Taxing the gambling goose in Joliet, Ill.

JOLIET, Ill., June 24 (UPI) -- Fifteen years ago I took the old Route 66 from Chicago to Santa Monica, and of all the scary forsaken places on that highway -- and there are many -- the scariest

was Joliet, Illinois.

From the outside it looked like a dark, brooding, sinister

place, made creepier by the fact that the first major building

you encountered was the fortress-like Illinois State Prison. At

that time the prison was the town's whole identity. Shipping had

long since vanished from the Des Plaines River. The railroad that

once sustained it was little more than a whistle-stop for the few

commuters into Chicago. And the neighborhoods were full of old

rundown gothic houses -- was it my imagination, or did they all lean

to one side, like witches' lairs?

When I revisited the city lately, I doubted my own memory of

what it once looked like. The downtown slums are gone. The

condemned buildings have been replaced by government offices and

plazas. The street lamps are new, the roads paved smooth as

glass, and the residential neighborhoods look like a picture of

all-American middle-class dreamland.

Say all you want about casino gambling -- in this case it's

transformed a wasteland into a city. The Illinois legislature

approved casinos in the early 1990s, awarding 10 licenses for

riverboats in cities that were economically depressed. To give

you some idea of how bad off Joliet was, it was the only city to

get TWO licenses.

Unfortunately, the lawmakers couldn't leave good enough

alone. They taxed the casinos at a higher rate than any other

state, then raised taxes again, then raised them a month ago to

70 percent of revenues, double the rate of the next highest

state, an amount so obscene that they'll probably choke off much

of the good that's been done here. Wall Street has already

panicked over the tax and advised investors to stay away from

Illinois. Bonds have been downgraded for companies with exposure

to Illinois. All capital improvement projects at the existing

casinos have been canceled.

It's grim -- and Steve Marshall, Vice President of Marketing

at Harrah's in Joliet, says it might get grimmer.

"The people doing this have absolutely no business sense

whatsoever," he says. "We're a politically easy target, and the

state has a $5 billion budget deficit. But these are private

companies, with hundreds of millions of dollars invested in

Illinois. There's much more upside for the state in allowing us

to grow our businesses. (Gov. Rod) Blagojevich is out of

control. It's unhealthy for the industry, it's unhealthy for the

employees, and it's slowly killing the business."

This is not the sort of talk you normally hear from casino

executives, who tend to be diplomatic to a fault. Obviously this

is all-out war.

You get some sense of what effect the new taxes will have

when you walk through the cavernous pavilion that fronts the

Harrah's barge on the Des Plaines River. For the first seven

years of Illinois gambling, operators were limited to cramped

riverboats that had to actually cruise every two hours -- an

annoyance to customers and an enormous expense. In 1999 the

legislature approved dockside gaming, and in October 2001

Harrah's became the first Illinois casino to replace its

riverboat with a roomy spacious barge.

It was supposed to be the first step toward developing a

lavish landside pavilion full of restaurants, shops, hotel towers

and the like. But it's mostly just a big empty hallway. "It's

been downsized," says Marshall curtly. "Just cosmetic changes

now."

They did manage to complete construction on a 204-room hotel

that is definitely the finest lodging place for miles -- spacious

rooms with all the amenities and four high-roller suites. Ninety

percent of the rooms are given away to the casino's premium

players.

"Actually our objective," says Marshall, "is not to have a

single dollar cross the counter. We want ALL the rooms comped. We

want that many good players here all the time. The hotel gives us

a good competitive advantage over (crosstown rival) Empress. Our

hotel is on the level of a Wyndham, the upper scale of hotels.

Theirs is more like a Hampton Inn, and it's not even connected to

the casino."

(I've stayed in both hotels, and what he says is true.)

Joliet is probably the most competitive gambling market in

the state. Not only are there two casinos vying for each other's

business, but the city is just a 25-minute drive from the Indiana

state line, where four casinos are packed closely together in the

northwestern corner of the state, including another Harrah's in

East Chicago. Especially on weekends, many Illinois gamblers

would rather drive to Indiana, where there are no limits on the

number of slot machines. In Illinois, a casino can't have any

more than 1,200 "gaming positions," which is a formula that limits

slot machines to about 1,150 per property. Most Indiana casinos,

on the other hand, have at least 2,000, plus a lot more card and

dice tables.

"There's been a structural shift in the market," says

Marshall. "Indiana has had double-digit growth since last August.

We've taken it on the chin from them."

Faced with the inability to build new facilities, Harrah's

is forced back on that old standby known to casino managers

everywhere -- coddling and pampering the customer.

"Fortunately," says Marshall, "Harrah's has the customer

service edge, not just here but nationwide. As VP/Marketing, I

spend two hours a week devoted just to thinking about customer

interaction, trying to come up with more ways to make them happy.

We do a lot of customer service surveys. We try for continual

improvement, and we base everything on scores. Employees get

points for customer service, and bonuses are based on how well we

did."

The other thing Harrah's does, here as elsewhere, is flood

the mailboxes of people who have a "Total Rewards" frequent-

gambler card. The Harrah's computer database is so sophisticated

that they can target a customer according to his past habits,

offering him precisely the giveways most likely to cause him to

get in the car and drive to the casino.

"Our customer is typically 40 to 60," says Marshall, "and he

lives in the south and western suburbs of Chicagoland. He makes

six trips a year, and he samples ALL the casinos."

What he samples is less than luxurious. Chicago has the

third-largest gambling market in the country, after Las Vegas and

Atlantic City, but its casinos lag far behind states like

Mississippi and Louisiana, which have better hotels, classier

facilities, and a lot more restaurants and shopping areas.

Harrah's/Joliet is limited to one high-end restaurant, a steak

joint called Van Buren's, plus a sports bar and a 250-seat

buffet -- which is excellent, by the way.

They're also forced to limit the number of table games they

can offer. "Over time we've yielded the casino floor to the slot

machine," says Marshall. "It just pays more per square foot." The

result: only 38 tables. (The competing Horseshoe Casino in

Hammond, Indiana, by contast, has more than 100.)

Entertainment, too, is woefully lacking. A very small

lounge, called Sevens, is open on weekends only. And the casino

sponsors just two or three live entertainment events per year at

the nearby Rialto Square Theater, which seats 1,800. Usually the

shows run to no-name attractions like the "Wheel of Fortune"

contestant search, although they recently brought in Don Rickles

for their 10th anniversary, and B-level acts like Howie Mandel

have worked there in the past.

There are no bus programs -- too expensive. ("The taxes

prevent that.") There were plans for an additional hotel tower,

but those have been canceled. Ten years ago, when Joliet was back

on its heels, Harrah's was welcomed like the long-awaited

economic savior. But now that the city is rejuvenated, it's

Harrah's that's most likely to be enlisted on the welfare rolls.

*

E-mail Joe Bob Briggs, "The Vegas Guy," at [email protected] or

visit Joe Bob's Web site at www.joebobbriggs.com. Snail-mail:

P.O. Box 2002, Dallas, Texas 75221.

sidebar . . .

HARRAH'S JOLIET CASINO & HOTEL

151 N. Joliet St., Joliet, Ill.

Theme: Generic Slots o' Fun

Opened: 1993

Total investment: $130 million

Known for: Suburbanites with time on their hands

Marketing niche: Chicago day-trippers

Gambler's Intensity: Medium

Cocktail speed: Slow

Dealers: Friendly

Bosses: Personable

Tables: 38

Rare games: None.

Slots: 1,138

Rooms: 204

Surrounding area: Downtown Joliet, which is sparkly clean

but has seen better days. There's no nightlife to speak of

outside the casino.

Web site: harrahs.com/our_casinos/jol/

Overall rating: 56

Joe Bob's bankroll: Down $40 after an hour of "Monopoly":

total to date +149