Public employee pensions continue to lose out to gambling giveaways, expert says

CHAMPAIGN, Ill. — A legacy of giveaways to gambling interests continues to haunt the pension system in Illinois, a leading national gambling critic and University of Illinois expert warns.

Since 1990, the state of Illinois has given away between $35 billion and $100 billion to gambling insiders in the form of low-cost casino licenses and tax giveaways – money that could have been used to shore up a pension system that is now teetering on the brink of insolvency, says John W. Kindt, an emeritus professor of business and legal policy at the U. of I.

According to Kindt, all signs point to a number of new casinos sprouting up in the cash-strapped Land of Lincoln, including a long-sought-after “megacasino” to lure tourists in the heart of downtown Chicago.

“Considering the dire straits of the state’s finances and the Legislature’s attempts to curtail pension assets, I certainly wouldn’t bet against expanded casino gambling coming to the state of Illinois in the near future,” said Kindt, a senior editor of the United States International Gambling Report, a six-volume series released between 2008 and 2013.

An expansion of gambling is commonly seen as one way to increase revenue without raising taxes, but that line of reasoning “couldn’t be further from what reams of research tell us about the true costs of gambling,” said Kindt, the author of the 2013 book “The Gambling Threat to World Public Order and Stability: Internet Gambling,” the third in a series of three books on Internet gambling.

According to Kindt, more gambling is a recipe for continued economic stagnation.

“When you increase the opportunities to gamble, you’re creating more social problems, which likewise strain taxpayer dollars,” he said. “You’re also draining jobs away from the consumer economy. All of that money that could be used to buy big-ticket consumer goods – cars, appliances and electronics, for example – is being flushed down slot machines, video poker machines and, increasingly, the legal gray-area of Internet gambling. More blackjack tables and more roulette wheels don’t create jobs. They are job killers that also destroy the communities they’re located in.”

If the state of Illinois adds casinos, whether it’s one megacasino in Chicago or a competing proposal that would add another five new casinos throughout the Chicago suburbs and downstate, look for cronyism and mismanagement to continue, Kindt said.

“In Illinois, the first 10 casino licenses were each worth a fair market value of at least $500 million, but they were granted to political insiders for $25,000 per license – including one insider convicted in the Rod Blagojevich scandals,” Kindt said.

In 2015 dollars, those initial gambling licenses would be worth a total of more than $10 billion. Kindt notes that the 2015 Illinois budget had more than $110 billion in unfunded liabilities, “most of which is owed to teachers,” he said.

“The state of Illinois also has a backlog of overdue bills totaling nearly $6 billion, and a budget deficit of almost $1.6 billion in the current fiscal year,” Kindt said. “Before expanding gambling and raiding teachers’ earned benefits, the state should consider making existing gambling interests pay up.”

Kindt will testify tomorrow before the U.S. House Subcommittee on Crime, Terrorism, Homeland Security and Investigations on Internet gambling and the Wire Act of 1961. The hearing was prompted by the Department of Justice’s reinterpretation of the law, “which arguably resulted in a 180-degree reversal of the strictures against Internet gambling and spawned expanded gambling and legal confusion nationwide,” he said.

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