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Quinn Raises Stakes on Gambling

OCT 17, 2011 7:40pm ET
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CHICAGO — Warning he would veto the current version of a gambling expansion bill, Illinois Gov. Pat Quinn Monday handed lawmakers an alternative plan that scales back the number of new gaming sites, imposes state regulatory control over a new Chicago casino, and sweetens fiscal benefits for the state.

“I believe the current bill is top-heavy with too many new gambling locations. I will only support a smaller, more balanced and modest expansion. As long as I’m governor, Illinois will not become the Las Vegas of the Midwest,” Quinn said, calling the original plan severely flawed.

In order to appeal to a broad range of lawmakers and win approval in May, the authors of Senate Bill 744 offered up a broad expansion menu allowing for five new casinos, slots at Chicago’s airports, the state fair, and racetracks.

Shortly after its passage, Quinn said he opposed such an expansive bill but stopped short of saying he would veto the package, and legislative leaders never sent the bill to his desk.

On Monday, he floated a revised package that outlined the changes needed to win his approval. They could be taken up during the General Assembly’s six-day fall veto session that begins next week or in the regular session that opens early next year.

The governor’s plan — like the legislation — allows for five new casino licenses, including one for Chicago, Danville, Rockford, Lake County and southern Cook County.

But it does not permit slots at Chicago’s airports, the state fair, or state race tracks and it bars video gambling in communities that oppose it.

The proposed casino sites allow for economically depressed areas to generate greater revenue and are designed to stem the flow of gambling dollars to border states with casinos like Indiana and Wisconsin, Quinn said.

He suggested Chicago qualifies for a license because it is facing a $635 million budget deficit in 2012.

Quinn wants a revised bill to cut the tax breaks provided to existing casinos and raise the state’s share in gambling taxes depending on a casino’s gross receipts to bring it in line with current rates.

The state would also receive its one-time licensing fees more quickly. The current bill gives casinos between four and nine years after their opening to pay the state.

“Illinois and its bills cannot wait that long,” Quinn’s documents read.

“Any bill should be restructured for prospective casino owners to competitively bid for the license, in order to maximize bids and for the state to receive as much of the one-time casino license payments up front as possible.”

Illinois closed out the first quarter of fiscal 2012 with $3.8 billion in overdue bills. The bill’s sponsors originally said it would generate an estimated $1.5 billion in up-front licensing fees and about $500 million in annual revenue would go to education and public works spending.

Quinn’s proposal would bring a new Chicago casino under the regulatory oversight of the state gaming board. The current bill gives much of the oversight authority to a new local agency. 

He also wants to impose greater regulatory oversight than allowed under the approved package and wants to remove deadlines imposed on gaming board decisions on licensing and regulatory issues.

“The Illinois Gaming Board must be equipped with ultimate oversight authority and the necessary tools to continue its exemplary record of keeping corruption out of our gaming industry,” he said.

The governor also would ban campaign contributions to elected officials by gaming licenses and casino managers similar to action taken by a handful of other states.

Chicago Mayor Rahm Emanuel, who pressed for inclusion of a Chicago license in the legislation, issued a statement saying he was encouraged by Quinn’s announcement.

“We are anxious to work with him and the leadership in the Illinois General Assembly so that we can soon begin creating tens of thousands of jobs for Chicagoans and make the investment in the city’s aging infrastructure that will secure a successful future for Chicago,” according to the statement.

A spokesman for Senate President John Cullerton, D-Chicago, said of the governor’s announcement: “We welcome his suggestions and input.”

Lawmakers already face a crowded agenda in their upcoming veto session. In addition to possible changes to the state’s $33.2 billion fiscal 2012 operating budget, lawmakers face pressure to take up pension reforms and changes to the retiree health care.

Illinois holds the distinction among states of having the retirement plan with the lowest-funded ratio, 45.4%, with $75.7 billion of unfunded liabilities.

The state has an actuarially based unfunded liability for other post-employment non-retirement healthcare benefits of $27.1 billion.

Quinn on Monday also stressed that the state has no intention of asking for a federal bailout of its pensions. U.S. House Republican leaders sent state officials a letter on Sunday calling on them to shore up their pension system and warning that the state should not expect federal help, according to a published report.

“We are not asking for any federal bailout,” Quinn said Monday at a press conference.

His administration had suggested in state documents earlier this year that it could ask for federal help, but later said that statement was made in error.

After a lull in borrowing, the state has set Oct. 25 as the date for its next bond sale, according to offering statements. The state will take competitive bids on $300 million of Build Illinois sales-tax backed bonds.

The state will follow that sale with a competitive issue of general obligation bonds and a negotiated sale for total issuance of about $1 billion before the end of the year.

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