More than 18,000 slot machines can be found in licensed bars, restaurants, truck stops and fraternal and veterans organizations in Illinois—more than 60 percent of the amount in the state’s 10 casinos. Several hundred slots are being installed every month, even though they’re banned in Chicago and many other cities.
The $1.6 billion Illinois casino industry is not happy. Casino revenue in Illinois fell 5.3 percent in 2013, the first full year the slots were legalized. Revenues were down in July, marking 11 consecutive months of decline, according to Bloomberg Intelligence data. Keith Smith, chief executive officer at Las Vegas-based Boyd Gaming, owner of the Par-A-Dice Hotel Casino in East Peoria, said the competition from slots was one reason for the company’s shortfall in second-quarter profit. “And it is not ending,” he said.
The Illinois Casino Gaming Association is fighting legislation that would double the number of machines, and wants to restrict the games’ expansion. Tom Swoik, executive director of the Springfield-based association, said, “We underestimated the kind of impact it was going to have. We thought by putting a limit on the number of devices it wouldn’t hurt us much.”
That limit is five slots per location that serves alcohol, under the Illinois Video Gambling Act of 2009, which took effect in 2012. The bill was enacted to raise taxes, help bars and fraternal and veterans groups struggling with higher liquor taxes and a 2008 smoking ban and combat illegal machines, said Rockford Republican state Senator Dave Syverson who supported the measure. Swoik said at the time, casinos were fighting efforts to allow additional casinos and racinos, so a few machines in taverns were considered a minor threat. Now, according to the Illinois Gaming Board, the machines have spread to more than 4,400 locations, including a scuba store, a swimming-pool supplies store and a florist; alcohol is served in all of them.
Syverson said in the next legislative session he plans to reintroduce a bill that would limit gambling to businesses that get at least 60 percent of their revenue from food and beverage sales. The bill is intended to help charitable clubs and bars, to prevent the spread of stand-alone slot parlors and to stop slots from being installed in locations that never were meant to offer gambling under the original law.
Syverson introduced the bill last year but it went nowhere as casinos, slot parlor owners, truck stops and machine operators all opposed it. “It really is going to be up to municipalities to fix this issue now, because the soonest we’re going to fix it is going to be eight to 10 months from now,” he said.
Meanwhile, several Illinois communities are curbing slot parlors or seeking ways to do that. For example, a special meeting was held in Rockford to begin to develop new rules. Alderman Joseph Chiarelli, head of the city’s Code and Regulation committee, said city council members are reviewing Syverson’s bill and neighboring communities’ regulations. Under consideration are rules about the distance between gaming facilities, signs, limiting the types of business that can have slots and whether to put a cap on the number of parlors in town. Currently there are 80 businesses with slots, an increase of 22 percent since January. Gamblers have wagered more than $151.9 million and lost $11.9 million this year. Tax revenue generated has reached nearly $600,000 this year.
Mark O’Donnell of Slots of Fun on Charles Street compared the growth of video gambling to the California Gold Rush of 1849. “Seemingly, now everyone has an angle of trying to get a liquor license in order to put slot machines in any open space they can find,” he said. O’Donnell added he and his business partners applaud the city council for developing rules to govern gaming in the city. “We respect and believe adults should have the right to choose, in healthy moderation, how and where they want to spend their money. However, most residents and neighboring businesses would agree that ‘clustering’ certain industries like slot machine establishments, bars, strip clubs, tattoo parlors, payday loan and tobacco/pipe stores in close proximity to each other does not diversify any neighborhood and discourages other business from investing in those areas.”
Loves Park also is taking on slot parlors. Currently there are 18 in operation and in June the city issued a 20-site limit. It also determined slot parlors cannot be located less than 1,000 feet from each other. In addition, last month the city capped the number of bar licenses at seven, meaning any new gaming facilities must have a restaurant in conjunction with alcohol sales. In the city there are 45 businesses with gaming, up from 35 in January. Gamblers have wagered $76.5 million this year and lost $5.9 million, with tax revenue at about $300,000 this year.
Mayor Darryl Lindberg said, “I’m basically a free-market guy, but on the other hand I could sense that we were starting to get people saying ‘Is that all you’ve got out there?’ and we don’t want that from a community-image standpoint. I don’t think anybody anticipated the amount of play that was going to be received.”
But not all Illinois cities are anxious to slow slot-machine growth. Quincy has 83 machines that average about $12,000 each and have generated about $150,000 for the city since July 2012. City officials and business owners consider the program a success. In fact, Judy Huff, owner of Scoreboard sports bar, said, “We’re averaging $2,500 to $3,500 more a month, besides our food and our alcohol sales, so I think that helps it all.” She said Quincy law allows two machines per business, but she wishes she could install two or three more.
