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Who's cashing in on video gaming?

Cities, businesses ‘fortunate’ to have extra income, whatever it is

Published: Saturday, Aug. 24, 2013 1:15 a.m. CDT
Caption
(Alex T. Paschal/apaschal@saukvalley.com)
Tipsy's was the first bar in Dixon to install video gaming machines.

At the end of July, 8,830 video gaming terminals were operating throughout Illinois, and about 225 of them were in the Sauk Valley. The terminals have been legal for less than a year.

Many of the municipalities and businesses in the Sauk Valley haven’t seen significant revenues from the terminals. But given the down economy, they say, they’re happy to have both the extra money and new customers.

In November 2012, The Associated Press reported that when video gaming was approved, officials estimated it could raise about $375 million per year for the state, and gambling officials had estimated that up to 75,000 machines could be installed statewide within a year.

Gene O’Shea, director of Self-Exclusion Program for Problem Gamblers and who works on the Illinois Gaming Board, said his office is fielding a constant flow of applications

“This is the largest video gaming jurisdiction in the world,” he said. “We didn’t know what to expect. On this large of a scale, the potential number of locations that could be licensed dwarf any other in the country.”

A business, which is allowed a maximum of five terminals, gets 35 percent of the revenue; vendors who supply the machines get 35 percent; the state gets 25 percent; and 5 percent goes to the municipality or county that licenses the business.

The businesses

Cardwell’s W&D Tap, 219 First Ave. in Rock Falls, has three terminals, and manager Phyllis Cardwell said new customers started coming in to check out the terminals as soon as they were installed.

Not only are they playing the machines, which benefits the bar, but many patrons also are having a few drinks while they do it, she said, adding that interest has been consistent since terminals arrived. 

“I’m hoping for the growth, but I really don’t know,” Cardwell said. “It’s still early. I’m hoping it doesn’t slow.”

According to the gaming board, Cardwell’s had more than $12,400 in net terminal income in July, of which 35 percent will stay with the bar.

For TJ Paone, owner of Blackhawk Lanes, 2325 E. Lincolnway in Sterling, getting licensed and installing the maximum five terminals was an easy decision.

The bar, which is separated from the bowling area, now is busier at night and has new customers, Paone said. The vast majority of those new customers haven’t started bowling, though.

The revenue, which Paone said he expected to be minimal, has exceeded his expectations.

“It’s a significant amount for us,” he said. “It’s opened up another avenue for us in terms of bringing in income. The economy has been down for a couple years, and this has sort of stimulated us.”

According to the gaming board’s July report, the terminals in Paone’s business had more than $12,800 in net terminal income.

Paone said he’ll put the revenue from the terminals back into his business, in the form of a new roof or lane improvements, among other areas.

Sauk Valley businesses seeing the most revenue from the terminals are not bars. They’re two Road Ranger truck stops, one in Dixon, 1801 S. Galena Ave., and one in Rochelle.

The Dixon location, according to the monthly reports available on the Illinois Gaming Board’s website, posted a net terminal income of more than $26,500 in July. The Rochelle location had $48,600 net terminal income.

Steve Brooks, general counsel for Road Ranger LLC, said the company had the first licensed truck stop in the state, in Tuscola, and was aggressive in licensing all eligible locations.

“Dixon is doing fine,” he said. “We have some other ones that are doing better. But, overall, we’re pleased with how it’s been going in Dixon.”

The Tuscola location had almost $38,900 net terminal income in July, and one of its two Springfield locations had nearly $111,400 net terminal income this past month.

“We weren’t really sure what the expectations were going to be,” Brooks said. “But it was an option we wanted to try.”

The gaming terminals, he said, are similar to the Road Ranger truck spots having a Subway restaurant. It’s another service the locations can provide to customers, who are most likely making a stop to rest while on the road.

The cities

Dixon Mayor Jim Burke said allowing the terminals will be good for the city from a financial standpoint, but admitted some people might have a moral problem with it.

However, not having video gaming in Dixon, he said, wouldn’t stop people from gambling and could hurt local businesses.

“When [the state] banned smoking from the bars, it was a big hit [to business],” he said, adding that the video gaming could help offset some of those losses.

Rock Falls City Administrator Robbin Blackert said she had heard some negative response from residents when gambling came before the City Council, but it wasn’t overwhelming.

The decision to allow Rock Falls businesses to apply for the licenses, she said, was to keep them competitive with businesses in other Sauk Valley cities.

“We projected our revenue to be somewhere around $25,000 [per year],” Blackert said. “If we stay on track, we’re going to be ... between $35,000 and $40,000 per year.”

Sterling budgeted about $2,000 for video gaming for the year, City Manager Scott Shumard said, which was included in the $21,000 “other sales taxes” line item in the city’s budget.

“Honestly, there were a lot of highly inflated numbers thrown out by the proponents,” he said. “And we didn’t buy into them.”

From Sterling’s perspective, while the revenue has been minimal, Shumard said, the city has been “fortunate” to have the additional revenue.

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