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Video gambling brings in cash for state, municipalities, bars

Published: Sunday, Oct. 13, 2013 5:30 a.m. CDT • Updated: Friday, Dec. 27, 2013 8:50 a.m. CDT
Caption
(Lathan Goumas - lgoumas@shawmedia.com)
The video gambling area seen from the bar at Hermann's Rest-a-While in Port Barrington, Ill. on Thursday, Sept. 26, 2013.

Three to four times a week, Ron Thornton, 44, of Oakwood Hills, sits in front of a video gaming terminal to play video poker at Hermann’s Rest A While Bar and Grill in Port Barrington with about $100 to $200 to deposit into the machine.

“When I’m winning, I’m coming more,” Thornton said.

On one day, he had two hands where he hit the maximum prize of $500, along with an additional turn where he won a $250 prize.

When he was done playing, Thornton printed a receipt from the terminal for $1,200.

“I was on fire,” he said. “There was no doubt about, it was my best day ever.” 

Since video gambling went live throughout the state in October, however, Thornton says he’s not ahead.

“You can’t win in the long run,” he said. “You’re just going to lose if you play a lot. It’s built into the system.”

For the past year, video gambling has served as a revenue source for the state’s 2009 Illinois Jobs Now! capital program. When including the state’s three-week testing period in September of last year through the month of August, people have inserted $614 million into the video gaming terminals. So far, $438 million has been cashed out to gamblers.

The rest of the money, about $175.7 million, has been split among the owners of the establishments with terminals, video gaming operators, the state, and municipalities where video gambling is allowed.

Inside of Hermann’s Rest A While, there are five video gambling terminals, the maximum allowed for an establishment.

Hermann’s was one of the test locations for the state before the Illinois Gaming Board went live with video gambling in places that serve alcohol, truck stops, and fraternal and veterans establishments.

For bar owner Wayne Krcmar, the five terminals have been a financial windfall.

Since September of last year, his bar has brought in $75,000 from video gambling. 

“I absolutely love it,” Krcmar said. “It’s wonderful; there’s never been a hassle, no problems.”

The money, which Krcmar keeps in a separate account from revenue for food and drinks, has helped pay for a new roof on his building, a walk-in cooler and beer vending system, a flat-screen television behind the bar, and new flooring, he said.

Those investments cost about $17,000. He also used the money to pay his property-tax bill this year.

“Any cities that don’t have it should have it,” Krcmar said. “It hasn’t brought in riffraff, and we haven’t had any problems. It’s an asset.”

More and more establishments are looking to add terminals. As of Sept. 20, more than 1,800 places around the state have applications pending with the state gaming board. The owners of those establishments have to go through criminal background checks and get fingerprinted, said Gene O’Shea, spokesman for the gaming board.

Marcy Paschky, the bar manager at Hermann’s, said the terminals serve as entertainment for the customers.

She said there are people from towns that don’t have video gambling who come to Hermann’s.

“The people who want to gamble are finding a place to do it,” Paschky said. “Apparently people had money, they’re paying it in. ... They’re liking this. They’re coming out to do it. And now there’s enough to go around.”

Bars and restaurants also have to compete for customers’ food and drink dollars.

“People aren’t out as much, [and] aren’t drinking as much when they are out,” Paschky said. “You have to do more and more to draw them in. Hire a band, hire a karaoke. Things cost more and more to get them in the door.”

The amount of money being generated by the video gaming terminals has led to a push this year from business owners in towns where video gambling initially was banned.

Algonquin, which at first didn’t allow the terminals in the village, permitted them after a six-month review of video gambling in other communities. Money the village receives from the terminals is slated to be used for parks and recreation capital improvements in the village, said Mike Kumbera, assistant to the village manger.

Cary is considering whether to allow video gambling within its borders. The village decided in 2010 to ban the revenue source.

“It was new at the time, we didn’t have any history or data to make a decision on what would be in the best interest for the village of Cary,” said Village President Mark Kownick, who was a trustee at the time. “It was the fear of the unknown.”

Kownick said now he is on the fence about video gambling.

Cary could have six or seven establishments with the terminals if the Village Board decided to permit video gambling, Kownick said. Those establishments have asked the Village Board to reverse its position on video gambling.

“When an establishment wants something, you want to make sure they have everything to help them succeed,” Kownick said. “If our establishments came to us and said, ‘I want to have video gambling to enhance our company, to enhance the draw to my establishment [for] people who are waiting for something to do,’ I would have bought into that a lot sooner.”

As for how the village would use the revenue if it allowed video gaming, that has yet to be determined, but Kownick doesn’t see video gambling as helping balance a budget.

“I’m not looking at some of these novelty items to offset some of our costs,” Kownick said. “That could go away. I want to build long-sustaining revenue sources for the village of Cary.”

Lake in the Hills was one of the first towns to allow video gambling, well before the machines were set up and went live. 

“The wave of gambling was coming,” Village Administrator Gerald Sagona said.

Since video gambling went live, the village has seen nearly $12,000 in revenue from it added to the general fund, which pays for the police department, public works and general administration, among other things.

Only Moretti’s Ristorante and Pizzeria had video gaming in Lake in the Hills in the last year. Recently, the American Legion Post 1231 was approved by the village to have video gaming terminals. Stella’s, a planned video gambling cafe, plans to open in the village.

In McCullom Lake, the village plans to use its video gambling revenue to resurface McCullom Lake Road.

In Fox River Grove, the village’s video gambling share is being used for its tree replacement program, Village Administrator Karl Warwick said.

“It’s something we need with emerald ash borer taking several trees away in the village,” Warwick said.

As for long-term use of the video gambling revenue, Fox River Grove has yet to decide what to do with the money, Warwick said.

The city of McHenry authorized video gambling in July 2012. Since it went live, $4.88 million has been put into the machines and $3.59 million has been cashed out to gamblers, according to state documents.

Of the $1.29 million in gambling losses by players, the city received about $64,500, all of which goes into the city’s general fund.

“It’s a lot of money,” Deputy City Administrator Doug Martin said of the revenue from the terminals. “I think in the future, there will be more interest in them.”

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