Jam-packed restaurants and saloons on game nights. Vendors hawking their wares outside Wrigley Field. Out-of-town…
A Chicago casino would almost certainly bring in tax revenue that could help the city stave off a looming crisis over a massive public-pension shortfall, but that could be the extent of its major benefits, according to Northern Illinois University experts.
They say a casino probably won’t be a big boost to tourism. Restaurants and other types of entertainment across Chicagoland could take financial hit as consumers instead plunk their expendable dollars on a roll of the dice. Increased competition for gambling dollars would likely reduce revenues at suburban and Indiana casinos. And it’s questionable whether any gambling expansion would provide a net increase in jobs to the region.
Just recently, talk of a Chicago casino and gaming expansion in Illinois again surfaced in the news media. Under one plan reportedly being discussed, Chicago would keep all revenue for seven years to help meet pension obligations, and casinos would be added in Chicago’s south suburbs, Rockford, Vermilion County and Lake County.
While gambling expansion may be seen as a panacea for the cash-strapped state and its cities, NIU experts say there are two sides to the coin.
“It could be a good move in some respects, but we need to keep our expectations realistic,” says NIU assistant professor Ryan James, an economic geographer who has studied casino proliferation in other states.
“In terms of helping fund pensions, it would probably raise money efficiently,” he says. “Taxes placed on gambling are higher than other entertainment venues, so it would move dollars already being spent in the region from a lower-tax category to higher-tax area.”
But a Chicago casino isn’t likely to boost the city’s substantial tourism economy, James says, because it will never be a national gaming destination like Atlantic City and Las Vegas. In other words, tourists might gamble while in Chicago, but most won’t travel to the city specifically for that purpose.
And while businesses in close proximity to a Chicago casino might benefit from patron traffic, the casino would compete for consumer and tourist dollars with the region’s other entertainment venues, such as restaurants, theaters and concert venues.
“There could be drawback in terms of displaced entertainment expenditures,” James says.
“I think there’s probably no question that (a casino) would generate positive revenue for Chicago. The question becomes: Where does that revenue come from?” Peddle says.
He believes existing casinos in close proximity to Chicago will feel a particular pinch. “In all likelihood, it would draw money from other casinos,” Peddle says.
“The ones that probably are going to be hit the hardest would be those in northwest Indiana, but it also would likely take some play from casinos in Joliet, Aurora and Elgin. So there would probably be some transfer of dollars from those casinos, and the economic impacts they have in those communities would be reduced.”
If Chicago keeps the revenue for a period, then the issue of how much business its casino takes from competitors could be a concern to the rest of the state, Peddle says, noting that Illinois government gets a cut of revenues from its other casinos.
“So to the extent that a Chicago casino bleeds revenue from other casinos, it could end up being something where the state might lose some revenue,” Peddle says.
Peddle also notes that casinos already have had a significant negative impact on the horse racing industry in Illinois. “The economic reach of horse racing is much larger than that of casino gambling,” he says. “Horse racing has a multiplier effect because it also involves the breeding industry, agriculture and such. There’s more of a support economy around the horse racing industry.”
On the job front, a new casino would create jobs, but the increased competition for entertainment dollars could mean a loss of jobs at other businesses, according to Brian Richard, a researcher at NIU’s Center for Governmental Studies. He has studied the impacts of state policies on casinos.
“In terms of employment, it could be a wash,” Richard says.
“States that have lower tax rates on gambling revenues tend to have greater job creation at casinos,” he adds. “Illinois has set up its casino policies to maximize tax revenue.”
Richard says Nevada and Mississippi have the lowest tax rates, and those states do not limit the number of casino licenses. So the businesses must compete against each other by offering more amenities and restaurants, spurring added job creation.
Even if Illinois allows gambling expansion, Richard says, the casino market will not be saturated.
“Comparing state to state, if Mississippi added a casino, it wouldn’t increase overall gaming revenues,” he says. “In Illinois, however, revenues would go up because of the limited supply of casinos.”