CORRECTION AND CLARIFICATION: An amendment proposing rules to impose stricter regulations on "parlor-style" locations running video gaming terminals was not attached to HB5017, which amends the Illinois Horse Racing Act of 1975. Several local news sources erroneously reported that the amendment was part of the bill now waiting for Gov. Pat Quinn's signature. Several informed sources, including officials from the Illinois Gaming Board and the Illinois Casino Gaming Association, contacted Vending Times about the error. Part of this story, under the subheading "PARLORS AT RISK," has been revised accordingly.
SPRINGFIELD, IL -- According to data reported by the Illinois Gaming Board, the amount of money played on the state's video gaming terminals in June was $638 million, compared with $684 million in May, a 6.5% month-to-month decrease. Net terminal income (revenue after payouts) was $50.8 million in June, compared with $54.6 million in May, a decline of almost 7%.
The number of terminals on location in June increased to 17,467 from May's installed base of 16,879. That number is expected to continue to grow over the next year.
For the vast majority of Illinois markets taking part in the two-year-old video gaming program, June had the lowest yield of the year. This is not surprising, as June is traditionally a slow month for amusement locations and the overall hospitality industry. The National Restaurant Association said its Performance Index, a nationwide metric, declined 1.1% in June, citing "soft" customer traffic.
Despite a soft June, the Illinois video gaming program is doing what it intended: raising badly needed revenue for the state and local governments. Cities that allow location-based video gaming are getting used to its revenue, and they say the games are here to stay. In June, municipalities were paid more than $2.5 million, while the state's take was about $12.7 million. May, which had the highest amount played, was the best month, with $2.7 million going to local governments and $13.6 million to the state.
All revenue captured by a terminal is split in the following way: 35% going to the business owner, 35% to the terminal operating company, 25% to Illinois's Capital Project Fund and 5% to the local municipality.
CORRECTION: PARLORS [ARE NOT] IN PERIL
Video poker machines were first allowed in October 2012, after state lawmakers approved legislation to permit gambling in establishments that sell liquor. Truck stops, along with bars, fraternal organizations and other places with a liquor license, can have up to five gambling machines under state law. The Illinois General Assembly actually approved the plan in 2009, but machines didn't go online for another three years.
The Video Gaming Act was meant to stop illegal video gaming machines in bars, particularly in the southern part of the state, and to allow places with liquor licenses and truck stops to legally offer them with state and local governments earning a piece of the action. But some entrepreneurs discovered a niche, one operator told Vending Times. They found that many video gamblers prefer to play in small, quiet atmospheres rather than loud casinos or rowdy barrooms. The successes of these parlors, which usually offer limited snack and drink menus, and promises of their tax revenue, have prompted some city leaders to quickly hand out liquor licenses to those willing to operate terminals. Subsequently, some business owners are acquiring liquor licenses as a means to operate the terminals.
This trend has grabbed the attention of some state legislators who would like to put limits on parlor-style locations. An amendment sponsored by state Sen. Terry Link (D-Waukegan) placing restrictions on the boutique gaming shops was the first attempt. Link's amendment had failed to pass both houses and is therefore not attached to HB5017 (contrary to an earlier report). HB5017, which amends the Illinois Horse Racing Act of 1975, is now on Gov. Pat Quinn's desk.
Details in the tabled amendment would have required:
1. A video gaming parlor would have to prove annually that 60% of its gross revenue comes from food and beverage sales, with half of all alcohol sales being consumed on the premises.
2. All existing parlors would have been grandfathered in until they apply for their annual license renewal.
3. Only 200 licensed establishments would have been allowed statewide with video gaming revenue exceeding 80% of gross annual revenue.
4. The amendment did not include fraternal organizations, veteran's establishments, bowling centers or golf courses with valid state liquor licenses.
The amendment would have also allowed up to 10 video pokers at any licensed truck stop that sells at retail more than 50,000 gallons of diesel or biodiesel fuel a month. All other licensed truck stops can operate no more than five terminals.