In Illinois, more than 150 so-called café casinos offer 700 video gambling terminals in 73 communities, according to the Illinois Retail Gaming Operators Association. Those businesses brought in 1 million to the state since becoming legal two years ago. Café casinos are a small but growing sector of the state’s video gambling industry, just 3.5 percent of Illinois’ 4,234 licensed video gambling establishments, as of early February. In addition, the games are available at 442 fraternal or veterans organizations and 165 truck stops.
The 107 café casinos attract female players with feminine names and coffee-shop or granny’s kitchen environments. Currently Blackhawk Restaurant Group, based in Oakbrook Terrace, owns 50 cafes, including Betty’s, Penny’s, Emma’s and Jena’s. The company plans to open 10 more.
Thirty-four Dotty’s country-style cafes are owned by Illinois Cafe and Service Company, which plans to open 150 locations. The company has a background in similar ventures in Oregon and Nevada. Laredo Hospitality Ventures owns 23 cafes under the Shelby’s and Stella’s names. Vice President of Operations Charity Johns said, “In Wheeling, I went through six board meetings before they took a gamble on me. Now I have two locations there, and we’ll be opening a third. The limit will be what the marketplace can bear. Just like any other business, there will be enough Subways for everybody, eventually.”
As of early February, 175 Illinois communities—including Naperville, Schaumburg and Chicago–don’t allow the café casinos, but some are reconsidering due to the success of the cafes just outside their borders. Blackhawk Restaurant Group Partner Mike Thiessen said, “We have over 400 people that work at our company every day. I spend about $200,000 per store when I open. We put $10 million into the local economy last year. When you show that, and I bring a mayor or a city council to one of these stores, the first reaction is, ‘Oh, I didn’t realize what this looks like. This is OK.'”
He continued, “When you match that with we’re going to take a vacant space, and we’re going to put that back on the tax rolls, and we’re going to make the landlords happy, and we’re going to generate local tax revenue, pay your sticker tax, pay you a 2 percent food and beverage tax, the story becomes much better.”
Johns pitches Stella’s “like hosting a party in your own home. We have couples come in for a date night. It’s what you do with your recreational entertainment. Some people play golf. Some go to the movies. Some people come here, have a glass of wine and play some video poker.” In addition, she and Thiessen point out their companies bring more customer traffic to shopping centers where they locate, helping other businesses in those centers.
Some Illinois legislators said the café casinos are taking advantage of a loophole in state gaming laws and are not what was intended. State Rep. Bill Cunningham unsuccessfully sponsored legislation limiting the number of the gambling licenses in individual communities. Café casino owners are gearing up for Cunningham and other lawmakers to try again in the 2015 legislative session to limit café casinos.
Mike Gelatka, president of the Illinois Gaming Machine Operators Association, pointed out that community leaders opt in to video gambling, which requires business and/or liquor licenses before opening, fingerprinting and thorough background checks. “It’s not like anyone is saying they are going to build a hot dog stand, and when they open there are all of sudden slot machines. There’s no ‘They tricked us’ going on. The owners go in, tell the elected officials, ‘This is what we do, and this is why we do it.’ If the town says they don’t want it, the cafe goes away.”
Johns said she and Thiessen have no intention of forcing the issue in communities that are not receptive to their business model. “We are going to continue to look at opportunities in communities that are willing to have us,” she said. And a growing number are doing just that. In the past 18 months, café casinos have opened in vacant storefronts in Round Lake, Hoffman Estates, Elk Grove Village, Elgin and, soon, Carol Stream. Charles Lucchese, a partner at Dearborn Realty, said the casinos have helped the shopping centers to not just survive but to thrive. “The biggest thing is they are a new use. It’s not a beauty shop. It’s not another pizza parlor or a dry cleaner,” Lucchese said. He added, “There has been absolutely zero issues. We have five in five different shopping centers. No problems. No complaints. Nothing wrong since they’ve been open. Every mayor in these communities is talking to each other, and they know what they are going to get when one of these cafes wants to come in.”
Oakbrook Terrace Mayor Tony Ragucci noted, “Let’s be realistic. People gamble. A lot of people gamble. These cafes are a local opportunity for local establishments to take advantage of what people are already doing.” He said the café casinos generate more gambling revenue than local restaurants or bars that have the machines. The city built a new police station with video gaming machine profits.
Other communities are thrilled with the revenue video gambling machines are generating. Calumet Park Mayor Ronald Denson said video gambling money “helps pay the bills.” Last year the village received $63,000 in video gambling tax revenue, up from $8,400 in 2013, according to Illinois Gaming Board figures. After initially resisting the games, Tinley Park’s first gaming machines were installed last March, and brought in $72, 400 last year, Mayor Ed Zabrocki said. In Chicago Ridge, last year gambling tax revenue nearly doubled to $200,000. Last year Matteson had gambling revenue of $77,500 compared to $2,600 in 2013, and Mokena realized more than $122,500 in gambling tax revenue, up from $15,600 in 2013. Oak Lawn’s tax revenue more than doubled last year to nearly $351,500.
But not every community wants more video gambling. Homewood Mayor Rich Hofeld said he receives “two or three calls a week” from businesses whose revenue projections rely too heavily on income from video gambling. “If they are coming in with that in mind, they better rethink their plan,” he said. Homewood currently limits video gambling to existing businesses.
Also, anti-gambling groups are speaking up. Susan Rifkin of the nonprofit Stop Predatory Gambling said video gambling is one of society’s most financially and socially damaging activities. She compared video gambling to marijuana as a “gateway drug” to harder use. Rifkin said at a minimum her groups wants warning labels on the machines to inform players about the tremendous odds against winning. She noted personal responsibility only goes so far. “We also have a social responsibility to protect others from harm. If everything boiled down to personal responsibility, we would not need prescriptions for pharmaceuticals, and there would be no speed limits,” she stated.
Tinley Park’s Zabrocki stated what he and other officials know—that video gambling eventually will reach a saturation point. “There are only so many gambling dollars out there,” he said.
Still, Johns said, that’s a long way off. Even if legislators approve an expansion of casino gambling, video gambling will continue to grow. “There is a big gaming pie and there is room in this space for everybody,” she said.
