In a 9-2 vote, aldermen in Aurora, Illinois recently approved new rules banning large jackpots at progressive raffles at the city’s social clubs.
Because of their unique classification with the Internal Revenue Service, social clubs only will be allowed to stage raffles where the prize is less than $500. Aurora Chief of Staff Carie Anne Ergo said organizers will not have to obtain a raffle license from the city to stage the small raffles.
The rules however, will allow religious, charitable, educational, labor, fraternal and veterans’ groups to stage the progressive raffles. The new rules also limit the total prize for each progressive raffle to no more than $50,000 per game, and each organization can hold no more than four progressive raffles each year.
Aldermen had issued a six-month moratorium on the progressive gambling games in February after a contest jackpot at the Aurora Phoenix Club grew to more than $210,000, which did not comply with city ordinance limiting raffle jackpots to $100,000.
Aurora’s social clubs began operating progressive raffles about two years ago, as a way to raise revenue lost to the recession and declining memberships. Tracy Cahill, president of the 1,500-member, 104-year old Tiger Athletic Association, said, “There are 4,000-5,000 members between the clubs but I won’t be surprised if some of these clubs close” due to the new limits.
After the vote, Craig Bonifas, president of the 1,600-member, 120-year old Phoenix Club, said “The queen is dead,” referring to the popular Queen of Hearts progressive raffle game. “The vote didn’t surprise me. The outcome was predetermined,” he said. Bonifas noted progressive raffles “started as a way to get more business, as a way to sell more drinks and food. That equates to taxes for the city, too.” He said the Phoenix Club operated four Queen of Hearts progressive raffles in one year, with most payouts seldom reaching $3,000. The $210,000 payout “that caused all of this trouble” was a fluke, he said. The moratorium has hurt social clubs’ bottom line. “At this time last year, we were doing so much better. If the clubs close of move out, that’s one more empty building,” Cahill said.
Unlike charities, social clubs have access to other revenue streams, including membership fees, bar and restaurant sales and video gambling, Ergo said. Bonifas said video games “will help us a bit” but would not replace revenue lost from the progressive raffles ban. He said the Phoenix Club has applied for a video gambling license through the state, but has not yet installed the machines.
Ergo noted, “Progressive raffle jackpots can easily raise to a level that would compete with” Hollywood Casino in Joliet, a 22 mile drive from Aurora. Melonie Johnson, interim general manager at the casino, said, “In Aurora, social and civic clubs host progressive raffles that can accumulate up to $100,000. This is well beyond the top prizes awarded to our patrons and has a negative impact on us.”
She added Hollywood Casino experienced a 16 percent decline in revenues since video gambling devices came online; currently 161 establishments within a 20-mile radius of the casino have video gambling devices, and each can offer up to five machines. The social clubs’ progressive raffles and video gambling have meant less revenue resulting in fewer tax dollars for the city, decreased private charitable donations from the casino and possibly a reduction in the workforce, Johnson said. More than 50 percent of Hollywood Casino workers live in Aurora, she said.
However, while researching the progressive raffle issue, Ergo said residents, former residents and city employees said they experienced discrimination at one or more social clubs. “Some of the incidents occurred well into the 21st century,” Ergo wrote in a city memo. The clubs are not required to have a written policy addressing discrimination based on race or religion to maintain their IRS status, but Aurora social club practices may still produce “de facto segregation,” she said. In addition, when asked about social clubs’ desire to continue progressive raffles, representatives from the local chapter of the NAACP, Quad County Urban League and Main Baptist Church said they “were concerned that granting social clubs the privilege to raise funds through raffle activities would compete directly with charitable organizations that provide substantial tangible community benefits,” Ergo wrote.
In response, Bonifas said, “For some reason, there’s a real lack of understanding about these social clubs. We’re not just a restaurant and bar.” This year, he said, the Phoenix Club supported an array of charitable causes, including boy’s baseball teams, a girl’s softball team, neighboring St. Joseph Catholic Church, the ALS Association and charity golf outings. “We’re not required to donate money to charities under our IRS classification, but we do it all the time because it’s the right thing to do,” Bonifas said.
