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Local Municipalities Cash In On Video Gaming

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Video gaming in Aurora, Illinois

Video gaming terminals at Mike and Denise's Pizzeria in Aurora, Ill. (Jenna Dooley/WNIJ)

If proceeds from video gaming were a coconut cream pie, Illinois municipalities would only get a taste. But if you added up those nibbles every month, it may be enough to notice an increasing waistline.

In December alone, Illinois municipalities that offer video gaming shared $1.8 million.

Video gaming machines starting spewing out the green in the fall of 2012. Illinois started with a few hundred gaming terminals. By the end of last year, there were more than 13,000 terminals in the state.

One of the locations is at Mike and Denise's Pizzeria in Aurora. General Manager Pam Siddon said it made sense to add video gaming because the machines require little upkeep.

"It's something for people to do when they are in here having a drink or having dinner. It was kind of a no-brainer," Siddon said. "Some people are serious about it and some people  are like, 'I just won $10,' and they are happy and then they go home."

Siddon said the popularity of the machines varies, depending on how busy the business is. She said the cold weather has slowed things down a bit, but adds there's no real rhyme or reason when people come in to play.

Overall, it has proven to generate reliable dollars for those who get a piece of the pie. And it's not just the state's largest cities who are reaping the largest rewards, according to Loves Park Mayor Darryl Lindberg. He is also president of the Illinois Municipal League.

"What we've seen here is  we actually ... for a couple, three months, we've been like third in the state in the city of Loves Park," Lindberg said. "Not that we are a big gambling destination, but we really thought this would be a good way to supplement our revenues because we don't have a property tax."

Lindberg said gaming has been a boost to the local economy.

 "What we've seen is that a lot of these establishments that were maybe bordering on being successful or closing, this added income from video gaming has really allowed them to do a lot more and improve their buildings and things like that and that's what we hoped for," Lindberg said.

Anita Bedell, who is the executive director of the Illinois Church Action on Alcohol and Addiction Problems, takes a different view.

"It's not new revenue. It's money that's being lost from local residents, and it's being diverted into the pockets of the gambling interests," Bedell said. "It's really a loss to the economy of these communities. This is one of the messages we are trying to get out."

She has a familiar face at the Illinois Capitol and often lobbies against any expansion of gambling. Even though video gaming is growing rapidly, her group continues to distribute informational packets to mayors and village boards.

A portion of the license fees from the Video Gaming Act are directed to the Department of Human Services for the administration of programs for the treatment of compulsive gambling. Bedell said that is little consolation.

"The problem is, when you expand gambling so far as they have with the Video Gambling Act, no amount of money that they put into the Department of Human Services is going to be enough to pay for all of the ruined lives and gambling addiction," Bedell said.

Despite opposition, new applications continue to be approved. The Video Gaming Act law gives local communities and counties the option to pass a ban on video gaming. Otherwise, establishments can apply for permits to install the machines.

The law authorizes the installation of up to five licensed video gaming terminals in licensed establishments where liquor is served. 

Cash generated by the video gaming terminals that is not awarded in payouts to players is divided among the state, local governments and terminal operators.

Rockford has been one of the state's biggest magnets for gaming dollars. The city earned $61,000 in December, the city's share of $16 million played in the city during the month. Rockford City Administrator Jim Ryan said that helps the city lease fire, police and public works vehicles.

"We finance that through the revenues that come in through video gaming," Ryan said. "It doesn't cover all of the expense for our fleet, but it covers about half."

Ryan said not all applications for new permits are approved.

 "We really take a look at location, 'does it make sense through a land use perspective?' We've been happy with the decisions we've made and how that's worked for the community," Ryan said.

Ryan said it is still too early to see how deep the pockets for Rockford's gaming will be each month.

"I would venture to say it might cap out at around $70,000 to $75,000 [per month]," he said. "That's just a guess at this point. It's continuing to exceed our expectations."

Ryan said the city of Rockford is still very interested in attracting a casino, and an increase in video gaming terminals won't stop that effort.

The Chicago suburb of Bartlett wants more control over how many businesses allow gaming, according to Village President Kevin Wallace.

"People on the board have actually used the term, 'we don't want to look like a little Vegas,'" Wallace said.

Video gaming is relatively new in Bartlett compared to other Illinois communities. Bartlett's share of gaming revenue was about $3,500 in December out of $857,935.15 played. 

Wallace said the money brought in goes into the village's general fund for roads and infrastructure. He said he has been surprised by applications from what he calls "smaller cafes" wanting to get into the game.

"Is there demand for more machines from our residents? I don't know the answer to that question," Wallace said. "There's demand from retail operations looking to locate in Bartlett."

The city council is looking at restricting video gaming. Possible limits would require minimum square footage at an establishment or requiring a commercial kitchen in order to qualify for a license.

"You want to make sure that people know the playing field and it's consistent, or as consistent as we can be,"  Wallace added. "We are still in the process of figuring out and hammering down the exact ordinances that would make sure that the playbook in order to open up one of those establishments is really clear for people looking to come in."

The council is still working on legal issues but could take up those measures this month.

Categories: Business, Economics, Government