COMPTROLLER'S CORNER ILLINOIS' RETURN ON THE GAMING DOLLAR By Loleta A. Didrickson, Comptroller, State of Illinois

Gaming has become a multi-billion dollar business here in Illinois and it continues to grow at a dramatic pace. With the addition of riverboat gambling, the amount of money wagered has exploded over the last five years from $2.8 billion in 1990 to approximately $18 billion in 1995.

Net state gambling revenues (revenues minus prizes paid out) grew from $61 million in fiscal year 1974 to $971 million in fiscal 1995. This increase is due largely to the lottery and the growing riverboat industry. Horse racing, bingo and other forms of gambling have not shown as much revenue growth.

In calendar year 1994, gambling wagers of more than $17.8 billion came from horse racing, riverboats and the Lottery (fiscal year 1994). Of the $17.8 billion, net receipts to the state totalled $736 million or 5.2% of total wagers.

Specifically, receipts from the Lottery (fiscal year 1994) were $547 million accounting for 36.6% of the nearly $1.5 billion wagered. Horse racing receipts (calendar year 1994) of $42 million out of a total of more than $1.2 billion accounted for 3.4%. Receipts from riverboat (calendar year 1994) wagers of $147 million equalled 1.3% of $11.4 billion wagered.

The return on a gambling dollar of 36.6% to the state is clearly superior at the state government run Lottery with the privately run and state-regulated industries of horse racing and riverboat gambling returning 3.4% and 1.3% respectively.

Comparing the return on the dollar for a public versus private gambling industry is like comparing apples and oranges. Yet it is possible to directly compare horse racing and riverboat gambling. If riverboats would have returned 3.4% of each gambling dollar to the state as horse racing did, an additional $245 million could have been received.

Conversely, if horse racing were only required to turn over 1.3% of their total, $26 million would be retained by a struggling industry. And the state treasury would be the loser.

Although most of the money generated for the state comes from wagering dollars, the state also gains from licensing, fees and registration. The Lottery raises a small amount this way while riverboats pull in millions each year. Horse racing revenues are generated by the privilege tax, breakage, inter-track wagering tax, uncashed pari-mutual tickets, admission tax, licenses and fines.

The newest form of gambling, riverboats, generate revenues by a 20% wagering tax, a $2 admission tax and a license and fee structure for owners, suppliers and employees of riverboats. The licensing and fee costs include everything from $50,000 for an owner's application to cover background checks to individual employee license application fees of up to $1,000. Once a license is approved, owners pay a $35,000 fee for the first three years and $5,000 for subsequent years.

Illinois is not the only state experiencing gambling fever. In a recent report, the U.S. Casino Entertainment Industry stated that it generated $153 in revenues for each American household in 1994. This represents an increase of 26% over 1993. •

February 1996 / Illinois Municipal Review / Page 11