NEW IPO Logo - by Charles Larry Home Search Browse About IPO Staff Links


Gamblin' on the rivers
Win some, lose some but
still no state economic jackpot as promised

Three years ago state Sen. Denny Jacobs, an East Moline Democrat, bet that riverboat gambling could revitalize a Quad Cities economy battered by recession and the permanent loss of manufacturing jobs. He convinced fellow lawmakers to enact the Riverboat Gambling Act in January 1990 with the promise that floating casinos would produce jobs, economic vitality for declining industrial cities and cash for the stressed treasuries of state and local governments.

The Quad Cities alone, Jacobs predicted, would see 2,000 new jobs from riverboat gambling. And 10 riverboats, he vowed, would generate $40 million a year for state and local governments. With seven boats now on the water and two more on the way this year, it appears that the economic promise of riverboat gambling fits well the gambler's credo: win some, lose some. Riverboat casinos have produced jobs, generated revenue for public treasuries and apparently stimulated some economic activity. Despite the benefits, some wonder whether blackjack tables and slot machines hold much promise of an enduring and significant economic jackpot for Illinoisans.

Government's gambling addiction is hard to break. So tantalizing is the lure of easy money for governments that riverboat casinos for Chicago became one of the legislature's end-of-session bargaining chips. Meanwhile, a host of river towns including Rock Island's neighbor, Moline competed for the 10th and last license to operate a riverboat. As of May, riverboats were floating on rivers near Alton, Galena, Joliet, Metropolis, Peoria and Rock Island. Joliet became the first Illinois town with competing riverboats when Harrah's Casino launched a boat on the Des Plaines River in May to join The Empress. Riverboats are also to be launched this year in Aurora and East St. Louis.

It is easy to see why communities are eager to jump aboard riverboats. The state and cities each get half of a $2 head tax for each gambler and then split 20 percent off the top of gambling revenues; if a gambler lost $100, the state would get $75 and the city $25. From September 1991, when the Alton Belle began plying the Mississippi River, through May 1993, riverboats have generated $68.3 million for the state of Illinois and $27.4 million for local governments. During this fiscal year, from July 1992 through May 1993, Joliet was the biggest winner among the six riverboat communities in tax revenue, with $9.5 million. The Empress provided $9.2 million of that total.

The cities of Peoria and East Peoria have split the revenues ($3.9 million during 1992) generated by the Par-A-Dice, which debuted in November 1991. Although the Par-A-Dice moved from a Peoria site on the Illinois River to an East Peoria dock in May 1993, the two cities will continue to share the revenues. While moored at the Peoria site, the city received money from a nearby parking lot. This year, Peoria will use $300,000 from the parking lot proceeds to fund a $600,000 program to deploy former gang members on city improvement projects, said Brian Kier, the city's finance manager. Peoria will pay for a new $8.4 million police station with riverboat revenues, Kier added.

Joliet and Will County officials see riverboat gambling as a way to rebuild the local economy, said Will County Chamber of Commerce President Ruth Calvert Fitzgerald. She said The Empress has helped the city. However, she said Harrah's Casino Cruises boat, the Northern Star, is key be-

Illinois riverboats in operation; fiscal 1993 revenue produced for local, state governments as of April 1993




Local revenue

State revenue

Alton Belle





The Empress





Northern Star










Casino Rock

Rock Island




Silver Eagle










Source: Illinois Gaming Board.

10/July 1993 /Illinois Issues

Gambling in one of the State's newest riverboats
Photo by Richard Foertsch/Photoprose

Pictured is the inside of the newest riverboat with a state gambling license. Opened in May, the boat is operated by Harrah's Casino Cruises out of Joliet on the Des Plaines River. Also operating out of Joliet is The Empress, which started its gambling cruises in June 1992.
cause it is located downtown, unlike The Empress, which is docked six miles downriver. Because of Harrah's commitment to downtown, Joliet officials have accelerated a 25-year downtown development plan by at least 20 years, Fitzgerald said. Under the plan, a marina, new sidewalks and a parking garage would be built near the boat. Still, The Empress has made a difference, especially with an annual $35 million payroll, said Empress spokesman Jim Murphy.

So far, Rock Island is the only town on the Illinois side of the Quad Cities to benefit directly, via tax revenues, from a riverboat. The Casino Rock Island opened in March 1992 and pumped $1.8 million into the city treasury during the rest of 1992. Those revenues enabled the city to freeze property taxes, said Rock Island Mayor Mark Schwiebert. "This project has proven to be very valuable for the redevelopment of our downtown area," Schwiebert said. According to City Manager John Phillips, the Casino Rock Island led to development of an arts and entertainment complex called The District located near the downtown riverfront. Special events in The District, such as a Halloween party and New Year's Eve celebration, have drawn large crowds, Phillips said. The riverboat, said Mayor Schwiebert, "has had the spiraling effect that you hope to have in economic development, where you have a good project that comes and that, in turn, prompts another project, which starts another project and so on."

"And so on" is the spinoff effect that proponents say casinos have in bolstering local economies. Proponents point to construction of new hotels and increases in the number of tourists to riverboat towns. In 1992, the first full-year for riverboats in Illinois, The Empress was the 11th largest tourist attraction in the state with 1.3 million visitors, according to the Illinois Tourism Bureau. The top 10 sites included Chicago's Lincoln Park Zoo and several downstate parks. Peak season occupancy rates, from June to September, increased from 1991 to 1992 at eight hotels with about 850 rooms that belong to the Joliet Area Hotel Association, according to a Heritage Corridor Visitors Bureau spokesman. The rate jumped from 43 percent in July 1991 to 73 percent in July 1992. The Will County chamber's Fitzgerald said riverboat gambling "is a little niche in the market, but a very important one because it creates a bit of tourism that we haven't had here before."

Riverboat gambling has been one factor in increasing tourism to the Quad Cities, said Joe Taylor, communications director for the Quad City Convention and Visitors Bureau. The Quad Cities drew 1 million visitors in 1990, but the number of tourists increased to 1.5 million in 1991, when riverboats debuted that year on April 1 in Iowa, including two on the Iowa side of the Mississippi River. Occupancy rates at Quad City hotels increased from 65 percent in 1990 to 70 percent in 1991, Taylor said. Although Taylor expects the 1992 rate to drop because 200 new hotel rooms were constructed in the Quad Cities since late 1991, he said, "Riverboat gambling has [pushed] the Quad Cities into the national spotlight for the last couple of years."

Earl Grinols, an economics professor at the University of Illinois at Urbana-Champaign, said riverboats can help a community or region in two ways. First, they can attract tourists who normally would have not visited an area and thus spend their money in a town, he said. In that way, Grinols noted, "it is probably not helping the state of Illinois, because if most of the people using the riverboats are coming from Illinois, you are just displacing the demand from some other part of the state."

Perhaps more importantly, he said, riverboats can help rebuild faith in the local economy. That has happened in Rock Island and Moline, Grinols said. "They used [riverboat gambling] as a signal to other businesses that 'we're not going to let this city die. We are doing things that we can to promote growth, to promote economic activity.' So, they were able to assure other businesses that locating in Rock Island and Moline was going to be an OK thing to do. So, in that sense, you can say that riverboat gambling was helpful.

July 1993/Illinois Issues/11

But it wasn't helpful because of gambling; it was only helpful because anything that would have reassured businesses in those towns would have been helpful."

Bud Grieves, a Peoria stockbroker, said the prospect of riverboat gambling in Peoria inspired him to plan a downtown project. In late 1989, he bought an aging hotel building, spent $3 million to renovate it and opened the 110-room Best Western Mark Twain Hotel in late 1990. He also opened the nearby Packard Banquet and Meeting Center in 1991. The two businesses, together, employ 138 people, Grieves said. "Riverboat gambling was probably the swing factor," he said. "It was the extra to make this feasible."

In May 1993, about three months after the Players Riverboat Casino opened in Metropolis, Players International Inc. and Amerihost Properties announced plans to build a 120-room hotel and 400-seat cabaret style theater near the riverboat. The decision to build the complex was influenced by the presence and success of the riverboat, said spokeswoman Beverly Jedynak.

Figure 1. Illinois riverboat reciepts, state and local tax revenues, May 1993 Dollars in thousands

So far this fiscal year, the seven riverboats have paid about $75 million to state and local governments. But gross receipts for the seven casinos have totaled $327.7 million

There clearly have been some economic gains for riverboat communities. There have also been significant gains for riverboat operators. So far this fiscal year, the seven riverboats have paid about $75 million to state and local governments. But gross receipts for the seven casinos have totaled $327.7 million. And on average, each of the 5.4 million gamblers on Illinois riverboats this year lost $60.

So, not everyone sees an unblemished economic record from floating casinos. "Riverboat money does not trickle down into the local economy," said the Rev. Tom Grey, a United Methodist minister who has criss-crossed the state the last two years battling the spread of gambling in Illinois. Grey contends that the money gambled on riverboats simply displaces money that would be spent on other forms of entertainment, so there is no net gain to the state's economy but instead a movement of money from one community to another. He also suggests that the effect of the riverboats on local economies is exaggerated. Gamblers who visit river-boats from out of town will return home to spend their winnings, he says, and those who suffer losses will be reluctant to hang around a riverboat town to spend any more of their money.

Grey acknowledges that riverboats have spawned some new businesses, such as the Chantilly Lace restaurant in Rock Island. But he notes that as some new businesses have opened, others have closed. The owners of W.L. Velie's, a landmark Moline restaurant, said they closed in 1992 because of competition created by riverboat gambling. The start of riverboat gambling in Iowa in 1991 hurt business, Velie's owners said, but the launch of the Rock Island boat last year was the final blow. Other Quad Cities businesses have also blamed riverboat gambling for some negative economic fallout. Last year when the owner of the Peppercorn Grill and Bar in Bettendorf, Iowa, lost his lease, he said riverboat gambling had hurt some restaurants by driving up rental rates and increasing competition for entertainment dollars.

Grey also argues that riverboat gambling can have a negative effect on a personal level. Generally, he said, there is a limited amount that people spend on most forms of

12/July 1993/Illinois Issues

entertainment. That is less true of gambling, he contends, because there is no betting limit on Illinois riverboats. He noted that the average loss on The Empress casino in 1992 was $78. "But for the average loss for the Joliet boat to be $78, some people had to lose more than that. If people do not set a limit on how much they can spend, they spend more than they probably should."

The mantra that usually drowns out critics of riverboat gambling or any expansion of gaming in Illinois is jobs, jobs and more jobs. According to the Illinois Gaming Board, the six Illinois riverboats currently operating (not counting Harrah's Casino which opened in Joliet in May) employed 4,316 people at the end of April 1993. The annual average salary for a riverboat employee is $19,237, according to the Gaming Board. Total annual payroll for the riverboats now operating is $83 million.

Riverboats seem to have had, at best, a negligible effect on the employment base in river towns. The unemployment rates in Alton, Joliet, Peoria and Rock Island were higher in March 1993 than in March 1991. Alton, for instance, had an 8.5 percent unemployment rate in March 1991. A year later, about six months after the Alton Belle opened, the city's jobless rate had climbed to 9.7 percent. In March 1993, Alton's unemployment rate had risen to 11 percent. Ron Hospodka, a labor market economist for the Illinois Department of Employment Security, cautioned that factors beyond riverboat gambling the nation's lagging economy, for example influence the unemployment rate and can offset employment gains from riverboats. The closing of two plants in Alton, for instance, nearly wiped out the gain of 640 jobs brought by the Alton Belle, said Jim Bownan, director of economic development for the River Bend Growth Association in the Alton area.

Figure 2. Average daily admissions, losses per customer, fiscal 1993.

Moreover, job growth from riverboats often is minimal in the context of a major metropolitan area. In Peoria, the Par-A-Dice employs 700 people in a metropolitan area with a potential workforce of 169,000. Earl Grinds, the University of Illinois economist, noted that 700 jobs "for a city the size of Peoria is not going to show up much in their employment statistics." Grinds added that he doubts there are actually 700 new jobs because some riverboat jobs may have displaced employment elsewhere in the Peoria economy. Those new jobs are important, however, said Roberta Parks, senior vice president for government and community relations for the Heartland Partnership, which assists with economic development in the Peoria area. "How often do you get a company that locates in any town that brings in 700 jobs? Any city would tap dance for a company that brought in 700 jobs. Would we like to have a manufacturing company that brought in 700 jobs? You bet we would. Manufacturing jobs tend to be higher paying jobs than the tourism industry. Are we unhappy with 700 tourism jobs? Not one bit."

Denny Jacobs still considers riverboat gambling a winner. "I think it has been better than expected in almost all aspects and not only for the Quad Cities," he said this spring. "In the Quad Cities, it is doing everything that we expected it would do, plus more."

Others aren't so sure. State Rep. Robert Churchill (R-62, Lake Villa), who voted against the riverboat bill in 1990, is still skeptical that floating casinos are a helpful economic development tool. "It is making great profits for the boat owners, the state is getting money, but who else is it helping?" he asked.

William Thompson, an expert on gambling, thinks that, except for the boat owners, riverboat gambling has turned out to be a draw. Thompson, professor of public administration at the University of Nevada-Las Vegas and author of four books on gambling, said, "Joliet is probably sucking money out of the Chicago economy. Joliet is a winner, Chicago is a loser. Chicago is big; you don't notice the loss. Joliet is smaller; you see the victory. But it is an illusion to think that Illinois is a winner because Illinois has just broken even. [And it] has probably lost a little because the boat owner lives here in Nevada and they are taking their 10 percent."

Ken O'Brien, a graduate of Sangamon State University's Public Affairs Reporting program, is a Chicago area free-lance writer.

July 1993/Illinois Issues/13

|Home| |Search| |Back to Periodicals Available| |Table of Contents||Back to Illinois Issues 1993|
Illinois Periodicals Online (IPO) is a digital imaging project at the Northern Illinois University Libraries funded by the Illinois State Library