With legal battle over gambling machine tax ended, casino owes Cook County $3 million

By Annie Hunt | Feb 9, 2016


CHICAGO — After the Illinois Supreme Court refused to hear the casino owners' appeal, Cook County now has the green light to collect $3 million in unpaid taxes from Midwest Gaming, owner and operator Rivers Casino in Des Plaines.

In addition to an one time payment of $3 million that accounts for the past three years, the county's revenue department expects taxes collected from the casino will ring up roughly $1 million annually. In a separate case, a state appellate panel also upheld Cook County’s right to tax gambling machines.

“The proceeds from the tax will go to the General Fund,” said Ted Nelson, Public Information Officer for the Cook County Bureau of Finance. He added that they do not plan to increase the gaming tax at this time.

The decision came after a three-year legal dispute between the county and the casino over the right to tax video gambling machines. The battle began in Nov. 2012 when the Cook County Board of Commissioners initially approved a tax on video gambling.

In the following year, county staff met with Midwest Gaming to work out the details of operations and estimates. Midwest Gaming filed suit shortly after in Cook County Circuit Court. The two parties agreed the county would not enforce the tax law or issue non-compliance citations during the litigation period under the stipulation that Midwest Gaming agreed to pay unsettled taxes following the court’s final decision.

In the hearings, Midwest Gaming argued that the state’s Riverboat Gambling Act prohibited a tax on video gambling machines at the county level and that the tax would violate the Illinois Constitution. While Midwest Gaming was successful in circuit court, Cook County appealed to the Illinois First District Appellate Court, which reversed the circuit court on all counts in August.

Ultimately, Midwest Gaming was unsuccessful in their petition to the Supreme Court to appeal the August ruling, meaning they will be paying around $3 million.

In the meantime, other video gambling operators in Cook County have been paying tax on their machines and purchasing tax decals since the tax was approved three years ago. Under Cook County ordinance, tax decals for machines in casinos cost $1000, while decals for machines in bars and restaurants cost $200. The county has said it expects decals alone generated more than $300,000 in 2015 and will produce about $400,000 in county revenue in 2016.

In terms of revenue, the tax on the video gambling machines is sizable but not monumental for the county.

“Revenue streams vary greatly," said Nelson, "For example, the county’s cigarette tax is projected to generate about $134 million while the anticipated annual gambling tax revenue is expected to be approximately $1.5 million based on all gaming terminals in Cook County."

The Illinois Coin Machine Operators Association recently filed a separate case against Cook County regarding the tax. The nonprofit organization works to unite and promote the coin operated amusement machine industry in Illinois. The court ruled that the tax is within the county’s home rule powers.

The ICMOA still has the right to appeal that decision to the Illinois Supreme Court.

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Cook County Cook County Board of Commissioners Illinois Supreme Court Rivers Casino

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