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Illinois’ Sucker Bet Casinos

Illinois’ unfolding gambling strategy—scattering an ever-increasing number of casinos and slot machines around the state—has a big problem: The losers at the slots and blackjack tables are almost all locals, an approach that saps the state’s economy rather than expanding it.

Casinos in other states with large gambling industries—Nevada, New Jersey, even Indiana—draw most of their customers from elsewhere, making the business a net plus for the states’ economies.

“It’s not the local population that the (Las Vegas) casinos are living off of,” says Jane Pedreira, a gambling-market analyst at Lehman Bros. in New York. “It’s the international population.”

State legislators are considering adding four new casinos and 2,000 slot machines around the state, giving the Chicago area a total 26,000 gambling positions. That would make Chicago the third-largest gambling market in the country, behind No. 2 Atlantic City, which has 43,000 positions.

The new gambling positions would be spread across casinos and racetracks from Rockford to Country Club Hills, making it more convenient for local residents to gamble. But it wouldn’t create the kind of concentrated casino district that makes Las Vegas and Atlantic City destinations for gamblers from around the world.

“You’re not turning Chicago into a destination market. What makes a good destination market is that you can hit five casinos in a mile or 10 or 15 casinos in a mile,” says Eric Hausler, a gambling industry analyst at Susquehanna Financial Group in New York. “If you had to drive from Elgin to East Chicago (casinos), it would be a disaster.”

Adding new casinos and slots would boost gambling in Illinois, but wouldn’t bring much new money into the state. Dollars bet in the new Illinois casinos would otherwise have been spent in the state’s grocery stores, restaurants and movie theaters.

Atlantic City’s 12 casinos, clustered within walking distance of each other in the oceanside resort town, draw customers from a 200-mile radius that includes New York, Pennsylvania, Dela-ware, Maryland and Virginia. Las Vegas is an international destination for gamblers. Indiana positions casinos along its borders to attract gamblers from neighboring states.

Each of the Chicago area’s eight existing casinos, on the other hand, draws from a 50-mile radius. The proposed new casinos aren’t likely to have a longer reach.

Read the entire article at: Chicago Business 

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