Tax Revenues Fall in Illinois as a Result of Coronavirus Pandemic
The state of Illinois is seeing a tax revenue shortage due to the casino closures stemming from the coronavirus pandemic.
In 2019, the state of Illinois passed legislation to expand gambling. They saw the change as a way to bring in new revenues via taxes. What the state did not see was the impending pandemic. Once COVID-19 hit the state, the outcome was much different than expected. Casinos were shut down for quite some time this year and now it seems gambling tax revenues have fallen by over 13%.
Fiscal Year Results
For the 2020 fiscal year, the gambling tax revenues in Illinois fell by almost $200 million. The fiscal year ended on June 30 and now reports of how the year went have been released. Every aspect of gambling took a hit, from casinos to bingo and horse racing.
The largest percentage decline took place at Par-A-Dice in East Peoria, with the drop so large, it was the worst dip in revenues for a single year and the worst in five years for all the casinos in the state. Illinois was actually on track to see a nice annual increase in tax revenues for the fiscal year until gambling operators decided to shut casinos down in March due to the outbreak.
On March 16, the 10 operating casinos in the state and video gaming locations were shut down. Illinois has thousands of locations that offer video gaming terminals. It was not until July 1 that gambling properties could get back to work.
Of the providers, it was the casinos that were hit the hardest. Adjusted gross revenue slipped by 30% for the year, with only $943 million generated. When looking at locations, it was East Peoria that saw the biggest drop, with a 34.6% decline in adjusted gross revenues. Only $48.7 million earned compared to $74.5 million last year.
The Rivers Casino is the busiest casino in the state and usually sees high earnings. This year, the adjusted gross revenue came in at $321 million, which was a drop of 27%. Unfortunately, this was the lowest full-year since 2011.
Video Gaming Effect
Casinos have been operating in Illinois for quite some time, so that state relies on the industry’s tax revenues heavily. In 2012, video gaming terminals were legalized and added to bars, truck stops and restaurants. As video gaming has grown, it has helped to contribute to the decline of casino gaming and provided funds when the industry was down.
There are over 36,000 video gaming terminals currently operational in Illinois. When they were shut own, it brought the gaming industry to a standstill. Revenues that the state had started to rely on where simply gone.
For the video gaming terminals, revenues dropped by around 23% and only $1.22 billion was earned. The share of taxes for the state from the earnings dropped by $56 million. This drop was significant, even though the tax rate for the games increased this year from 30% to 33%.
The lottery also contributes to the taxes given to the state in the gaming industry. For the fiscal year, lottery sales dropped by a whopping $173 million. This was an almost 6% from 2019. This was the worst drop that the lottery has seen in decades, going back to the 1970s.
More gaming is coming to the state. With the expansion bill signed into law last year, six casinos can be created. Applicants have applied for licensing in several areas. The state has until the end of this month to provide the remaining casino licenses. However, the submission deadline for applications can be extended if a written explanation is provided to applicants.
Operators who are approved can open a temporary facility and use it for two years until the permanent location is constructed.