Elgin’s Grand Victoria, 3 other casinos lose racetrack tax challenge

• Reprints

Updated: August 4, 2011 4:20PM

A state appellate court again has upheld a decision by a Will County court to dismiss a lawsuit against the state by four northern Illinois casinos, including the Grand Victoria in Elgin.

The casinos — Empress Casino Joliet Corp.; Des Plaines Development Limited Partnership, which owns Harrah’s Casino Cruises Joliet; Hollywood Casino-Aurora; and Elgin Riverboat Resort-Riverboat Casino, which owns the Grand Victoria Casino — had argued that a state law requiring them to give 3 percent of their adjusted gross receipts to the state’s horse racing tracks was unconstitutional.

According to the appellate court opinion, Public Act 95-1008 was signed into law in December 2008. The law required the state’s riverboat casinos to pay 3 percent of their earnings into the Horse Racing Equity Trust Fund on a daily basis for a three-year period, to be distributed to the horse racing tracks in the state for various purposes.

Casinos with annual earnings less than $200 million were exempt from the tax.

In passing the act, the state legislature found that riverboat gambling had damaged the horse racing industry in the state by luring away gambling dollars and that the 3 percent tax was necessary to reverse the damage. Of the nine riverboats in the state, only four had earnings over $200 million in 2004 or 2007, the opinion said. Those casinos — the plaintiffs in the case — were all in the northern portion of the state.

In January 2009, the four casinos filed a suit challenging the constitutionality of the 2008 law. They paid the tax under protest but sought a permanent injunction against the collection of the 3 percent tax.

The state defendants — former Treasurer Alexi Giannoulias and the Illinois Racing Board — and the racetracks filed motions to dismiss the complaint, saying there was no legal merit to the casinos’ claims. The Will County trial court granted the motion to dismiss, but the casinos appealed.

The appellate court said, “Our role in this case is to determine if the 2008 Act is constitutional,” and according to the opinion, it is, and the judges “affirm the judgment of the circuit court of Will County.”