State’s big payout from video gaming still less than predicted
BY JON SEIDEL Staff Reporter April 4, 2014 10:27PM
Toby's Tavern & Grill in North Chicago, which houses five video gaming terminals. In the first two months of 2014, they were among the most lucrative in the Chicago area. | Jon Seidel/Sun-Times
Updated: May 7, 2014 6:16AM
Hard to say what it is about Toby’s Tavern & Grill in North Chicago.
It could be the loyal regulars, bartender Vicky Farias said.
Or the “best darn burgers around,” she added.
But in a roped-off corner of that wood-paneled pub about three miles off Interstate 94 jingle five of the most lucrative video gaming terminals in Illinois. Their combined net income of $141,000 in the first two months of 2014 topped all others near Chicago, records show.
And state and local government got a 30 percent cut.
“There are days when there are two or three people waiting to get on them,” Farias said.
Video gaming has failed so far to produce the total tax revenue once predicted by state officials. But casino owners complain they’ve been on a losing streak ever since video terminals began popping up in groups of no more than five in taverns like Toby’s all over Illinois. Casino lobbyists have objected to casino expansion proposals in areas like the south suburbs, where terminals are already taking up enough territory to fill a whole casino on their own.
But the lobbyists haven’t historically balked at Mayor Rahm Emanuel’s idea for a casino in Chicago, where video gaming is banned. Tom Swoik, executive director of the Illinois Casino Gaming Association, said a reasonably sized Chicago casino could “attract a lot of tourists and conventioners.”
However, a recent proposal for as many as 10,000 gaming positions in a Chicago casino gives him pause — that’s eight times the size of other Illinois casinos. The details will likely be hashed out when lawmakers hold a public hearing on a casino expansion bill in Chicago later this month.
Meanwhile, Chicago’s ban on video gaming means there are far fewer terminals in Illinois than originally predicted. State gaming officials say that’s part of the reason — along with other communities opting out — overall tax revenue has fallen well short of the original annual expectations of $345 million to $641 million.
They point out the machines have lived up to the hype on an individual basis. State officials predicted each machine would net between $70 and $90 in revenue every day. The average so far is $94, records show. Illinois gets a 25 percent cut for capital projects. Local governments get 5 percent.
In February 2013, five months after video gaming machines first went live, 4,353 terminals generated more combined tax revenue — $4 million — than any individual Chicago-area casino with the exception of powerhouse Rivers Casino in Des Plaines, records show.
A year later, 14,859 video terminals sent $13.2 million in tax revenue to state and local governments in one month.
Since then, gaming officials said the number of terminals has grown to nearly 16,000. That’s equal to 13 traditional riverboats, casino owners point out, each of which may house only 1,200 “gaming positions” — calculated by slots and seats at table games.
Meanwhile, all of the Chicago-area casinos generated $17.7 million in total tax revenue last February. That’s a 23-percent drop from the $23 million total generated in February 2012, before the video gaming machines went live.
State Rep. Bob Rita, D-Blue Island, said there’s nothing new about video gaming in Illinois. Lawmakers simply decided to legalize, regulate and tax an underworld industry, he said.
“Now you’re actually seeing and being able to have data based on real numbers,” Rita said. “So, how do you compare what was going on prior to the new law?”
Rita, a chief sponsor of the casino expansion bill in Springfield, said video gaming and traditional casinos serve different markets.
One of Rita’s proposals would put a casino in Lake County, near Toby’s in North Chicago. And just like traditional casinos worry about the creep of video gaming, bartender Farias is concerned about how a new casino would affect small businesses that have taken advantage of the terminals.
But she doesn’t think the Lake County casino will happen.
“I just really hope that it doesn’t,” she added.