Will Illinois resort to 'If you can't stop 'em, tax 'em' again?

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Will Illinois resort to 'If you can't stop 'em, tax 'em' again?
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Recent news that the Illinois State Lottery's revenue has gone wobbly got me thinking about Prohibition.

Everybody knows how the U.S. addressed the scourge of liquor with a constitutional amendment that outlawed it, beginning in 1920. Many ignored the provision and thus enriched gangsters like Illinois' own Al Capone, who provided the supply.

While the crooks were slaking America's thirst, they also were draining America's treasury, which spent substantial sums trying to stop them.

In 1933, Prohibition was repealed. Somewhere along the line was born an enduring axiom of government: "If you can't beat 'em, tax 'em." And tax 'em they did.

According to the latest figures I can find, the federal government puts a $13.50 tax on a gallon of distilled spirits, and Illinois adds $8.55 more. Various proofs and products vary.

Unable to compete legally, the Capone types did not disappear but turned to other outlawed vices, like gambling.

One very popular form was known as the "numbers" or "policy" game. Players placed small bets with neighborhood bookies in the hope of large returns. Winning numbers were pegged to the last three digits of the U.S. Treasury balance published in the next day's newspaper, or perhaps particular horse race results.

By 1964, states were turning to the "tax 'em" approach to run out the hooligans and make money at the same time. Illinois followed 10 years later. Convenience stores became legalized bookies, and the selection of winning numbers from labeled pingpong balls was televised live.

Of course, the lottery was barely gambling. It wasn't like the hard-core evil of high-stakes table games and relentless slot machines run by mobsters in illicit private clubs.

Emil Toffant, the gang-busting Illinois State Police captain of 1950s and '60s fame, used to regale me with tales of raids that made the front pages, and tell how officials used to destroy confiscated equipment.

But why ax what you can tax? The folks in Springfield authorized the Alton Belle in 1991 as the state's — and St. Louis region's —first legal casino. It would be a tourist draw, proponents promised, with a loss limit to protect those tourists from getting carried away. Funny thing. In the final version, lawmakers forgot to include that loss limit.

So what does all this have to do with a wobbly lottery?

Well, in the first four months of fiscal 2012, its revenue was down $6 million from the same period of fiscal 2011. For that matter, casino revenue is wobbly, too, with adjusted gross receipts falling about 31 percent since fiscal 2007.

The roughly $1 billion in Illinois state revenue from all forms of gambling in fiscal 2011 was down almost 3 percent from the year before, and the lowest since 2001, according to a legislative report called Wagering in Illinois.

Yet there's still talk of trying to fight Illinois' budget crisis by authorizing more casinos. Anybody want to open a new service station in a town where gas sales are off 31 percent in four years? Good luck with that.

So how long will it be before today's desperate political leaders bring back the "if you can't beat 'em" strategy? Are there any popular vices left to legalize and tax?

I see two.

One is prostitution. It's a touchy subject, even in Nevada, where brothels have been permitted in some communities since 1971. Participating counties charge up to $100,000 a year for a license, but lawmakers have so far resisted the temptation to impose a state tax. In 2009, they rejected a proposal to take a cut of $5 per, uh, transaction.

The other is marijuana smoking. It certainly would face moral and federal statutory obstacles. But — and you may not know this — Illinois already put a tax on it, requiring that a dealer purchase a $10 stamp for every gram. Of course, it's also illegal to sell the stuff if you do have a stamp. (The law was intended to add tax evasion to a drug charge, but the Illinois Supreme Court eventually overruled that as double jeopardy.)

Go ahead and laugh and say that Illinois will never legalize prostitution or marijuana. In the short term, I'm sure you're right. But there's nary a chuckle anymore from the people who once said the same thing about liquor and gambling.

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