Wednesday, Feb. 16, 2005 | 9:36 a.m.
CHICAGO -- Millions of dollars worth of construction and untold numbers of jobs have been on hold for months because Gov. Rod Blagojevich has failed to fill vacancies on the state board that oversees gambling.
Since August, the vacancies have prevented the remaining two members of the Illinois Gaming Board from moving forward on several issues simply because they lack a quorum -- the board must have at least three members to take any action.
The impact:
"It's, to say the least, frustrating," said Gary Thompson, spokesman for Harrah's Entertainment, the parent company of Harrah's Metropolis Casino, which wants to build a hotel and entertainment complex near its casino at the southern tip of Illinois.
"We want to invest money in that market. We want to create jobs. We want to serve our customers better. All of that ends up adding revenues to the state," Thompson said. "It's very difficult to understand why it's so hard to fill out a board that regulates an industry that generates tax revenues. It would seem that something like that would be a priority."
Blagojevich spokeswoman Cheryle Jackson said the administration has had a hard time finding qualified candidates willing to serve.
The governor knocked heads with the board last year, saying the public couldn't trust its actions after board members approved allowing a casino in Rosemont over the objections of their own staff. Previous board members in 2001 had opposed a Rosemont casino, citing allegations of connections to organized crime. The village of Rosemont contends there are no such connections.
"Right now the priority is finding the right candidates to appoint to the Gaming Board," Jackson said. "It's more important that the public be able to trust decisions made about casinos, whether it's awarding a license or approving construction projects, than it is to react to individual requests from casinos."
The five-member Gaming Board already had one vacancy when two members resigned in August.
Remaining members Gary Peterlin and William Dugan, whose terms expire July 1, still conduct unofficial meetings open to the public about twice a month. They issue agendas and discuss various issues, such as their frustration with Blagojevich for not appointing new members or the problems facing the casinos that want to expand. But without a quorum, they cannot take action.
The Gaming Board usually dealt with license renewals or expansion issues quickly, Peterlin said.
"To have these delays isn't fair to the industry, which is regulated by the state, heavily taxed and very important economically not only to the state but the local communities in which they operate," he said.
In 2003, the latest year for which figures were available, the state's share of casino taxes was $617.8 million, about an 11 percent increase over the $555.7 million collected by the state in 2002.
Total adjusted gross receipts for 2003 were $1.7 billion, which was about a 6.6 percent decrease from $1.83 billion in 2002. Admissions in 2003 were down also, with nearly 16.6 million patrons going to Illinois casinos that year compared with 18.8 million in 2002.
Harrah's Metropolis has proposed building a $62 million hotel and entertainment complex that is expected to create 300 construction and 115 permanent jobs and generate about $1.2 million in additional property taxes for Metropolis and Massac County.
The city of Metropolis agreed to build a $4 million electric substation to supply electricity to the new complex. The city is preparing to issue bonds to pay for it, but Mayor Beth Clanahan fears the city will not be able to pay them off unless it gets additional tax revenue from the complex.
"The delay is putting the city of Metropolis, a small, rural community, in financial jeopardy and could put an additional tax burden and increased utility rates on all our residents," Clanahan wrote last month in a letter to Blagojevich.
In Rock Island, Jumer's Casino Rock Island has proposed a $90 million project for a new casino, hotel and multi-use performance space. The casino is finishing work to prepare the construction site but is otherwise stalled until the Gaming Board considers its plans.
"When you obviously get this close, only to be in this situation where there is no one there to make the decision, there is a level of frustration," said Bill Renk, vice president of sales and marketing.
The Casino Queen in East St. Louis is awaiting board approval on a $150 million project to build a new facility in the existing casino's parking lot, as well as additional hotel rooms, an entertainment facility and parking garage, said Paul Zemitzsch, casino spokesman.
License renewals also are being held up by the vacancies. By the end of February, licenses for four casinos will have expired. But the casinos continue to operate pending renewal.
"Although they may continue to operate, we are placed at the disadvantage of not being able to discuss with them or work out with them any areas that we feel need attention," Peterlin said.
Two casino operator mergers also could be threatened. MGM Mirage Inc. in June agreed to buy Mandalay Resort Group for nearly $5 billion. The merger cannot take place without the Gaming Board's approval because Mandalay runs the Grand Victoria Casino in Elgin, said Tom Swoik, executive director of the Illinois Casino Gaming Association.
Also, Penn National Gaming Inc. announced in November it is acquiring Alton, Ill.-based Argosy Gaming Co. for $1.4 billion. Argosy runs the Alton Belle in Alton and the Empress Casino in Joliet.
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