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The combination has some lawmakers, casino executives, and state economic officials questioning the long-term effects of the tax hikes and the state's growing reliance on gambling to balance its budget.

Starting July, the state imposed new tax rates. Casinos now pay 50 percent of all winnings over $100 million. Before July, that rate had not kicked in until $200 million. The tax rates go up the more the venues make.

Gov. Rod Blagojevich, the architect of the tax increases, remains optimistic he'll get the dollars needed to help wipe out a nearly $5 billion deficit.

A comparison of July 2003 to July 2002 shows the new taxes brought in an additional $6.6 million for the state. However, the state gambling reports for last month also show sizable drops in visitors throughout the industry. For example, Hollywood Casino in Aurora reported a 46.5 percent decline in attendance last month compared with July 2002. Joliet Harrah's reported a 16.4 percent drop over the same months. In Elgin, the decline was 9.45 percent.

Revenues dropped, too. Aurora revenues were down almost 30 percent last month compared with July 2002. Harrah's Joliet reported a 16 percent revenue drop. In Elgin the decline from one July to the next was 6.38 percent. Of the Chicago-area casinos, only the Joliet Empress posted gains. Its admissions increased less than 1 percent last month compared with July last year while its revenues increased 6.41 percent.

The gambling industry blames Blagojevich's tax increases and fears it will only get worse. Still out there is the 70 percent tax rate on all profits over $250 million. Soon the Grand Victoria in Elgin could be sending 70 cents of every dollar it makes to the state - the highest gambling tax in the nation. As of July the Grand Victoria has posted more than $220 million in revenues.

Industry executives said the tax hikes forced riverboats to look for ways to slash costs and raise money elsewhere. Those moves may be partially to blame for reduced attendance and revenues.

However, gambling opponents accuse the industry of bluffing economic hardship, saying the casinos continue to rake in millions each month. Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling, claims the industry is playing the states against each other to better its own bottom line.

Indiana recently went to dockside gambling to match Illinois' move of 1999, which followed dockside gambling in Iowa. Illinois lawmakers proposed sweeping gambling expansion this spring only to have Blagojevich say he wouldn't consider it.

An Illinois Economic and Fiscal Commission analyst recently expressed concerns that a disturbing trend may be developing in the riverboat industry. Last year, the state's take from casino taxes increased 22.8 percent while casino revenues dropped nearly 2 percent. The state reports issued Thursday are the first indications this trend may continue.

State revenue analyst Eric Noggle said the dip could be caused by increased competition in neighboring states or simply the novelty of dockside gambling wearing off. A state report looking into the trend is expected in September.