Remember the 2005 Kelo v. City of New London Supreme Court decision, in which private property was confiscated by local government for outright redistribution to private developers, despite the Fifth Amendment’s explicit requirement that private property only be confiscated for “public use?”
Or what about Maryland’s infamous “Wal-Mart Law,” when the state legislature made headlines by specifically targeting Wal-Mart and requiring it to spend fully 8% of its payroll on health benefits?
Well, in Illinois, the state legislature and state Supreme Court have failed to learn from both the Kelo and the Wal-Mart debacles, and have confiscated profits from four specific casinos for redistribution to five private, failing horse racing tracks in the state.
Maryland’s Wal-Mart law was fortunately vetoed by former Republican Governor Robert Ehrlich, and also struck down by a federal judge. The Kelo decision so outraged citizens and legislatures across the country that they reacted by requiring that public takings occur only for true public uses like roads, hospitals or police stations.
In Illinois, however, citizen outrage and grassroots mobilization will be required to reverse their state’s bald abuse of governmental power.
The 2006 Illinois law in question imposes a 3% surcharge on four of the state’s nine casinos, and steers the proceeds toward five unprofitable horse racing tracks. Illinois’s five other casinos were conveniently excused from the profit surcharge, simply because they weren’t as profitable and therefore couldn’t provide as many golden eggs for redistribution.
In other words, Illinois legislators decided in their wisdom to punish the success of popular casinos in order to prop up a withering industry. This is no different than Chicago specifically targeting the Bears and Cubs, and confiscating their profits to prop up a professional soccer team.
Like the United States Constitution, however, the Illinois Constitution prohibits this type of confiscation from one private group to another private group. According to the Illinois Constitution, “private property shall not be taken or damaged for public use without just compensation as provided by law.” It also provides that “public funds, property or credit shall be used only for public purposes.”
Accordingly, the targeted casinos sued in state court, correctly contending that the surcharge illegally amounts to taking profits from private parties, and using them for the benefit of favored private parties. The casinos noted that the primary intended beneficiaries of the 3% surcharge were five private horse track owners, not the public at large.
The casinos also correctly alleged that the statute violated the Illinois Constitution’s Uniformity Clause, because it taxes four casinos but not five other identical casinos, as well as the state and federal Due Process and Equal Protection Clauses. Finally, the casinos pointed to a report that concluded that the decline in racetrack wagering was due principally to such things as off-track betting, Internet betting services, telephone account wagering and interactive television, rather than casino gambling.
The state circuit court agreed, and invalidated the surcharge, ruling that contravened the Illinois Constitution.
Applying the same flawed logic that outraged the entire nation in Kelo, however, the Illinois Supreme Court overturned the lower court and upheld the confiscatory surcharge. As in Kelo, it ruled that “the principal purpose of the Act is a public one: to stimulate economic activity, including the maintenance of jobs and the attraction and retention of sports and entertainment, particularly betting on horse racing.” The Court further held that, “the ultimate result of the surcharge will encourage an increase in industry in this state, including farming, breeding, and training, will stimulate commercial growth, and will revitalize an economically stagnant industry.” On this basis, it ruled that “we conclude that the Act does, in fact, serve a public purpose.”
Absent in the Court’s logic, however, is a recognition that while the proceeds might speculatively benefit the horse track industry in these ways, it would at the same time have the opposite effect of punishing the many state industries and employees associated with the casino industry.
Ironically, the statute authorizing the casinos themselves was enacted as recently as 1990. This statute thus recalls Ronald Reagan’s adage that, “if it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it.”
As a result, it is now incumbent upon Illinois citizens to do the job that the state Supreme Court shirked in upholding this law. Casinos are not to blame for five racetracks’ sagging fortunes, and private profits should not be confiscated to subsidize another politically-favored industry.June 12, 2008
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