The Chicago Daily Herald recently analyzed video gambling machine revenue in 70 suburban locations in 27 communities and found the devices generated less money per machine from August 2022 through July 2023 compared to the same period the previous year.
Gaming industry expert and watchdog Kevin McGourty, “It’s oversaturation because there are too many terminals out there now. You can only pull so much from so many people until it diminishes the returns.
“The state also changed the rules on how many terminals can be in a business and the types of businesses that can offer them, with large truck stops now allowed to have 10 devices. We’re cannibalizing the marketplace, and the more liquor licenses they allow, the more gaming licenses they’ll allow with them.”
The amount of wagering hasn’t changed, meaning state and municipal tax revenue from the machines mostly has remained the same. But the bottom line is gamblers now have more options for where to play. Ralph Martire, executive director of the bipartisan Center for Tax and Budget Accountability, told the Herald, “There’s a limited demand, so when there’s been substantial terminal growth, it will of course divert some revenue from Business A to Business B.”
By state law, 65 percent of video gambling machine revenue terminal operators and business owners, 29 percent goes to the state, 5 percent goes to municipalities or counties and nearly 1 percent goes to the Illinois Gaming Board for administrative costs.
Jim Iverhouse, who has placed four terminals at Copper Fiddle Distillery in Lake Zurich for three years, said his machines generated half the revenue as the previous year. “I’m definitely keeping an eye on it this year, because there’s costs involved with operating these things, too. There’s electricity and licensing fees, plus the space they take up I could put in three or four tables,” he said.
Revenue also has dropped in some areas where saturation isn’t an issue. For example, Sleepy Hollow has had the same number of terminals for the past 24 months, but revenue per machine fell by nearly 30 percent year over year. In Antioch, Crystal Lake, East Dundee, Elburn, Long Grove and Third Lake, revenue per machine dropped by more than 10 percent in the past year.
Most municipalities, however, had modest increases in video gambling revenue because interest in the machines hasn’t declined. Areas that may have lost some revenue from the previous year may have lost terminals or may be located near other towns that began offering the machines and lured gamblers away.
McGourty noted the state is receiving significant revenue from video gambling and is unlikely to make regulations more business-friendly.
The state received $818.1 million in gambling machine tax revenue from August 2022 through July 2023. That’s an increase of 7 percent of $54.4 million more than the same 12 months one year prior, according to IGB data.
Looking ahead, businesses should prepare to lose even more revenue from video gambling. “Get used to it,” McGourty told the Herald.
