SEARCH NEWS:

 

Inside Gaming Column: Gambling Feeling Ill in Illinois

An Inside Gaming column five weeks ago about the spread of gaming to Florida generated a spate of comments from industry insiders about Illinois. They said Illinois, unlike Florida, graphically illustrates the rule that the spread of gambling won't hurt Nevada.

The same dynamics are at work in each state, precisely in reverse.

Several casino bosses are saying they really want out of Illinois because the fundamentals work against them -- for the opposite reasons that Nevada, California and Florida have such allure.

Retiring baby boomers hate the cost of living, the lousy climate and high taxes, and they are fleeing the state for the sunnier climes gamblers love.

Secondly, the hospitality industry in Chicago doesn't lend itself well to the gaming industry. The hotels and amenities are spread out and lack the glitz of Las Vegas, Los Angeles or Orlando, Fla., and Miami. Huge capital investments would be necessary to level the playing field.

Finally, real estate values are in the crapper, relative to Nevada, California and Florida, and are likely to stay that way as boomers flee the Rust Belt city. Since major operators and institutional investors are coming to see investments in gaming as real estate plays, weak property values also undermine any interest they might otherwise have for expanding around Chicago.

These fundamentals are reinforced by shorter-term developments.

Illinois' hostile tax and regulatory environments have soured even stalwart supporters. Since Illinois imposed an extortionist marginal gaming tax rate of 70 percent, casinos there have cut back on operations and canceled expansion plans.

Making a bad situation worse, Illinois Gov. Rod Blagojevich recently appointed five members of the state gaming commission whose views on balance are anti-industry. He and his regulators will probably poison the climate further and lead MGM Mirage, which recently merged with Mandalay Resort Group, ultimately to pull out, they said.

Blagojevich, who was decidedly pro-gaming when he became governor three years ago, dropped his support for casinos, reportedly because he harbors presidential aspirations and his advisers told him a pro-gaming position was the death knell for his ambitions.

Blagojevich reversed course, running straight into Chicago Mayor Richard Daley, who wants an urban casino in his hometown. That's enough to leave Illinois casino operators mired in politics for years to come.

Locals gaming will persist, riverboats should prosper, but insiders here say Illinois is dead on arrival as a threat or challenge to Las Vegas.

The Inside Gaming column is compiled by Gaming Wire Editor Rod Smith. He can be reached by e-mail at rodneysmith1@cox.net or by fax at 387-5243.

Copyright GamingWire. All rights reserved.

< Gaming News