June 29, 2018
Beginning in August 2018, establishments with liquor licenses in unincorporated areas of Cook County will be able to offer video gaming on automated gambling machines based on an ordinance amendment passed by the Cook County Board of Commissioners earlier this month. Video gaming refers to electronic video games that simulate games such as poker, line up and blackjack upon insertion of cash.
The ordinance, sponsored by Cook County Commissioner Timothy Schneider and co-sponsored by Commissioners Gregg Goslin, Jeffrey Tobolski, Luis Arroyo and Richard Boykin, includes three provisions:
- It amends Section 58-161 of the Cook County Code of Ordinances on Gaming Devices to state that video gaming terminals may be operated in licensed establishments in unincorporated Cook County;
- It adds a new section to the Code – Chapter 54, Article XIV, Video Gaming – outlining licensing and application procedures and the regulatory process; and
- It adds new fees to Chapter 32 of the Code to charge an annual $1,000 licensing fee per video gaming terminal and an annual $500 application fee per establishment.
The measure was approved by the Cook County Finance Committee on June 5, 2018 by a vote of 9 to 1, with three Commissioners voting present and four Commissioners absent. The voting record and meeting details can be found at this link. The measure was approved the following day by the full Cook County Board of Commissioners.
The expansion of video gaming to unincorporated Cook County was supported by the food & beverage, hospitality and gaming industries. Several members of the public testified in favor of the ordinance. The Illinois Restaurant Association submitted a letter to the Board of Commissioners voicing support because of the impact it would have on establishments by generating revenue to offset increasing expenses. No members of the public testified in opposition to expanding video gaming to unincorporated areas.
At the Finance Committee meeting, Commissioner Schneider provided some background information on the issue. He said about 60 establishments have liquor licenses in unincorporated areas, which would make them eligible to apply for video gaming licenses. This map shows the location of these establishments by County district. He said the ordinance is intended to level the playing field for businesses in unincorporated areas against municipalities that currently allow video gaming; ninety of the 132 municipalities in Cook County allow video gaming.
Video gaming was made legal in Illinois in 2009 when then-Governor Pat Quinn signed into law the Video Gaming Act, 230 ILCS 40. However, delays related to the license application process and a central computer system to monitor the video gaming machines pushed back implementation until 2012. Per the statute, the Illinois Gaming Board collects a 30% tax on the money made from video gaming terminals, of which the State keeps five-sixths (83%) for the Capital Projects Fund and distributes one-sixth (17%) to local governments that allow video gaming through a Local Government Video Gaming Distributive Fund.
When the law was enacted, municipalities had the option to prohibit video gaming and therefore opt out of any revenues generated. Cook County opted out of video gaming at the time.
Cook County estimates that video gaming in unincorporated areas will generate up to $781,000 in annual revenue for the County by 2022. In the first year of implementation, in which revenues would only be received for the period of August-November, Cook County estimates total revenue of $260,000. Of that amount, $180,000 would be from annual application and license fees, and $80,000 would be from the one-sixth portion of the tax distributed by Illinois Gaming Board. In FY2019 after a full year of implementation, the County estimates that it will generate $743,400: $225,000 from annual application and license fees and $518,400 from the Illinois Gaming Commission. The revenue generated from annual application and license fees would be used to cover the administrative costs the Cook County Sheriff’s Office and Department of Revenue would incur for regulation, enforcement activities and system support. It is not yet known how the County will spend the remaining revenue.
The County’s revenue estimates are based on the assumption that 40 establishments apply for video gaming licenses in 2018 and 50 establishments annually thereafter; 160 video gaming terminals (machines) are licensed in 2018 and 200 in later years; and that gaming terminals generate a net income of $216 per month based on statewide averages for video gaming terminals. Licensed establishments are allowed to have up to five video gaming terminals.
Within all Cook County municipalities that allowed video gaming as of 2017, there were 995 businesses with video gaming terminals and a total of 4,571 video gaming terminals – the most in any county in the State. This excludes the City of Chicago, which does not allow video gaming but contains 21% of the State’s population. According to a 2017 Commission on Government Forecasting and Accountability study, the number of video gaming terminals statewide increased from 61 in 2012 to 26,873 in 2017. The total net terminal income generated through video gaming statewide has increased over the past three years from $804.8 million in 2015 to $1.2 billion in 2017. Video gaming in Cook County generated the largest amount of revenue in 2017 at $248.6 million in net terminal income.
Helpful Links:
Video Poker a Gamble for Capital Funding
Video Gaming Continues to Grow in Illinois While Casinos and Lottery Falter
Commission on Government Forecasting and Accountability: Wagering in Illinois: 2017 Update