Appellate Court Permits Cook County to Tax Slot Machines

A long pending issue concerning a Cook County proposal to tax revenues from slot machines was decided in favour of the county by an appellate court on 21 August 2015. The law that would permit taxes to be collected was initially passed in 2012, but the issue was taken to court. A lower court had passed a ruling to strike down the tax. The county was not able to collect taxes as long as the case was under litigation.

County board president, Toni Preckwinkle is extremely relieved by the favourable ruling from the three-judge panel since it is expected to bring in approximately $1.1 million to the budget. Needless to say, the appellate court decision comes as bad news for the operators of Rivers Casino, a very popular gambling establishment based in Des Plaines, Illinois within a very short distance of O’Hare International Airport.

Midwest Gaming & Entertainment, which operates the Rivers Casino will no doubt be the first company to be adversely affected by the ruling since Cook County does not have any other casinos. However, other counties in Illinois are expected to follow. The state of Illinois has a total of 10 casinos and it won’t be too long before other counties follow suit in taxing revenues from slot machines located in them. However, Midwest Gaming & Entertainment Chairman, Neil Bluhm has indicated that his company will take the issue to the Supreme Court of Illinois.

The casino operators have maintained that the Illinois Riverboat Gambling Act does not permit taxing slot machines. Furthermore, the tax levied by the county was in violation of the Constitution of Illinois, since it proposed to tax casino slot machines and video poker machines at considerably different rates.

Rivers Casino is one of the best in the state of Illinois and it makes more money than any other casino in the state. It will be affected very much by the new tax law since it has approximately 1,000 slot machines. If the new tax comes into effect, the casino will have to pay $1,000 as annual levy on each and every slot machine and $200 for video poker machines. The casino already contributes very highly to the state as well as the county. The state received $161.6 million from the casino in taxes during 2013. The county received $24.7 million during the same period.

Cook County is facing a huge budget deficit of approximately $179 million and the Preckwinkle administration has been trying out different ways to close it including pushing through an increase in sales tax by one penny. The tax on slot machines is no doubt a very small portion of the total deficit, but this is an issue the administration has pursued very actively. A representative of the administration said that the legal victory indicated that they were on the right track all along. Incidentally, the county also charged a $25 tax on the sale of firearms; this tax drew lawsuits as well, although the county has been able to collect the levy to the tune of $950,000 in 2014.

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