COMPTROLLER'S CORNER RIVERBOAT REVENUES By Loleta A. Didrickson, Comptroller, State of Illinois

June 30th marked the end of the Illinois' 1996 fiscal year and as we look back, we find that casino action on river fronts throughout the state is still going strong, but the industry is feeling the competition from bordering states. Adjusted gross receipts (total amount less winnings paid back to bettors) for riverboat gambling in Illinois topped $1.215 billion, $117.5 million or 10.7% higher than fiscal year 1995. This increase pales in comparison to prior years due to the fact that only one additional riverboat became operational in fiscal year 1996 compared to multiple boats in prior years.

Competition from the five Iowa riverboats on the northwestern Illinois border has had a tremendous effect on the Silver Eagle in East Dubuque and the Casino Rock Island.

The Silver Eagle instituted a temporary shutdown of operations on December 4, 1995, with operations resuming in a limited capacity on May 22, 1996. Silver Eagle revenues had been declining severely due in large part to the startup of the Diamond Jo riverboat in Dubuque, Iowa in May of 1994. The Silver Eagle had also been placed at a competitive disadvantage as the hording and departure requirements as well as loss limits for Iowa riverboats were legislatively eliminated. In addition, free admission was offered on the Diamond Jo.

Prior to the legislative changes in Iowa, monthly adjusted gross receipts for the Casino Rock Island averaged about $3 million while the Silver Eagle averaged about $2.5 million. Adjusted gross receipts for the casinos in November 1995, the last full month of operation for both boats, were $1.257 million for Rock Island and $826 thousand for the Silver Eagle. Since November the Casino Rock Island level of adjusted gross receipts has remained fairly steady averaging $1.325 million per month while the Silver Eagle in its only full month of operation since resuming on a limited basis recorded adjusted gross receipts of $466 thousand in June. As a show of support from the community, the Casino Rock Island was actually exempted from paying local and county taxes beginning in August of 1995.

With the startup of three riverboats in northern Indiana this June, the Chicago area riverboats will face border competition from the east. Joliet, which has four riverboats, is in closest proximity to the Indiana boats. In June the Joliet riverboats combined to record adjusted gross receipts of 30.645 million, $1, 635 million or 5.3% less than in June 1995.

The Aurora riverboats had increased adjusted gross receipts in June over the prior year of 3.4%. However, this increase is far below the month over month average increase of 17.7% for the entire fiscal year 1996. In Elgin, the Grand Victoria Riverboat had

September 1996 / Illinois Municipal Review / Page 15

increased adjusted gross receipts of $2.81 million or 17.8% over the prior June.

Indiana also has a riverboat in Evansville at the southern end of the state. This boat is in competition with the Players Riverboat Casino in Metropolis on the southeastern boarder of Illinois. Unlike Iowa, Indiana riverboat gambling rules were established similar to Illinois' allowing for a more competitive playing field in the northeastern portion of the state. However, due to the Federal Johnson Act, northern Indiana river- boats (those in competition with the Chicago area) are not allowed to cruise on Lake Michigan and remain docked. Although boarding restrictions are applied like Illinois, departure from the riverboats may occur at any time.

In the southwestern part of Illinois, the Alton Belle and East St. Louis' Casino Queen face competition from the St. Charles and Admiral riverboats in St. Louis. Adjusted gross receipts for the Alton Belle declined in nine of the twelve months for fiscal year 1996 when compared to the prior year. For fiscal year 1996 receipts were 8.2% lower than fiscal year 1995. The Casino Queen's adjusted gross receipts remained relatively flat in fiscal year 1996 when compared to fiscal year 1995 with an increase of 0.1%.

Increased competition for the riverboat gambling dollar from border states will undoubtedly continue to have a big effect on Illinois, especially in areas where Illinois faces competitive disadvantage. Many experts feel that the midwest market is far from saturated, especially in the Chicago area where three Indiana river-boats have recently opened with two more to begin operation in early 1997.

Page 16 / Illinois Municipal Review / September 1996