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No end in sight to video gambling

With no power to control it locally, state or market will determine ceiling

While many Illinois cities had hoped market saturation eventually would do what the state has failed to do – impose a ceiling on the growth of video gambling – it isn't happening yet.

Sterling has four gambling licenses pending with the Illinois Gaming Commission and there are plans for a new parlor at 2607 E. Lincolnway.

In Rock Falls, there are three licenses pending with the state, and the mayor, who also serves as the liquor commissioner, continues to field calls about plans for more machines.

Dixon has no licenses pending, but gambling has grown at a faster pace there than in the other two cities. Dixon has 122 machines at 27 sites, while Rock Falls has 101 machines at 21 locations, and Sterling has 66 machines at 14 establishments.

The pending licenses are not factored into those numbers, which are current through ]July.

The most staggering number is the amount of money going into the machines, although some of the same money is counted more than once. Many people put their winnings back into the machines, so that money shows up again under the state's amount played category.

In Dixon, more than $64 million was played in calendar year 2016. During the same time frame, slightly more than $43 million was put in Rock Falls' machines, and nearly $31 million in Sterling. Rock Falls and Sterling are on pace to crush those numbers in 2017, while Dixon is slightly below where it was at this point last year.

Business owners must get a city liquor license before applying for state licensing, and the mayors, who head up the liquor commissions, have the task of trying to figure out where the runaway train that is video gambling will stop.

Sterling has looked at curtailing its growth through an ordinance, but legal counsel advised against anything that appears to specifically target the gambling businesses. When the 2009 state statute ushering in the wave of gambling was written, cities had hoped the state would eventually provide more clarity, but none has come.

"We didn't anticipate that the state would take such a hands-off approach, and let us deal with so much of this at the local level," Sterling Mayor Skip Lee said.

The city has approached state officials about the situation, but they haven't been receptive, Lee said.

"We'd like the state to be a partner in regulating this, but as long as they're getting their money, I guess that's all they care about," Lee said.

Sterling has several liquor license classifications, but most of the video gambling ventures fall into a licensing group that now is capped at 32. All of those licenses are spoken for, and the city decided not to increase the number available in that category.

"In the mid-1980s, we probably had 32 liquor license holders total, and now we don't have enough in that group," City Clerk Marie Rombouts said.

The liquor commission has decided to walk the tricky line of evaluating requests in that category on a case-by-case basis going forward.

"We're not freezing the number available, but we're just going to take a look at what businesses come forward," Lee said.

In Rock Falls, the Class A licenses are the ones most often needed for video gambling pursuits. The ordinance last was amended in 2014, to increase the number available from 12 to 20. There are only three available, so the city could soon be looking at again upping the count.

"No one wants unlimited liquor licenses, but I think most cities are surprised that this is still growing," Rock Falls Mayor Bill Wescott said.

Wescott expected everyone to "jump on the bandwagon" at the beginning, but he expected the action to level off by now.

"When this all started, we were expecting the city's share to be between $25,000 and $33,000 a year, and we got more than $126,000 last year," Wescott said. "I don't think anyone knew what they were getting into at the local or state levels."

In Dixon, the latest numbers hint at action leveling off in the city. The amount played in the first 7 months of 2017 is slightly below the pace of that period in 2016, even though there are two more sites with 10 more machines. That said, the city is still on pace to bring in more money this year, so perhaps the winners are just pocketing more of their winnings.

City officials are concerned about the economic and moral implications of gambling for some of its citizens, as well as what it does for the cities' image, but they have little at their disposal to fight it.

"You wonder that with so many kids on free and reduced lunches here, how so much money can be going into these machines," Lee said. "I'm concerned about what this is doing to our most vulnerable citizens, but there's nothing I can do about it."

Until the state or market conditions intervene, the cities are left with the revenues as a silver lining. While some of the funds had been earmarked for certain items, such as vehicles, at the beginning, the gambling revenue goes into the general funds of all three cities.

Last year, Dixon pocketed nearly $251,000, Rock Falls more than $173,000, and Sterling close to $126,500.

The state collects a 30 percent tax on net terminal income, which is the amount gambled minus what is paid out, and 25 percent of that goes to the state and 5 percent to the municipality. The remaining 70 percent of the income is split between the host businesses and the machine operators.


The following businesses have video gambling licenses pending with the Illinois Gaming Commission:


Starlight Theatre & Lounge - 314 First Ave.

Vegas Slots & Gaming - 10 E. Miller Road

The Boulevard Pub & Grill - 2501 Avenue E

Ellie's Gaming Cafe - 1202 W. Fourth St.

Rock Falls

Dead Tree Tavern - 102 W. Second St.

Crystal Lake Recreation (RV Park) - 600 E. 17th St.

Charley's Video Gaming - 223 W. Second St.




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