Midwest Gaming & Entm't, LLC v. Cnty. of Cook

• Decision Date: 21 August 2015
• Docket Number: No. 1–14–2786.,1–14–2786.
• Citation: 39 N.E.3d 286
• Parties: MIDWEST GAMING AND ENTERTAINMENT, LLC, Plaintiff–Appellee, v. The COUNTY OF COOK, The Cook County Department of Revenue, and Zahri Ali, as Director of the Cook County Department of Revenue, Defendants–Appellants.
• Court: United States Appellate Court of Illinois

39 N.E.3d 286

MIDWEST GAMING AND ENTERTAINMENT, LLC, Plaintiff–Appellee

v.The COUNTY OF COOK, The Cook County Department of Revenue, and Zahri Ali, as Director of the Cook County Department of Revenue, Defendants–Appellants.

No. 1–14–2786.

Appellate Court of Illinois, First District, Fifth Division.

Aug. 21, 2015.

Lewis Brisbois Bisgaard & Smith LLP, of Chicago (James B. Tobin, of counsel), for appellants Russell A. Kleppe and Kiswani Trucking, Inc.

Knight Hoppe Kurnik & Knight, Ltd., of Rosemont (Elizabeth A. Knight and Michael J. Atkus, of counsel), and Grant & Fanning, of Chicago (Patrick J. Fanning, of counsel), for appellant Transfreight, LLC.

Corboy & Demetrio, P.C., of Chicago (Philip Harnett Corboy, Jr., and Matthew T. Jenkins, of counsel), for appellee.

OPINION

Justice GORDON delivered the judgment of the court, with opinion.

¶ 1 The instant appeal arises from the trial court's grant of summary judgment in favor of plaintiff Midwest Gaming and Entertainment, LLC, the owner and operator of Rivers Casino in Des Plaines, which operated to strike down the Cook County Gambling Machine Tax Ordinance (the Tax Ordinance) (Cook County Ordinance No. 12–O–62 (approved Nov. 9, 2012)). The trial court found that the Tax Ordinance: (1) was preempted by the Riverboat Gambling Act (230 ILCS 10/1 et seq. (West 2012)), (2) constituted an impermissible tax upon occupations in violation of the Illinois Constitution, (3) constituted an impermissible license for revenue in violation of the Illinois Constitution, and (4) violated the uniformity clause of the Illinois Constitution. Defendants, the County of Cook, the Cook County Department of Revenue, and the Director of the Cook County Department of Revenue (collectively, the County), appeal and, for the reasons that follow, we reverse.

¶ 2 BACKGROUND

¶ 3 I. Tax Ordinance

¶ 4 On November 9, 2012, the County enacted the Tax Ordinance, which imposed registration and tax requirements on “Gambling Machines” displayed for play or operation by the public within the County. “Gambling Machines” were defined as either a “Gambling Device” as defined by the Tax Ordinance or a “video gaming terminal” as defined by the Video Gaming Act (230 ILCS 40/5 (West 2012) ). Cook County Ordinance No. 12–O–62, § 74–626 (approved Nov. 9, 2012). A “Gambling Device” was defined by the Tax Ordinance as “a machine or mechanical, electrical, or electronic device utilized in or primarily designed for gambling, and includes any clock, tape machine, slot machine, video machine, or other machine, for the reception of money or other thing of value on chance or skill is staked, hazarded, bet, won or lost, but does not include gambling devices excepted from the Illinois Criminal Code, 720 ILCS 5/28–2(a)(1) through 5/28–2(a)(4) or video gaming terminals, as defined in the Illinois Video Gaming Act, 230 ILCS 40/5.” Cook County Ordinance No. 12–O–62, § 74–626 (approved Nov. 9, 2012). A “Video Gaming Terminal” was defined by the Tax Ordinance nearly identically with its definition in the Video Gaming Act, and was defined as “any electronic video game machine that, upon insertion of cash, is available to play or simulate the play of a video game, including, but not limited to, video poker, line up, and blackjack, utilizing a video display and microprocessors in which the player may receive free games or credits that can be redeemed for cash and as further defined under the Video Gaming Act, 230 ILCS 40/5. The term does not include a machine that directly dispenses coins, cash, or tokens or is for amusement purposes only.” Cook County Ordinance No. 12–O–62, § 74–626 (approved Nov. 9, 2012). Thus, according to the Tax Ordinance, a slot machine at a casino would be a typical gambling device, while a video poker machine at a bar or restaurant would be a typical video gaming terminal. Both machines would be considered gambling machines.

¶ 5 Under the Tax Ordinance, all owners of gambling machines to be played or operated by the public at any place in the county, and those people currently displaying gambling machines to be played or operated by the public at any place owned or leased by them, were required to register with the County's Department of Revenue that they owned or displayed such gambling machines by June 21, 2013. Cook County Ordinance No. 12–O–62, § 74–627(a) (approved Nov. 9, 2012). Additionally, the Tax Ordinance imposed a tax upon each gambling machine that was displayed by a person for play or operation by the public in the county (the tax). Cook County Ordinance No. 12–O–62, § 74–628 (approved Nov. 9, 2012). The Tax Ordinance imposed separate tax rates for gambling devices and video gaming terminals. For gambling devices, the Tax Ordinance imposed an annual tax of $1,000 per gambling device, while for video gaming terminals, the Tax Ordinance imposed an annual tax of $200 per video gaming terminal. Cook County Ordinance No. 12–O–62, § 74–628(a), (b) (approved Nov. 9, 2012). Both subsections provided that “said tax shall be paid by the owner.” Cook County Ordinance No. 12–O–62, § 74–628(a), (b) (approved Nov. 9, 2012).

¶ 6 Before any gambling machine was made available for use by the public, the owner was required to remit the tax due to the Department of Revenue, after which the director would issue a tax emblem to be affixed to the gambling machine as evidence of the payment. Cook County Ordinance No. 12–O–62, § 74–629 (approved Nov. 9, 2012). The Tax Ordinance provided that “[n]o owner or person shall make a Gambling Machine available for play or operation by the public in the county unless (1) the tax has been paid on said Gambling Machine and is evidenced by the tax emblem conspicuously affixed to the Gambling Machine; and (2) the Gambling Machine is plainly labeled with the name, address and telephone number of the person displaying the Gambling Machine for play or operation by the public, and such information as may be required by the director through policy, procedure, rule, or form.” Cook County Ordinance No. 12–O–62, § 74–629(c) (approved Nov. 9, 2012).

¶ 7 The Tax Ordinance provided that it was unlawful for any owner or person to display a gambling machine for play or operation by the public within the county unless (1) the owner of the gambling machine and the person displaying it registered with the Department of Revenue; (2) the tax was paid and was evidenced by the presence of the tax emblem conspicuously affixed to the gambling machine; and (3) the gambling machine was labeled with the name, address, and telephone number of the owner of the gambling machine. Cook County Ordinance No. 12–O–62, § 74–634(a) (approved Nov. 9, 2012). If, at any time, a gambling machine did not bear the tax emblem, the owner of the gambling machine and the person displaying the gambling machine would be jointly and severally liable for a fine of $1,000 for a first offense and $2,000 for any subsequent offense. Cook County Ordinance No. 12–O–62, § 74–634(a) (approved Nov. 9, 2012). The Tax Ordinance provided that “[e]very day such violation continues shall constitute a separate and distinct offense.” Cook County Ordinance No. 12–O–62, § 74–634(a) (approved Nov. 9, 2012).

¶ 8 The Tax Ordinance provided that representatives of the County's Department of Revenue “shall be permitted to inspect any premises for the display of Gambling Machines” (Cook County Ordinance No. 12–O–62, § 74–636 (approved Nov. 9, 2012)) and further provided that “[i]t shall be unlawful for any owner or person to prevent, or hinder a duly authorized Department representative from performing the enforcement duties provided in this article” (Cook County Ordinance No. 12–O–62, § 74–636 (approved Nov. 9, 2012)). Finally, the Tax Ordinance provided that “[t]he department [of revenue] shall enforce this article and the Sheriff and the Sheriff's Police are authorized to assist the Department, in said enforcement, including issuing citations hereunder.” Cook County Ordinance No. 12–O–62, § 74–639 (approved Nov. 9, 2012). The Tax Ordinance also gave rulemaking authority to the Department of Revenue, providing that “[t]he department may promulgate policies, procedures, rules, definitions and forms to carry out the duties imposed by this ordinance. As far as practicable in accordance with the purposes of this ordinance, such procedures, regulations, rules, policies, and forms shall be consistent with the practices of the Gambling Machine industry.” Cook County Ordinance No. 12–O–62, § 74–637 (approved Nov. 9, 2012).

¶ 9 The parties agree that the Tax Ordinance became effective on June 1, 2013. However, the parties “agree[d] to a Standstill of the tax at issue” until “the merits of this case are finally resolved.”

¶ 10 II. Complaint

¶ 11 On June 27, 2013, plaintiff filed a verified complaint for injunctive relief and for declaratory judgment. Plaintiff alleged that it was the owner and operator of Rivers Casino in Des Plaines, Illinois, and was the only licensed casino operator in Cook County. Plaintiff registered over 1,000 machines pursuant to the Tax Ordinance under protest, and sought an injunction to bar the application and enforcement of the Tax Ordinance. Plaintiff argued that the County did not have the authority to impose the tax because (1) the Riverboat Gambling Act prohibited the imposition of such a tax, (2) the tax was an impermissible “occupation tax” (Ill. Const. 1970, art. VII, § 6 (e)), (3) the tax was a “license for revenue” prohibited by the Illinois Constitution (Ill. Const. 1970, art. VII, § 6 (e)), and (4) the tax was unconstitutional because it did not treat all gambling machines uniformly (Ill. Const. 1970, art. IX, § 2 ). Accordingly, plaintiff sought “injunctive relief barring Cook County from enforcing this tax and from otherwise improperly interfering with [plaintiff's] lawful operations.”

¶ 12 Count I of the complaint alleged that the Riverboat Gambling Act gave exclusive jurisdiction to the Illinois Gaming Board and that the Tax...