Gambling on Illinois riverboats: morally wrong or profitably right?

A visibly angered Republican Rep. Ron Stephens waved his arms, screamed for recognition and hurled a sheaf of papers toward the House speaker's podium. With a seat near the front of the Republican side, the downstate lawmaker appeared to be the captain of a GOP pirate ship aimed at broadsiding riverboat gambling legislation on that mid-afternoon of June 30. "Mr. Speaker! Mr. Speaker! Mr. Speaker!" he bellowed.

Like Stephens (R-110, Troy), his Republican colleagues shouted, pounded fists and stomped feet in partisan protest. Their spontaneous demonstration drew no reaction from the man with a quick gavel, Rep. Frank Giglio (D-77th, Chicago). The acting speaker quickly and perfunctorily called another bill on a different subject, denying Republicans the opportunity to verify the vote that sent the riverboat legislation on its way to a conference committee.

Later that night, the conference committee's new riverboat report steamed out of the Senate only to sink in the House on a 32-75 vote. Even many Democrats pulled off the bill when House sponsor E.J. "Zeke" Giorgi (D-68, Rockford) added a provision that would have given property tax breaks to the Arlington International Racecourse, which already had received state aid after being destroyed by a fire. Immediately after the House torpedoed the riverboat legislation, Giorgi vowed to bring the measure back in the fall.

Senate sponsor Denny Jacobs (D-36, East Moline) has kept the issue alive with bipartisan summer hearings in Illinois river cities where there is interest in riverboat gambling. Proposed games include slot machines, blackjack, poker, video games of chance, roulette wheels, faro, keno and more.

To be sure, riverboat gambling, which evokes the romance of the past and the societal conflicts of the present, has churned up a wave of legislative tempers — as well as widespread public debate. Democrats delivered dazzling arguments that projected statewide payoffs of up to 2,500 new jobs, $200 million in initial riverfront investments and $700 million annually in economic spin-offs. But the Republicans called for more study, bowing to evangelical objections against gambling, worries over social impacts, fears of proliferating organized crime and concerns that land-based casinos would soon follow.

While some House Republicans declared a moral victory after holding up the bill, others used that successful maneuver to boost their sagging political morale. A few of the House GOP, upset about their diminishing role in the legislative process, viewed the betting bill as a way to tweak Democrats. Indeed, the riverboat issue was one of the few major fights won by the Republicans in the Democratic-controlled House.

The pressure to act quickly in Illinois results from Iowa's plan to launch riverboat gambling on the Mississippi River April 1, 1991. Jacobs and other lawmakers representing the Illinois side of the Quad Cities have responded with legislation similar to Iowa's in an effort to protect their recession-riddled region from potential revenue losses. Republican Gov. James R. Thompson has jumped aboard, too.

"It's really critical for the northwestern part of the state, the Quad Cities area, because otherwise they'll lose substantial tourism and economic development revenues to Iowa," Thompson said. "The Iowa challenge to the Quad Cities' economy ought to get everybody behind the bill. If we do it for the Quad Cities, we should do it for the other parts of the state that want it. If we wait until next spring's session, we'll lose whatever advantage there is to be gained by beating Iowa to the punch. And while that's not the end of the world, if this is something we're going to do eventually, we might as well do it now." Thompson backed his statements this summer by approving $500,000 for the Department of Revenue to oversee riverboat gambling even though no substantive legislation had passed.

Iowa's law places a $5 limit on individual bets and a cap of $200 in losses for each gambler per cruise. In comparison, Illinois' proposal would up the loss allowed each person to $500 per cruise but place no caps on bets. For example, gamblers on Illinois riverboats could win big — and bet big as long as they're winning — but wouldn't be allowed to lose more than $500. A loss limit of less than $500, Jacobs contended,

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Photo courtesy of Illinois Department of Transportation

would discourage many out-of-state tourists from flying into the Quad Cities to gamble. "We feel with a $200 limit, we would get strictly local gamblers," Jacobs said. "Our bill could make the Quad Cities one of the tourism capitals of the world."

Iowa Gov. Terry E. Branstad, a Republican, has countered the Illinois initiatives by suggesting that a regional authority should be established if Illinois and other states follow Iowa's lead. (The Wisconsin legislature is considering measures to change the state constitution and authorize off-shore casino gambling.) "To avoid crime and to keep problems out, it would be wise for us to try to work together in some kind of a regional mechanism to oversee and control it," said Branstad, who has conjured up the ghost of Al Capone and images of Chicago' s organized crime history in an attempt to portray the evils of Illinois' proposed big-time betting.

Furthermore, Chicago Mayor Richard M. Daley also said he does not want floating casinos in his city. "We don't need gambling in Chicago on the river," Daley said. "I just would not be for it. In other parts of the state, it's up to them to make the decision."

The last legislative proposal debated in Illinois' spring session called for riverboat gambling to begin in 1990 with four licenses on the Mississippi River and one on the Illinois River south of Marshall County, which is just north of Peoria. Five more licenses could be distributed the next year. With each license allowing two boats, 20 boats potentially could be plying the state's 25 waterways.

Besides the Quad Cities, metropolitan areas in or around Peoria, Alton, Rockford and Joliet are inquiring about gambling on their rivers. Alton is eyeing the potential money from St. Louis gamblers. (Missouri Gov. John Ashcroft said he doesn't believe his state will adopt a riverboat gambling law.) If Rockford and Joliet get licenses the second year, they would seek tourists from Wisconsin and

'There's a tremendous amount of money to be had. I'm not concerned about the clientele because, down here, they gamble anyway'

Indiana besides looking for gambling revenues from Chicago residents.

Rep. Donald Saltsman (D-92, Peoria) said riverboat gambling could infuse new tax revenues of about $1 million into his city and bolster the economy with more tourism and spinoff jobs. "We might as well keep our dollars here rather than sending them to Iowa," Saltsman said.

But Peoria Mayor Jim Maloof hedged his bets. "Every community would like to have the extra income," Maloof said. "Having said that, I don't know if riverboat gambling is the kind of atmosphere we need in Peoria." His waffling has created interest from the nearby cities of Peoria Heights, East Peoria and Pekin. "It doesn't have to be in Peoria," Saltsman said. "If the mayor doesn't get off his ass, I don't think it will be."

Just downstream, Beardstown Mayor Bob Walters said the extra tax income generated by riverboat gambling could lower property taxes in his Cass County town of 6,338. Developers in Colorado and California have talked about pumping $10 million into the local Beardstown economy to create a spot to dock a betting boat. "There's a tremendous amount of money to be had," Walters said. "I'm not concerned about the clientele because, down here, they gamble anyway. People would come to Beardstown who probably wouldn't otherwise. They're going to stay in motels and eat in restaurants. They're not going to just stop and gamble on the river. There's nothing like the ripple effect."

In Iowa, counties already are beginning to hold referenda on whether the gambling vessels should be allowed. Voters approved six of the first seven referenda in August.

Davenport officials are savoring the economic development potential. A Mark Twain-era theme park, hotels, restaurants, souvenir shops and a major relandscaping on the riverfront are but a few of the possible projects. Larry Reed, executive vice president of the Davenport Chamber of Commerce, said the annual effect on the Quad Cities from tourists and riverboat

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operations would be more than $70 million. "What we're looking at is major urban redevelopment," said Davenport Mayor Thomas Hart. "Riverboat gambling is the catalyst. It's a very exciting time. You get an opportunity like this once every century."

Jacobs also emphasized that his proposal for Illinois would benefit local governments as well as the state. Municipalities and counties would be able to collect half of the $2 admission fee at each docking and one-fourth of the 20 percent tax on adjusted gross receipts. Jacobs estimated an annual take of more than $40 million for state and local governments. That estimate assumes 10 licensed boats making three excursions a day for 245 days a year. Estimates by the Illinois Department of Revenue, however, are somewhat more fluid — and more conservative. Helen Adorjan, a department spokesman, said the state could expect to raise anywhere from $6 million to $11 million. (Local governments, she said, could expect to raise $5 million from the head tax.) In addition, the department might have to shell out as much as $2 million to $8 million in administrative costs — most of that for criminal enforcement.

Experts, meanwhile, debate the financial benefits. William Eadington, a University of Nevada-Reno economist and specialist in public regulation of gambling, said states like Illinois probably cannot expect to generate more than 10 percent of their revenue from commercial gaming. That's because their economies, unlike Nevada, do not rely as heavily on tourism, he

'As with all addictive substances and activities, when gambling becomes more accepted and familiar in a culture, more people begin to experiment'

said. (During the last fiscal year, however, nearly 6 percent of Illinois' more than $10 billion general revenue fund came from gambling; the bulk of that 6 percent was from the lottery.) Further, Eadington said, the revenue and economic development potential will diminish for individual states — and possibly disappear altogether — as state-sponsored gambling spreads and competition for dollars increases.

Eadington said he expects state-supported gambling to spread. Last spring, states looked more intensively at revenue-generating games than Eadington had ever remembered. Most states already sponsor some type of gaming — ranging from lotteries to dog racing. In July, for example, Oregon boosted its odds for generating a greater number of dollars for the state treasury by adding sports betting — an idea now under review by Illinois lottery officials. The state of Oregon operates the new gambling on sports for those who want to bet on National Football League games. The revenues are targeted for swimming and other intercollegiate sports that don't produce the dollars that football and basketball do.

States throughout the country, in fact, are under pressure to fund expanded social programs but to avoid raising taxes. Paradoxically, Eadington said, much of the revenue from gambling – particularly lotteries — is generated from the poor.

Indeed, critics of state-sponsored gambling have argued that long-term social costs are created when government legitimizes games of chance. Iowa's Branstad, for instant said he had no intention of letting the riverboat games spill over onto dry land. Last summer, that state's health officials concluded that 77,000 Iowans may be compulsive gamblers. Likewise, Don Mitchell, executive director of the Illinois Council on Compulsive Gambling, said about 5 percent of those Illinoisans who gamble are serious addicts.

According to Dr. Richard Rosenthal, a professor of psychiatry at the University of California at Los Angeles and specialists in prevention and treatment of compulsive gambling, up to 10 percent of those who bet may be susceptible to gambling addictions. That percentage will grow, he said, as govemment-backed gambling increases. He likened a cocaine rush to the quick-hit high of commercial betting. "As with all addictive substances and activities," Rosenthal said, "when gambling becomes more accepted and familiar in a culture, more people begin to experiment."

Although Rosenthal is not against the concept of gambling, he maintained that states should consider requiring an overall impact statement before they authorize widescale wagering. If they decide to sponsor such games, he said, states should set aside enough dollars to deal with the resulting social problems.

The Illinois Racing Board has been appropriated $250,000 during the current fiscal year to divvy up among organizations which help chronic bettors, but Mitchell said that's not enough. His organization will be pushing lawmakers to set aside more dollars, particularly if the state authorizes riverboat gambling.

Illinois Republicans echo these concerns. "We need," argued House Minority Leader Lee A. Daniels (R-46th, Elmhurst), "to determine the social implications of expanding legalized gambling and whether it would be economically advantageous to Illinois. We may very well find that it would cause more problems than it would solve. Plunging headlong into this endeavor would be penny wise and pound foolish."

Jacobs simply wants the "traditional moralistic no-nos" in Illinois to be open minded about the issue. "Illinois," Jacob said, "has legalized gambling with the lottery, bingo in churches and off-track betting facilities."

Giorgi, the father of the Illinois lottery and the gambling impressario most responsible for the seemingly relentless advancement of state-sponsored games of chance, knows it often takes more than one legislative roll of the dice before lawmakers hit the jackpot. "Every time you put up an idea in the General Assembly — if it's a good idea — it will stay alive," Giorgi said.

Ray Long is a Statehouse correspondent for the Peoria Journal Star. Peggy Boyer is Statehouse bureau chief for Sangmon State University's WSSU-FM, the anchor station of the Illinois Public Radio Network.

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