airport, which opens further prospects for industrial development.

One thing that never ceases to amaze me is people who move to the country and expect to control property use for miles around. However, no one seems to protest developers who buy out willing farmers to turn the land into subdivisions and strip malls. To see a prime example of that, just look at the sprawl that has eaten thousands of farm acres that used to separate Roscoe, Rockton and South Beloit.

Yes, I'm for this project. This area needs economic development opportunities if we are to be able to support ourselves in the future. But if economic development groups, local government leaders and business leaders continue to remain silent, the noisy voices of the Citizens Against Virtually Everything will go unchallenged. Folks, your silence speaks volumes about your timidity.

Chuck Sweeny: 815-987-1366;; @chucksweeny

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No public hearing set yet for railroad route



No public hearing set yet for railroad route

Posted: Wednesday, October 19, 2016 4:00 pm

By HILLARY GAVAN Senior staff writer | 0 comments

BELOIT — Although opposition to the Great Lakes Basin Transportation (GLBT)’s proposed rail route remains high in Rock and Winnebago counties, it’s unknown if that opposition will be taken into account by the Surface Transportation Board (STB) in the form of a public hearing. As of Wednesday morning, no date had been set for a new hearing and public comment period.

According to an email from STB spokesperson Dennis Watson: “The Office of Environmental Assistance (OEA) will update the public once a range of reasonable alternatives has been defined and will invite comment from the public on those alternatives prior to issuance of the Final Scope of Study. OEA will then prepare and issue a Final Scope of Study for the preparation of the Draft Environmental Impact Statement, taking into consideration all comments received.”

However, Wisconsin Rep. Amy Loudenbeck, R-Clinton, said she’s concerned the opportunity to which the STB is referring will be a brief period for submittal of written comment and not public hearings.

“It is my contention that this new preferred route is so dramatically different from the route that was previously shared with the public, that in the interest of fairness to individuals and landowners who will be directly impacted, the STB must open a new public comment period, including a public hearing in or near the affected communities.”

However, Loudenbeck said she had some good news — the nine pages of written comments she submitted during the initial public comment period in June 2016 outlined potential impacts not just along the proposed route, but within all of eastern Rock and western Walworth counties.

“I think the STB will take those comments into consideration for the new route,” Loudenbeck said.

The letter is available at the following link:

Loudenbeck also wrote to the Surface Transportation Board requesting it re-open the public comment period on the new route on Sept. 28 along with Rep. Mark Spreitzer, D-Beloit, and Sen. Janis Ringhand, D-Evansville.

An anti-rail meeting held at Winnebago, Illinois, High School Tuesday attracted more than 200 people, according to Winnebago County Board member Jim Webster.

Webster said a number of people spoke including those from Boone and Ogle counties about the potential problems of the proposed rail line. Richard Beuth, president of the Winnebago/Boone County Farm Bureau, was in attendance as well as Winnebago County board member Faye Lion and Winnebago County Supervisor of Assessments Tom Walsh.

On Oct. 27, Webster said he pressed for a resolution against the railroad running through Winnebago County at the upcoming Winnebago County Board meeting to be sent to the President, federal legislators and state representatives.

“The STB is made up of three people from Washington, D.C. and are appointed by the President with the consent of the Congress,” Webster said. “Three people make a decision that can affect millions of people.”

The latest plan is for the GLBT rail line to run west of Beloit and not go through Boone County in Illinois as was originally planned. The line is proposed to extend from La Porte, Indiana, through Illinois to Milton, Wisconsin. The privately-funded $8 billion rail line is hoped relieve congestion and to allow railroads to better handle traffic from Chicago. Modern signaling and controls would allow for the movement of up to 110 trains daily, and transit times through the Chicago area would be reduced to under eight hours, as they can currently can take up to 30 hours to complete.

According to information from Great Lakes Basin, the route through Boone County was not "defeated." The railroad voluntarily found a different route to avoid some of the impacts identified by public comments in the scoping meeting and is expected to be more efficient. The amount of traffic going through Winnebago County is expected to be 8-12 trains a day, which averages out to less than one train every two hours, according to the company. Traffic impacts resulting from new crossings of low-traffic roads would be offset by reduced train frequency at roads crossing existing rail lines.

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