Estimated proceeds from casino license too high?

BY MIKE RIOPELL
Lee News Service | Saturday, May 17, 2008

SPRINGFIELD | The process of selling Illinois' unused 10th casino license continues, and lawmakers are counting on the millions of dollars the sale is expected pump into the state's budget.

But as the economy suffers, smokers are kept off the riverboats and casino revenues drop, a top gaming expert says the state might not get as much as expected from the transaction.

Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada-Reno, said casino companies might not be as aggressive in paying for Illinois' 10th license as they were in 2004 when the license was last awarded for about $520 million.

"I think they would just be more cautious," Eadington said.

He said companies base their bids on several years of projected revenues. Because of the state's indoor smoking ban and general economic woes in the industry, those projections might be lower.

Illinois gambling revenues have dropped statewide in the first four months of the year by about 18 percent.

Eadington said casino companies have seen a "pretty significant crunch" in their profits, and the economic optimism seen during the last round of bids might not be around anymore.

"That optimism has been eroding certainly for the last 18 months," he said.

The 10th Illinois casino license is available because a plan to locate a riverboat in Rosemont fell through. And the license has been tied up in court proceedings for several years.

Gov. Rod Blagojevich's proposed budget -- which lawmakers likely will begin negotiating on in earnest next week -- estimated the state would receive $575 million from the license sale.

Blagojevich budget spokeswoman Kelley Quinn said Friday that $575 million is still the goal and that she doesn't think economic factors or the smoking ban would damage the bids.

"No, we do not feel that way at this time," Quinn said.

The Illinois Gaming Board controls how the casino license will be sold. Spokesman Gene O'Shea said the board is in the process of finding an investment banker that would help arrange how companies can bid for the license.

After that, bidding can begin. Lawmakers and Blagojevich are banking on the license being sold sometime in the next year.

"We're following the rules of the procurement process," O'Shea said.

Mike Riopell can be reached at mike.riopell@lee.net or (217) 789-0865.