Cook County Wins Legal Battles Over Gaming Taxes

December 23, 2015

A recent Illinois Supreme Court decision will allow Cook County to collect about $3 million in unpaid taxes, as well as generate another $1 million in tax revenue annually from Midwest Gaming, owner and operator of Rivers Casino in Des Plaines.

Separately, a state Appellate Court affirmed Cook County’s legal right to tax area gambling machines.

The Supreme Court’s decision effectively ends a three-year battle over the legality of a Cook County video gambling tax approved by the Cook County Board of Commissioners in November 2012.

“We are pleased with the Supreme Court’s decision confirming our long-held belief that the County’s tax on video gaming machines is legitimate and lawful,” said Cook County Board President Toni Preckwinkle. “The revenue generated from the gambling tax will help provide important funding for critical public safety services to County residents.”

Following the Supreme Court’s denial of Midwest Gaming’s petition to appeal, the Cook County Department of Revenue (DOR) expects a one-time payment for outstanding taxes from 2013 and 2014, as well as what is owed this year for an approximate total of $3 million.

When the tax was originally approved in 2013, DOR staff met with Midwest Gaming representatives to review operations and establish initial estimates of machines. Soon after, Midwest Gaming filed suit in Circuit Court and through the hearing process, an agreement was reached that Cook County would not enforce the tax or issue citations for non-compliance while the case was in dispute. In exchange, Midwest Gaming agreed to pay unsettled taxes following the court’s final determination.

The anticipated annual gambling tax revenue is expected to be approximately $1 million based on the estimated number of machines on the premises. Under the County ordinance, the cost of decals for video gambling machines found in any casino based in Cook County is $1,000 while video poker machines that you would find in bars and restaurants is $200.

A separate recent Appellate Court decision affirmed a Circuit Court ruling granting summary judgment in a case brought by Illinois Coin Machine Operators against the County. Among the appeals court’s findings was that the County is not pre-empted by the Riverboat Gambling Act and the tax is within the County’s home rule powers.

Unlike Midwest Gaming, these terminal operators have been remitting the tax and purchasing decals all along. The tax decals for these machines are $200 per year, per machine and are expected to generate about $350,000 for 2015 and $400,000 for 2016.

“With legal proceedings concluded, the Department of Revenue has a clear mandate to enforce the Gambling Machine Tax,” said Cook County Department of Revenue Director Zahra Ali. “We remain committed to fairly administering the collection of all Cook County home rule taxes, fines and fees.”

In the case of Midwest Gaming v. the County of Cook, the Circuit Court found that the Gambling Machine Tax was pre-empted by the Riverboat Gambling Act and precluded by the Illinois Constitution. Cook County then appealed to the Illinois Appellate Court which in August reversed the Circuit Court on every count. Midwest Gaming filed its ultimately unsuccessful petition for leave to appeal that ruling with the Illinois Supreme Court. The Coin Machine Operators still have the right to appeal up to the Supreme Court.