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Issue Date: Vol. 52, No. 9, September 2012, Posted On: 9/21/2012


The Long And Winding Road


Marcus Webb
TAGS: Illinois video lottery, VLT, Video Gaming Act, Illinois Coin Machine Operators Association, ICMOA, coin-op business, jukebox, videogame arcade, small business, vending, vending machine, vending operating, Marcus Webb, Vending Times editorial


The Illinois video lottery market is expected, at long last, to "go live" around the end of September or early in October. This expectation is based on the twin assumptions that a planned two-week test of VLTs in five locations around the state will go well, and that no major glitches will be discovered with the lottery terminals themselves or with the central computer system.


The VLTs' statewide launch has been a long time coming. The Illinois Coin Machine Operators Association began lobbying to create this market way back in the 1980s. On July 13, 2009, with great fanfare, Gov. Pat Quinn signed into law an omnibus revenue bill that included the Video Gaming Act. At the time, experts predicted that the Act would lead to a thriving VLT market by 2010 ... or maybe 2011 at the latest.

In hindsight, it's clear that few, if any, observers had a clue to what lay ahead. The next three years were filled with lawsuits; endless political wrangling; negative press coverage from big Chicago newspapers; a finding of "unconstitutionality" by the state court of appeals; name-calling by the chief of the Illinois Gaming Board; "opt-out" votes by dozens of local jurisdictions around the state; a bungled contract award process for the VLT system's central computer; and finally ... a state Supreme Court verdict in mid-2011 that rescued and reinforced the Video Gaming Act.

When the high court's verdict came down, you could hear champagne corks popping all over the state, mixed with enormous sighs of relief.

Both reactions were justified because a great deal is at stake. The Illinois VLT program is projected to create a market of 40,000 to 50,000 networked poker games. That projection is based on the belief that each of the state's 21,000 liquor-licensed locations will install two or three video lottery terminals.

Optimistic early predictions held that VLTs would generate anywhere from $375 million to $500 million a year in taxes for the state. However, those revenue projections were always based on the hope or belief that Chicago -- the state's biggest population center by far -- would opt in.

So far, it hasn't. And, with Chicago Mayor Rahm Immanuel consistently criticizing VLTs and plumping for more casinos instead, the Windy City seems unlikely to join the VLT market any time soon.

None of this has seemed to dampen the spirits of ICMOA and its allies, nor should it. If there was ever a time to "watch the doughnut, not the hole," that time is now. The amusement machine industry has had more than its share of bad news in the last several years, and there is every reason to celebrate the success of the Illinois VLT campaign.

Even if the state's video lottery market were to reach only half the size that was originally projected, it would still mean a windfall for a handful of VLT manufacturers and distributors. It would also mean an opportunity -- but no guarantee -- of years of fabulous income for hundreds of licensed VLT operators.

While the industry is celebrating the long-delayed launch of video lottery, there is also every reason to learn from the "long and winding road" that had to be followed in order to arrive at this destination. Past editions of this column have talked about some of the more-obvious lessons of the Illinois VLT story -- such as the need for persistence; the need for strong, smart and unified state associations; the need for ongoing, aggressive, proactive lobbying of state legislators; and the need for sheer luck.

ICMOA got that luck when the global economic crash of 2008 prompted state officials to reconsider video lottery after years of saying "no." Obviously, however, luck itself was far from enough. If it were, then every state association would have achieved a similar victory. ICMOA won the VLT laurel wreath because it had all those other factors lined up for years in advance.

While we're celebrating and learning from this story, one impact of the Video Gaming Act should not be overlooked. It means Illinois law enforcement will get serious about eliminating gray-area pokers like never before. As a result, the industry can expect continued headlines about organized crime, and a stream of disparaging remarks from bureaucrats who frequently seem to tar law-abiding operators with the same brush as criminals.

There will be other bumps on the long and winding road to VLT success, but this isn't the place to focus on future challenges. Once again, a big "congratulations" to ICMOA and its allies. You have won a big victory for small business and independent, mom and pop entrepreneurs ... and for a nationwide industry that's only mildly green with envy.


Topic: Editorial: Music and Games

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