 Mechanical gaming and video machines already exist in many bars and
taverns in Illinois. From the inception of "Pong" in the early 1970s
to the subsequent "PacMan" craze, gaming entertainment in
establishments began as simply that -- entertainment. Devices
considered to be for
entertainment purposes offer no cash payout and have been considered
legal and licensed by local governments.Eventually, video poker
machines were introduced to the scene, allowing customers to play
their odds against the computer in various games of chance. The
evolution from a virtual ball and paddle to lottery games emulating
those in casinos brought the seemingly inevitable shift from pure
entertainment to payout transactions -- a practice which, until last
year, was considered illegal under state law.
When the Logan County Liquor Committee met on Thursday evening,
it was yet unknown if the law would have any effect on
county-regulated gaming machines. The annual fees of $75 for video
amusement and $25 for mechanical amusement were due in and combined
with annual liquor license permit fees. Liquor licenses vary
considerably and are set by hours of operation at each
establishment.
However, in Lincoln some business owners have already been
feeling the effects of the new law, which will revise an almost
40-year history of video gaming systems in bars and restaurants.
For the businesses housing the machines, though, the law falls
under an umbrella of red tape and dollar signs, creating major
changes to their operations. Establishment owners who wish to
continue to use gambling machines must submit a license application
to the Illinois Gaming Board, replace their current machines with
state-approved machines and comply with a series of strict
requirements for their businesses.
One controversial measure that passed through the state Senate
last month loosened the proposed case-by-case licensure process by
requiring a felony conviction on gambling charges before the board
could deny a person or institution an operating license.
Gaming board spokesman Gene O'Shea said he finds the requirements
fair and does not see them as a deterrent for businesses to own and
operate gambling machines.
"I believe that they're going to be held to the same standards of
licensure as people in the casinos," O'Shea said. "You can't work in
a casino if you have a felony conviction.
"I don't know if the taverns that are in your community would be
willing to go through the process to be licensed and have the
machines and all that, (but) it's the way it's regulated in the
state of Illinois. We have to make sure everybody's aboveboard, and
that's how it's done."
Dick Anderson, local sales executive for the terminal operator
Midwest Electronics, said that in addition to the licenses required
for establishments and operators, licenses for manufacturers,
suppliers and technicians of gaming equipment are also mandatory.
"Those license apps will come out, and they will be scrutinized
very closely, especially the terminal operators," Anderson said.
"One of the reasons for this, with the Illinois Gaming Board, is to
get rid of undesirables. And that includes the locations too, like
shady bars. They don't want any part of that, so they have very
strict rules."
Lincoln taverns and other businesses are demonstrating varying
reactions to these "strict rules." Anderson said the new machines
are expected to be in place by December, and with less than six
months to decide, business owners are weighing the costs and
benefits of either keeping or removing the machines.
The Lincoln Knights of Columbus had its machines taken out last
month. April Martin, head of the branch, attended an informational
seminar held by Midwest Electronics on May 17.
"I brought home a 25-page application, and everybody -- all the
workers and board members -- they all were supposedly going to have
to fill this out and do a background check," she said.
But Martin cited the primary reason for her decision as the
financial burden of the act, which includes an application fee, an
annual licensing fee and a monthly leasing amount for establishments
to pay their terminal operators.
"(Midwest Electronics) said they want us to lease from them so
much a week per machine, and I was like, 'Whoa, we don't even make
enough per week to pay that,'" she said. "The poker machines didn't
help us keep our business open -- people are just not playing them
anymore. We're fortunate to have the banquet room and the meeting
rooms to bring in clientele, so when the (act came up), we decided
we're not even going to put poker machines in here.
"I just don't know how those small businesses, like the small
taverns in town, are going to do it. They rely on their machines
quite a bit for their net income."
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According to Anderson, who is also the commander for American
Legion Post 263, decisions to opt out of gaming revenue are the
exception to the local trend.
"We haven't had a lot of people say they're not going to do it,"
Anderson said. "As far as the American Legion in Lincoln, we're
projecting it to be 15 percent of our net revenue, so we won't cut
the gaming."
Anderson said the Legion will use the maximum number of machines
allowed by the Gaming Act -- five -- and each machine is expected to
generate about $135 per day.
In terms of state revenue, a July 2009 report by the firm Arduin,
Laffer & Moore Econometrics titled "The Estimated Revenues from a
New Video Gaming Tax in Illinois" used the lowest and highest
revenues from states that have already legalized video gaming
machines to project a median $45,000 annual revenue per machine in
Illinois.
The law also allocates one-sixth of the 30 percent state tax to
local government, which includes county regions as well as
municipalities. If the projection were correct, each territory would
generate about $2,250 annually.
Lincoln Mayor Keith Snyder said the figures should not be taken
as more than speculation, since they are dependent on the number of
machines, the number of establishments that will continue to operate
the machines and the amount of money spent on them.
"I mentioned (the $45,000) figure at one point to a gentleman who
appeared before the council," Snyder said. "He was representing
basically the company that's going to be selling these machines. He
thought that the estimate per year for net income was high. So
there's probably not even agreement on what the income might be per
machine, and the tax is based on the income per machine."
Fiscal ambiguity aside, Snyder said he is apprehensive about the
law's effects on the community, but he has not yet met with the council
to discuss the option of outlawing video gambling in Lincoln's
municipality.
"My concern as a mayor is that the city gets 5 percent tax on the
net income," Snyder said. "So for the city to get $5, somebody has
to lose $100 in a video poker machine. That's an expensive way to
get revenue for the city, I think, but the council will have the
opportunity, if they choose, to talk about the economics and the
impact on society and whether or not it fits in with the image of
the community."
If the council were to ban video gaming altogether, no
establishment within Lincoln's city limits would be able to house
the regulated gaming terminals. Outside those limits, though, the
decision shifts into the hands of the county.
According to Logan
County Board Chairman Terry Carlton, the county has authority over
"everything outside (Lincoln), until it bounces against Atlanta, or
any other appropriated area ... all the rural areas."
Carlton said he doesn't look for the act to bring many changes to
businesses or patrons in the area, and, for now, he sees no reason
for prohibiting the new machines.
"We can kind of do a knee-jerk reaction and say, 'Let's ban it
all,' but is that really a good decision?" he asked. "If you did
lock it down to where the city of Lincoln says, 'No, we're not going
to (have these machines),' what it would do is create a vacuum of
people who enjoy those activities, and now they would push out to
the Lawndales and establishments on the fringe," he said.
"So, I really don't see it being much of a change at all. It's
one of those things where people can really blow it out of
perspective."
But while city and county regulations currently remain
indeterminate, Anderson said that on a state level, it's a step in
the right direction.
"Let's put it this way," he said. "The state says they're going
to take the revenue and put it into roads and education. They also
said that about the lottery many, many years ago. So I can't predict
what the state's really going to do. But it will make a lot of money
for them, and right now, the state is in dire need of money."
[By LINDSEY BOERMA; LDN]
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