New Developments (updated 2/11/04)

On May 31, 1993 before adjourning for the summer, the Illinois General Assembly passed two significant measures pertaining to riverboat gaming.

Casino tax rates set to increase sharply: Illinois Senate Bill (S.B) 1606 steeply hikes the tax rates on riverboat casino revenue, with the higher rates set to take effect July 1, 2003. Currently, the adjusted gross receipts of riverboat casinos are taxed at the following rates:

	15% of annual adjusted gross receipts up to and including $25 million
	22.5% of annual adjusted gross receipts in excess of $25 million but not exceeding $50 million
	27.5% of annual adjusted gross receipts in excess of $50 million but not exceeding $75 million
	32.5% of annual adjusted gross receipts in excess of $75 million but not exceeding $100 million
	37.5% of annual adjusted gross receipts in excess of $100 million but not exceeding $150 million
	45% of annual adjusted gross receipts in excess of $150 million but not exceeding $200 million
	50% of annual adjusted gross receipts in excess of $200 million

The new tax rates are as follows:

	15% of annual adjusted gross receipts up to and including $25 million
	27.5% of annual adjusted gross receipts in excess of $25 million but not exceeding $37.5 million
	32.5% of annual adjusted gross receipts in excess of $37.5 million but not exceeding $50 million
	37.5% of annual adjusted gross receipts in excess of $50 million but not exceeding $75 million
	45% of annual adjusted gross receipts in excess of $75 million but not exceeding $100 million
	50% of annual adjusted gross receipts in excess of $100 million but not exceeding $250 million
	70% of annual adjusted gross receipts in excess of $250 million

S.B. 1606 provides that casino tax rates are to return to their previous levels as soon as riverboat gaming activity is conducted under a now-dormant license, but no later than July 1, 2005.

Gaming licenses may be put out for bid: Senate Bill 1607 provides that if the Illinois Gaming Board revokes or chooses not to renew a riverboat gaming license, it has the authority to reissue the license through a competitive bidding process.

Were it to choose that option, the gaming board would not be required to reissue a license to the highest bidder, but would have to explain why it did not.

Alternatively, the gaming board could choose not to reissue a license if it decided that Illinois would receive the "highest prospective total revenue" by selecting a manager to conduct that gaming operation for the state. The maximum number of gaming licenses would be reduced by one for each instance in which the gaming board authorized the state to conduct a riverboat gaming operation.

Issuance of a license to manage a casino for the state would be subject to a competitive bidding process.

In addition, the measure provides that riverboat gaming operations conducted by a licensed manager on behalf of the state would not be subject to the wagering tax on adjusted gross receipts.

Beginning July 1, 2003, the riverboat admissions tax, currently three dollars per person admitted, will be three, four or five dollars, depending on how many patrons were admitted to the riverboat during the previous calendar year. For a licensee that admitted one million patrons or less, the rate will be three dollars per person admitted; for those that admitted more than one million but no more than 2.3 million patrons, the tax will be four dollars per person; and licensees that admitted more than 2.3 million patrons in the previous calendar year will be required to charge five dollars per person admitted.

The admissions tax would apply at the same rates to riverboats managed on behalf of the state.

Casino license bid amounts unveiled by the Illinois Gaming Board: On February 5, 2004 Illinois gaming regulators revealed the dollar amounts of seven bids for the state’s only available gaming license.

Elzie Higginbottom, chairman of the Illinois Gaming Board, said the fine print in the bids (How much economic benefit does the state stand to gain from each proposal?) would weigh heavily in determining which ones make a list of three finalists to be announced February 23. Factors in addition to the bid amount will be considered.

Bid Amounts Offered for 10th License

* Hyatt Development Corp. and Mandalay Resort Group, owners of Elgin’s Grand Victoria casino, proposed offering the state less money up front -- $20 million -- but making up for the lower bid by giving the state a share of a Summit casino’s profits.

Bid amounts may not be increased until after the three finalists announced.