Appellate panel: Cook County can tax Rivers Casino's slot machines, other video gambling terminals

By Scott Holland | Aug 24, 2015

The operators of Rivers Casino were dealt a blow last week when a state appellate court overturned a Cook County judge’s decision vacating Cook County’s video gaming tax.

Midwest Gaming and Entertainment, which operates the Des Plaines casino, had sought relief from Cook County’s tax on video gambling machines, prevailing upon Cook County Circuit Court Judge Robert Lopez Cepero to find the county tax ordinance was preempted by the state’s Riverboat Gambling Act.

A three-justice panel of the Illinois First District Appellate Court, however, sided with the county, concluding there is no preemption, and further finding the tax in question is a permissible license for revenue that is neither an occupation tax nor a violation of the state constitution’s uniformity clause.

Justice Robert E. Gordon wrote the court’s opinion; justices Margaret Stanton McBride and Jesse Reyes concurred.

The Cook County Gambling Machine Tax Ordinance has been in place since Nov. 9, 2012. It defined gambling machines as either a “gambling device” or “video gaming terminal” as defined by the state’s Video Gaming Act. According to the county’s ordinance levying the tax, a slot machine at a casino would be a typical gambling device, while a video poker machine at a bar or restaurant would be a typical video gaming terminal. Both machines would be considered gambling machines. The tax ordinance imposed separate tax rates for gambling devices and video terminals. For gambling devices, the county imposed an annual tax of $1,000 per device, while for video terminals, the annual tax is $200 per video gaming terminal.

Rivers Casino is the only casino in Cook County. On June 27, 2013, Midwest Gaming filed a request for an injunction to prevent the county from assessing the tax on its more than 1,000 registered gambling machines.

On May 23, 2014, both parties filed motions for summary judgment. In its motion, the county noted the General Assembly had not preempted counties from taxing gambling machines, specifically explaining the tax in question was authorized by the Counties Code.

The trial court issued its decision Aug. 27, 2014. Judge Lopez Cepero found the Riverboat Gambling Act “includes an explicit provision barring additional taxes other than those established by the Act” and that the clause applied to home rule units, even though the Riverboat Gambling Act did not specifically refer to home rule units such as Cook County.

However, since the state law did not expressly limit a home rule government’s ability to levy such a tax, the appellate court found Midwest Gaming’s argument would be nullified.

Further, the appeals court said it didn’t need to decide if the tax in question qualifies as an occupation tax since the Illinois Constitution does not prevent home rule governments from enacting such a tax.

The appellate ruling also noted Midwest Gaming’s argument overlooked critical language in the laws it cites to make its case, as well as its use of a legal precedent: a case in which the American Beverage Association tried to fight a 5-cent tax on bottles of water. The appellate justices said that precedent actually supports the county’s position.

The appellate court stipulated it could not “find that the penalties, including citations and fines, transform this Tax Ordinance into a license for revenue.”

Further, while the circuit judge did not find a difference between owners of gambling devices and owners of video terminals, the appellate court disagreed, basing its opinions on several factors, including the location of such machines and the revenue each type generates.

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