Midwest Gaming and Entertainment, LLC v. The County of Cook
39 N.E.3d 286
Ill. App. Ct.2015Background
- Cook County enacted Ordinance No. 12-O-62 (Gambling Machine Tax Ordinance) imposing registration and an annual per-machine tax ($1,000 for casino "gambling devices," $200 for "video gaming terminals") and requiring emblems, labeling, inspections, and penalties for noncompliance.
- Midwest Gaming (Rivers Casino owner) filed suit seeking declaratory and injunctive relief, registering machines under protest and challenging the ordinance as: preempted by the Riverboat Gambling Act; an unconstitutional occupation tax; an unlawful "license for revenue"; and a violation of the uniformity clause.
- Trial court granted plaintiff summary judgment on all four counts and issued a permanent injunction enjoining enforcement of the tax against all taxpayers.
- Cook County appealed, arguing the ordinance (1) was not preempted, (2) was authorized by 55 ILCS 5/5-1009 (counties code), (3) was a valid tax (not a license for revenue), and (4) did not violate uniformity because gambling devices and video gaming terminals differ in revenue and use.
- The appellate court reversed: it held the Riverboat Gambling Act did not expressly preempt county taxation of gambling machines, found the statute did not specifically limit home-rule powers, concluded the county tax fell within the Counties Code authorization (subsection permitting "other taxes not based on *selling or purchase price or gross receipts"), rejected the "license for revenue" characterization, and upheld the ordinance under the uniformity clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption by Riverboat Gambling Act | Section 21 bars any political subdivision from imposing excise/license/occupation taxes on licensees, so county tax is preempted | Riverboat Act lacks the explicit language required to limit home-rule taxing power; statute is not specific enough to deny home-rule authority | Not preempted: statute does not specifically limit home-rule taxing power; county tax survives |
| Constitutional occupation tax (Art. VII §6(e)) | Tax is an occupation tax targeted at licensed gambling and thus prohibited for a home-rule county | Even if it is an occupation tax, 55 ILCS 5/5-1009(7) authorizes counties to impose "other taxes not based on selling or purchase price or gross receipts" | Not an impermissible occupation tax as county is authorized by 55 ILCS 5/5-1009(7) |
| License for revenue | Ordinance’s registration, emblem, labeling, inspection and penalty features show it is a regulatory license used to raise revenue | Those enforcement features are common in taxing measures and do not convert a tax into a police-power license for revenue | Not a license for revenue: features are enforcement/collection mechanisms, not regulation in guise of taxation |
| Uniformity clause (Art. IX §2) | Two-tier rate ($1,000 vs $200) arbitrarily discriminates between similar machines and lacks factual support | Distinction is based on real, substantial differences (revenue per machine and typical location/use) and reasonably relates to the tax’s objective | Constitutional: classification is based on substantial revenue/use differences and reasonably relates to legislative objective |
Key Cases Cited
- Town of Cicero v. Fox Valley Trotting Club, 65 Ill. 2d 10 (Ill. 1976) (tax power distinct from regulatory preemption; local amusement can be taxed despite comprehensive state regulation)
- Paper Supply Co. v. City of Chicago, 57 Ill. 2d 553 (Ill. 1974) (tax ordinance with registration and penalties is not necessarily a license-for-revenue)
- Rozner v. Korshak, 55 Ill. 2d 430 (Ill. 1973) (distinguishing legitimate taxing measures from improper police-power licensing for revenue)
- Jacobs v. City of Chicago, 53 Ill. 2d 421 (Ill. 1972) (tax enforcement penalties do not convert taxes into licenses for revenue)
- Empress Casino Joliet Corp. v. Giannoulias, 231 Ill. 2d 62 (Ill. 2008) (classification for tax purposes upheld where substantial revenue differences justified distinction)
- Palm v. 2800 Lake Shore Drive Condominium Ass’n, 2013 IL 110505 (Ill. 2013) (home-rule preemption requires specific legislative language; statutes constraining home rule must be explicit)