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Issue Date: Vol. 50, No. 2, February 2010, Posted On: 2/5/2010

Gathering Clouds Threaten Illinois' Planned VLT Industry

Marcus Webb
Illinois video gaming market, VLT, Video Gaming Act, Illinois coin machine operators, Illinois Coin Machine Operators Association. ICMOA, video gaming, video poker

CHICAGO -- Indicators continue to mount that Illinois' planned video gaming market could be in trouble. As of mid-January some 63 cities, towns and counties had chosen not to participate in the program, and dozen more were considering opting out, according to numerous reports.

The growing wave of opt-outs spells possible financial trouble for video lottery terminals. The Daily Herald said that the current number of opt-outs means that if the VLT market goes forward at the end of this year, 30% of Illinois citizens will live in jurisdictions where video gaming remains illegal. This could jeopardize the state's original forecasts for $500 million in annual VLT tax revenues, the paper said.

VLTs also face increasing political trouble. This week, five out of the six Republican candidates for governor explicitly vowed that if elected in November, they will work to repeal the Video Gaming Act. The position statements were announced during a Feb. 2 debate.

Support for video gaming among leading Democrats may be weakening, too. State Comptroller Dan Hynes, who is challenging incumbent Gov. Pat Quinn for the Democratic Party's gubernatorial nomination, has signaled that he could be persuaded to oppose VLTs.

The Video Gaming Act became law in July of 2009 with the strong endorsement of the Illinois Coin Machine Operators Association. ICMOA and other supporters said the law would pave the way for up to 45,000 officially authorized operator-run video lottery terminals and subsequent tax revenues would make a significant dent in the state's budget deficit.

But the act included a provision permitting local cities and counties to opt out of the market it would create. If any jurisdiction did so, it would forfeit any share of tax revenues from VLT machines operated elsewhere in the state.

The Chicago Sun-Times said Chicago Mayor Richard Daley, an early VLT supporter, is reconsidering his position on the issue. Supporters fear if Chicago bans the placement of gaming terminals, it could mean the end of the new market statewide. In a move to ensure success for video lottery, however, some lawmakers are advocating a possible new tax on jurisdictions that opt out.

To discourage more withdrawals, one Illinois lawmaker has proposed legislation that would require communities that do not allow VLTs to pay new taxes to make up projected lost revenues. If communities fail to pay the tax, according to the proposal, the state government would confiscate funds allotted to local projects.

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