Casino tax measure - Saturday 22nd of October 2005
At Fairmount Park, the effect of a decade of casino competition is spelled out in shorter weekly horse racing schedules, and counted out in lighter purses.
For the first time since World War II, Fairmount will host fewer than 100 racing days next year. The average purse (the combined winnings for the horses in each race) will be around $5,500 - half as much as the same thoroughbreds could make running at tracks in Indiana or Iowa.
That keeps some star-quality horses away, which, in turn, makes it harder to bring people to the track and gambling windows. And that could further diminish the number of racing days, and the size of the purses.
Now, Fairmount and the rest of Illinois horse racing industry want the casinos to pay for that lost business. Legislation, to be presented in Springfield next month, would require a 3 percent tax on casino revenue, to be used to fatten race purses and spur horse racing in Illinois.
"Youre not getting the quality of horses that (attract) people who like to bet on horses. Its self-generating cycle," says Brian Zander, president of Fairmount.
He lays blame on the floating casinos in East St. Louis and Alton - and on state policies that put them there in the early 1990s, without doing anything to protect the much older horse racing industry, as other states have done.
Fairmount isnt alone. The entire horse racing industry in Illinois is limping.
State tax data indicate that, in the Metro East area and across the state, gamblers who would otherwise have put their money on the tracks horses instead are putting it in the riverboats slot machines.
In previous years, the casino industry has agreed in principle to the idea of subsidizing racetracks but always in connection with major incentives like dockside gambling or reduction of their overall tax rates. Those things arent on the table this time. One casino industry official indicated last week that it may be a hard sell this year.
"Well look at it," said Tom Swoik of the Illinois Casino Gaming Association. "Were going to have to see it, and see whats in it for us."
Illinois has six racetracks: Fairmount and two other thoroughbred tracks, Arlington Park and Hawthorne Race Course, both in the Chicago area; and harness racing tracks Balmoral Park and Maywood Park near Chicago, and Quad City Downs in Rock Island. The industry claims theyre all having similar problems, because of casino competition in Illinois, and tracks in other states that provide more economic protection for racing.
"Fairmount . . . is in the most trouble," said John Bauman, president of the Illinois Thoroughbred Breeders and Owners Foundation. "With all the riverboats around (the Metro East area) . . . theres just not as many gambling dollars to go toward horse racing."
State Rep. Bob Molaro, D-Chicago, next month will push for what he calls "the 3 percent solution." Under the legislation, each of the states nine casinos, including the Casino Queen in East St. Louis and Argosy Casino in Alton, each year would have to give up 3 percent of their adjusted gross revenue (their income after paying out winnings but before any other expenses).
The money - an estimated $60 million to $100 million a year - would go into an "equity fund" to help bolster horse racing. In exchange for that cost, the legislation would offer the casino industry an increased number of allowable gambling positions to 3,000 per casino, up from the current 1,200 limit.
Molaro and others point out that some other horse racing states, including Indiana, Iowa and West Virginia, already provide subsidies to keep the industries healthy, a situation that allows those states to draw away thoroughbred business from Illinois. They say Illinois $1.3 billion horse racing industry and 30,000 to 40,000 related jobs could dry up if something isnt done.
But gambling opponents say the industry is exaggerating both the economic impact of horse racing and the extent of its current problems. The Rev. Tom Grey, a national anti-gambling activist based in northern Illinois, noted that the jobs figures the industry uses are for all horse-related employment, and not just racehorses. Grey also cited estimates that horse track profit margins in Illinois still are averaging around 14 percent.
"Thats not a bad profit. The problem is, the casinos are making 30 percent," Grey said. "Horseracing had a monopoly on gambling, they owned the Legislature . . . and then the casinos came in. . . . So what we now have is a (proposed) bailout for something thats not dying."
Most agree that without the backing of the casinos, the tracks proposed subsidy legislation will never get to the finish line. A byproduct of the casinos takeover of the gambling market in Illinois is its overwhelming economic and political clout in Springfield.
State economic data show that the horse tracks combined annual payments to the state, through taxes, has plummeted since 1992, when the states newly legalized casinos started posting their first tax payments.
According to data from the Illinois Economic and Fiscal Commission, the horse tracks sent $45 million to the states coffers that first year, while the new casino industry sent $8 million. This year, the estimated figures are $12 million and $699 million, respectively.
"Youve got a lot more legislators out there who care about the boats than care about the tracks," said Kent Redfield, political scientist at the University of Illinois at Springfield.
Molaro said his legislation seeking to create the 3 percent tax on casino revenues to help horse racing will probably be debated early next month, during the two-week fall session of the Legislature that starts Oct. 25.
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