2015 IL App (1st) 150547
Ill. App. Ct.2016Background
- Cook County enacted Ordinance No. 12-O-62 (Nov. 9, 2012) imposing registration, inspection, labeling, and annual per-machine taxes on "Gambling Machines" (defined to include Casino-style gambling devices and Video Gaming Terminals). Owners had to pay $1,000/year per gambling device and $200/year per video gaming terminal and affix a tax emblem before public use.
- Plaintiffs (Illinois Coin Machine Operators Ass’n and two terminal operators) operated licensed video gaming terminals in Cook County, registered and paid under protest, and sued for declaratory and injunctive relief challenging the Ordinance.
- Plaintiffs’ claims: (1) preempted by the Video Gaming Act (via incorporation of section 21 of the Riverboat Gambling Act), (2) outside Cook County’s home-rule authority (does not pertain to county government and affairs), (3) an impermissible occupation tax, and (4) an unconstitutional license-for-revenue.
- The trial court granted summary judgment to defendants (Cook County, Dept. of Revenue, Director), rejecting each plaintiff argument and upholding the Ordinance; plaintiffs appealed.
- The appellate court affirmed: held section 21 does not sufficiently or expressly deprive home-rule units of taxing power, the tax pertains to county government and affairs, subsection (7) of 55 ILCS 5/5-1009 authorizes this non-gross-receipts tax, and the ordinance is a tax (not an unlawful license-for-revenue).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption by Video Gaming Act (incorporating Riverboat Act §21) | §21 bars political subdivisions from imposing certain taxes on licensees; Video Gaming Act incorporated §21, so County tax is preempted | §21 is not sufficiently specific to restrict home-rule taxing power; even if applicable it was not enacted with the supermajority required to limit home-rule taxing power | Not preempted: §21 does not specifically and sufficiently limit home-rule taxing authority; County tax stands |
| Home-rule authority — whether the tax "pertains to" County government and affairs | State has primary, vital interest in gambling regulation/taxation; comprehensive state scheme means County cannot exercise home-rule power here | Power to tax is a core home-rule power; taxing machines within county pertains to local government and affairs | Tax pertains to County government/affairs; home-rule power to tax applies; Ordinance valid |
| Occupation tax | Tax targets gambling activity/occupation and is constitutionally prohibited absent legislative authorization | Tax is imposed on tangible machines (objects), not on services or occupation; alternatively it is authorized under Counties Code §5-1009(7) because it is not based on gross receipts or sales price | Not an impermissible occupation tax; even if characterized as such, §5-1009(7) authorizes this type of tax |
| License for revenue | Ordinance’s registration, labeling, emblems, penalties, inspections indicate a police-power licensing scheme raising revenue (forbidden if actually a license-for-revenue) | County exercised taxing power legitimately; enforcement provisions are common to taxing statutes and do not turn the tax into an unlawful license | Not a license-for-revenue; Ordinance is a valid exercise of taxing power, not an impermissible police-power revenue license |
Key Cases Cited
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (de novo review of summary judgment)
- Home Ins. Co. v. Cincinnati Ins. Co., 213 Ill. 2d 307 (summary judgment viewing evidence in favor of nonmovant)
- Paper Supply Co. v. City of Chicago, 57 Ill. 2d 553 (registration requirements do not automatically convert a tax into an unlawful license-for-revenue)
- Mulligan v. Dunne, 61 Ill. 2d 544 (broad home-rule taxing power under 1970 Constitution; taxing power essential to home rule)
- City of Chicago v. Roman, 184 Ill. 2d 504 (statute must expressly limit home-rule power to preempt local authority)