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Businesses laud reversal of video gambling bans

Published: Wednesday, July 9, 2014 10:00 p.m. CDT • Updated: Thursday, July 10, 2014 12:42 p.m. CDT

At 5 percent of the cut, municipal governments don't get a very big piece of the action when it comes to video gambling as compared to their other revenues.

But the much larger share that the establishments with the machines get is proving to be a needed windfall, according to owners, a number of whom have more recently acquired video gambling machines as a result of their local governments reversing gambling bans.

Cary last October reversed its ban, joining Algonquin and the McHenry County Board, which reversed theirs earlier in 2013 under pressure from bar and restaurant owners. Coleman's in the Park owner Brett Coleman said the downtown Cary restaurant and bar have plans for the money.

"Eventually we'll be able to use it to upgrade our property and hire local contractors to improve our parking lot, repair our roof and use it to pay our property tax," Coleman said.

The five machines that Old Rivers Inn acquired after the County Board reversed its ban have been "a blessing" for the rural tavern, owner Bob McDaniel said. Revenues are bringing the establishment on Route 14 between Harvard and Woodstock into the black, and will soon go toward a slew of needed repairs.

"It's been good. Sales are down, but the machines help out, which is all we wanted in the first place. It's been what I expected, maybe a little bit more," McDaniel said.

More than 140 businesses in McHenry County have a total of 630 of the machines as of May, the latest month of data available from the Illinois Gaming Board. But McHenry County's largest municipality, Crystal Lake, remains the sole holdout in not allowing the machines.

Illinois legalized video gambling in 2009 to help generate revenue to pay off the bonds for its $31 billion Illinois Jobs Now! capital plan, although the machines didn't go live in local establishments until late 2012.

Establishments that serve alcohol, fraternal or veterans organizations and truck stops, can have up to five of the machines. The state gets 30 percent of the proceeds and gives 5 percent of that back to local governments, which also can charge an annual permit fee for each machine. The remaining 70 percent of the proceeds are split between the machine owner and the establishment.

In May alone, revenues from the 16,879 machines in Illinois totaled $54.5 million, of which $13.6 million went to the state and $2.7 million went to municipal and county coffers.

Local governments differ as to how they use their share of the revenue. Some, like Woodstock and Lake in the Hills, deposit it straight into their general funds. Algonquin's revenues are slated for parks and recreation capital improvements, and Fox River Grove slated its revenues for its tree replacement program. Video gambling revenue played a part in the Johnsburg Village Board's decision earlier this year to no longer require vehicle stickers.

Fox Lake has the most machines of any local government. The 102 machines in 22 different establishments netted its government about $20,100 last month, which was the largest local amount.

Algonquin was among the handful of local governments that took advantage of a provision in the gambling law allowing local governments to opt out, citing critics' legitimate concerns about gambling as a social ill. But like Cary and the County Board, Algonquin reversed itself in 2013. Woodstock, which also had opted out, changed its mind in late 2012 just as the machines began appearing.

In the cases of Cary and the County Board, a change in membership helped prompt the reversals. Only about half of the elected officials who voted for the ban were in office when it was subsequently reversed.

A number of business owners in Crystal Lake have been trying to convince the City Council to do the same, but councilmen have held fast and argued that video gaming is not a good fit for the city. But the owners aren't giving up, and in August plan to ask the council to revisit the ban at its September meeting, said Paul Leech, owner of The Cottage.

Crystal Lake is one of 179 municipal or county governments with an outright ban on video gambling, according to state records. Eleven of those did not ban gambling, but prohibit the sale of alcohol and therefore have no places that legally can have the machines.

Leech said he would like to use the revenue to reinvest in his business, from needed repairs, such as a $22,000 cost to repave his parking lot, to future expansion.

"That money that's generated comes back into the local economy, and that's a boost for everybody," Leech said.

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