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G-969 - 03/27/2012 - GAMING-VIDEO - Ordinances Supporting Documents (2)AGENDA ITEM Regular Board of Trustees Meeting of March 27, 2012 SUBJECT: Illinois Video Gaming Act FROM: David Niemeyer, Village Manager BUDGET SOURCE/BUDGET IMPACT: N/A RECOMMENDED MOTION: The Village Board Approve Ordinance 2012- GA- VIDEO- G -969, an Ordinance Amending Title 4 of the Village Code Regarding Gambling Background/History.: In 2009, the Illinois Legislature passed a law legalizing video gaming in the State of Illinois to fund the State's capital improvement program. Video gaming is now allowed at all bars and restaurants in Oak Brook, as well as fraternal and veterans establishments. The attached overview from the Illinois Municipal League describes the particulars of the law. Each establishment that chooses to host video gaming can have up to five machines on the premises. A tax of 30% is imposed on the net income from each gaming terminal, with one -sixth going to the municipality. The estimated net income for a municipality for each establishment that has the maximum of five machines is about $11,250 per year. In addition, a municipality can impose a license fee of $25 per terminal. There are approximately 28 liquor license holders in Oak Brook that would be eligible to install video gaming machines. Video gaming can be prohibited in a municipality either by the Village Board approving an ordinance prohibiting video gaming or by a referendum placed on the ballot that is the result of a petition that is signed by 25% of the legal voters of a town. It is estimated that four counties and 77 municipalities have approved a video gaming ban. This includes several of our neighbors including Hinsdale, Oakbrook Terrace, and Elmhurst. As is mentioned in the attached article, there have been a number of delays in the state's implementation of this program, but it appears that some machines could be installed as early as the fall. Some businesses, including the Village's golf course have already received solicitations Last saved by DEFAULT V: \OI LegislativeGenMan \Agendas\AGENDA MEMOS\2012 Agenda Memos \032712\AG -video gaming (2) 3-27 - 12.doc Last printed 6/14/2012 4:06 PM from potential gaming companies. If the Village Board desires to ban video gaming, it would be desirable to do this before applications for machines are received. I have discussed this potential gaming ban with Chuck Fleming and he does not think the gaming ban would be a negative for any of the businesses at the mall that would be eligible to install a gaming machine. Tracy Mulqueen has spoken with the hotel General Managers and we expect an answer on their position on Monday. There are pros and cons to the Village imposing a gaming ban. On the pro side, the Board may feel that allowing gambling in Oak Brook is not something that is appropriate for the image of Oak Brook and that the revenues offered by the state are not large enough to make it worthwhile. On the negative side, video gaming could be an extra incentive to attract more visitors to Oak Brook hotels and restaurants. The staff recommendation is to pass an ordinance banning video gaming which we have prepared and is attached. The Board may decide to approve or not approve this or it could ask staff to solicit additional feedback. Please note that our ordinance already prohibits gambling in liquor establishments, but that our attorneys believe we should have an ordinance specifically banning video gaming because of the 2009 state law that allows it. Recommendation: That the Village Board approve Ordinance G -969 amending Title 4 of the Village Code regarding Gambling. Last saved by DEFAULT V: \01 LegislativeGenMan \Agendas\AGENDA MEMOS\2012 Agenda Memos \032712WG -video gaming (2) 3-27 - 12.dm Last printed 6/14/2012 4:06 PM ORDINANCE 2012 -GA- VIDEO -G -969 AN ORDINANCE AMENDING TITLE 4 OF THE VILLAGE CODE REGARDING GAMBLING WHEREAS, the Video Gaming Act, 230 ILCS 40/1 et seq., ( "Wdeo Gaming Act') allows the use of video gaming terminals in certain establishments throughout the State but also authorizes a municipality to pass an ordinance prohibiting video gaming within the corporate limits of the municipality; and WHEREAS, the President and Board of Trustees of the Village deem it advisable and in the best interest and in furtherance of the general welfare of the citizens of the Village that the Village Code of the Village of Oak Brook be amended so that the use of video gaming terminals in the Village is prohibited pursuant to Section 27 of the Video Gaming Act; NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows: Section 1: Recitals. The foregoing recitals are incorporated into, and made a part of, this Ordinance as the findings of the Village President and Board of Trustees. Section 2: Amendment to Title 4 of the Village Code to Prohibit Gambling. Title 4, entitled 'Business and License Regulations," of the Village Code of the Village of Oak Brook, Illinois shall be amended to add a new Chapter 11, entitled °Gambling; which shall read as follows: "Chapter 11 Gambling 4 -11 -1: Definitions 4 -11 -2: Gambling Prohibited 4 -11 -3: Gambling Houses 4 -11 -1: Definitions. Wherever the following words or phrases are used, they shall, for purposes of this Chapter 11 have the meanings ascribed to them in this Section 4 -11- 1, except when the context otherwise indicates. (a) "Gambling" shall have the meaning set forth in Section 28 -1(a) of the Illinois Criminal Code of 1961, 720 ILCS 5/28 -1(a), as may be amended, but shall not include: (i) Any of the activities described in Section 28 -1(b) of the Illinois Criminal Code of 1961, 720 ILCS 5/28 -1(b), as may be amended; or (ii) A raffle conducted pursuant to Chapter 7 of Title 4 of this Code. (b) "Gambling Device" shall mean any clock, tape machine; slot machine or other machines or device for the reception of money or other thing of value on chance or skill or upon the action or which money or other thing of value is staked, hazarded,, bet, won or lost, including but not limited to: any video gaming terminal, as defined in the Video Gaming Act, 230 ILCS 40/5; and any mechanism, furniture, fixture, equipment or other device designed primarily for use in a gambling place. However, a "gambling device" does not include: Ordinance 2012 -GA- VIDEO -G-969 An Ordinance Amending Title 4 of the Village Code Regarding Gambling Page 2 of 2 (i) A coin -in- the -slot operated mechanical device played for amusement which rewards the player with the right to replay such mechanical device, which device is so constructed or devised as to make such result of the operation thereof depend in part upon the skill of the player and which returns to the player thereof no money, property or right to receive money or property; or (ii) Vending machines by which full and adequate return is made for the money invested and in which there is no element of chance or hazard. (c) "Gambling House" shall mean any building, vessel, or other structure or premises that is used in whole or in part for gambling, Including, without limitation, the use of gambling devices. 4 -11 -2: Gambling Prohibited. Gambling of any kind, including, without limitation, the use of any gambling device, is prohibited in the Village. 4 -11 -3: Gambling Houses. It is hereby unlawful to set up, keep, maintain or operate, or to permit to be set up, kept, maintained or operated, a gambling house in the Village. A gambling house shall be deemed a public nuisance and may be abated by the Village to the extent provided by law." Section 3: Effective Date. This ordinance shall be in full force and effect from and after its passage, approval and publication as required by law. APPROVED THIS 27th day of March, 2011. PASSED THIS 27th day of March, 2011. Ayes: Nays: Absent: Gopai G. Laimalani Village President ATTEST: Chadotte K. Pruss Village Clerk East fapilol Avenue I P.O. Box 51801 Springfield, IL 627051 P. 217.525.12201 F. 217.525.7438 Educate. Advocate. Empower. QUESTIONS AND ANSWERS ON THE NEW VIDEO GAMING ACT The Video Gaining Act, enacted on July 13, 2009, legalizes the use of video gaming terminals in specific land locations in Illinois. The new Video Gaming Act is codified at 230 ILCS 40. Other states that allow video gaming outside a casino or racetrack include Louisiana, Montana, Nevada, Oregon and South Dakota. Many of the provisions of this new Act will impact local governments and local businesses. This document is intended to answer the most frequent questions that municipal officials may raise, It is important that municipal officials consult with their attorney for specific actions that may arise from the implementation of the Video Gaming Act. The low allows for the placement of "video gaming terminals". What is a video gaming terminal? A video gaming terminal is any electronic game machine that upon insertion of cash, is available to play or simulate the play of a video game, such as video poker, line up and blackjack, using a video display and microprocessors in which the player may receive free games or credits that can be redeemed for bash. The term does not include a machine that directly dispenses coins, cash, or tokens or that is only for amusement purposes. Who regulates the machines and the operators of those machines? The Illinois Gaming. Board has jurisdiction over and shall supervise all gaming operations under this Act. Municipalities are not responsible for administering or enforcing the provisions of this Act. The Illinois Municipal League will be monitoring all rulemakings proposed by the Illinois Gaming Board pertaining to the implementation of this Act to be sure that no local mandates are adopted under the rulemaking procedure. Where may these video gaming machines be located? The statute specifically defines four types of establishments where video gaming machines are allowed: ■ Licensed establishment — a licensed retail establishment where alcoholic liquor is served for consumption on the premises such as a bar or restaurant; • Licensed fraternal establishment — a qualified fraternal organization that derives its charter from a national fraternal organization; • Licensed veterans establishment — a qualified veterans organization that derives its charter from a national veterans organization; and Q&A on New Video Gaming Act I luf 21, 2009 (Updated March 10,1010) Page l of 4 ■ Licensed truck stop establishment — a facility that is at least 3 acres with a convenience store and with separate diesel islands for fueling and parking commercial motor vehicles. What are the restrictions on the operation of these video gaming machines? The statute sets forth a number of requirements for the operation of these games, the more prominent restrictions are: • Location restrictions —Video gaming terminals may not be operated on any premises that is (i) located within 1,000 feet of a horse racing or riverboat gambling facility or (ii) located within a 100 feet of a school or a place of worship. ■ Number of machines —There may not be more than five machines on any premises. • Location of machines —Video gaming terminals must be located in an area that is restricted to persons over 21 years of age. The entrance to that area must be within the view of at least one employee. • Age restrictions --No licensee may cause or permit any person under the age of 21 years to use or play a video gaming terminal. • Liquor license required—Each premises establishment must possess a valid liquor license issued by the Illinois Liquor Control Commission. • Hours of operation -Those premises that are licensed establishments, licensed fraternal establishments, and licensed veterans establishments may operate video gaming terminals only during the hours of operation for the consumption of alcohol at that premises. There appears to be no limit on the hours of operation for licensed truck stop establishments. • Additional regulations —The Illinois Gaming Board may adopt rules that add additional restrictions or conditions on the placement or operation of the video gaming machines. Can municipalities prohibit video gaming in their community? The statute identifies two ways by which video gaming may be prohibited in a municipality: • The corporate authorities may pass an ordinance prohibiting video gaming within the corporate limits. Also, a county may pass an ordinance prohibiting video gaming in the unincorporated areas of the county. • A petition containing not less than 25% of the legal voters of that municipality may be filed with the clerk at least 90 days prior to the election. If this occurs, then a proposition will be placed on the ballot asking whether video gaming shall be prohibited. If a majority of the voters voting in the election vote "Yes," then video gaming is prohibited in that community. A similar referendum may be held in a county, but it is unclear from the language whether the prohibition would apply countywide or just in the unincorporated areas of the county. If my community bans video gaming, will it still be eligible to receive funds through the State's Capitol Program? The State's Capitol Program is supported through a combination of (i) the increase and expansion of taxes on alcohol, soft drinks and candy; (ii) increased vehicle 08A on Now Video Gaomng Ad I July 21, 2009 10,1010) M Page 2 registration fees; and (iii) video gaming. It is estimated that video gaming will raise approximately 25% of the projected funds to the State's Capitol Program. The Capitol Projects Fund is created under Section 6z -77 of the State Finance Act. The statute is silent regarding whether capitol projects may be held back because a county or municipality passed a ban to prohibit video gaming. Can a municipality impose other restrictions on video gaming? The statute is silent as to whether the municipality may impose stricter standards for the operation of video gaming than what is set forth in the Act. It should be noted that the Act does not preempt any home rule powers. Can a rdry' community have video gaming under this Act? No. A precondition for licensure is that the premises posses a valid liquor license. Additionally, video gaming may only be conducted during the legal operations allowed for the consumption of alcohol at licensed establishments, licensed fratemal establishments, and licensed veterans establishments. What about existing amusement games that are currently in operation? The new law makes it a felony to own, operate, or possess any device that "awards credits and contains a circuit, meter, or switch capable of removing and recording the removal of credits when the award of credits is dependent upon chance." A video gaming terminal that is operated only for amusement and that bears an amusement tax sticker is not subject to the prohibition until the earlier of (i) the expiration of the tax sticker or (ii) the Gaming Board's establishment of a central communications system. This prohibition could lead to the loss of some tax revenue for coin - operated amusement devices under Section 11 -55 -1 of the Illinois Municipal Code. Is there a tax on these machines and do municipalities receive any of the revenue? A tax of 30% is imposed on the net income from each video gaming terminal. The State collects the tax. Of the tax collected, one -sixth goes to the unit of local government where the machine is located. According to a report titled "The Estimated Revenues from a New Video Gaming Tax in Illinois" by the firm of Arduin, Laffer & Moore Econometrics, a reasonable median projection for the net income per machine is $45,000 per year. Using this projected income, the total tax per machine would be $13,500 per year, and the municipal share of that tax would be $2,250 per year. Therefore, for each establishment with the maximum number of five machines, a municipality will generate an estimated $11,250 in tax revenue per year. The unit of local government may use the proceeds of that tax for any general corporate purpose authorized for that municipality or county. 0&A on New Video Gaming Act I Jut 21, 2009 (Updated &610, 2010) Page 3 of 4 Can the municipality impose a fee on the video gaming terminals? Yes. A non -home municipality may not impose a fee in excess of $25 per terminal per year. There is no'limitation in the statute on these fees imposed by Home Rule Municipalities. Adoption of this fee by the corporate authorities is necessary. What are the penalties for violating the provisions of this Act? Depending on the violation, the penalties range from a petty offense with a fine not to exceed $100 to a Class 4 felony. Also, for certain offenses, the establishment may lose its licenses to operate video gaming and to serve or sell alcohol. When is it likely for us to start seeing these machines in Illinois? The Video Gaming Act went into effect on July 13, 2009. But under the statute, video gaming machines may not become operational until the Illinois Gaming Board establishes a centralized communications system that connects the machines. The Gaming Board. In February of 2010, the Gaming Board closed its solicitations for vendors to assist in creating this system. The IML has been told that it is unlikely that that video gaming machines will be allowed to be operational before January of 2011. Additional Information is available at: The Illinois Municipal League: www.inil.ore The Illinois Gaming Board: www.igb.state.il.us Won New Ydeo Goma g Act I July 21, 2009 (Updated March 10, 2010) pap 4 vworeca u='a woras on a machine at incredible Technologies In Arlington Heights, The Compog which makes arcade and electronic gam - Ing machines, has begun manufacturing its first line of video poker games, Which are slated to be unveiled In Illinois, ' Sltate'3 ° e Poker Still . qe-.� 'em BY Bat, atnertmtT Even if gambling begins ppleamy o£ hurdles to. clear, the Tribune llibum spade t folind.Amongtherm The firstvideopolar machines inTlllaois by year's end, local bans ®Thallgnou GamingBOerdhwcomppkted -'l LL�� Its review 'of only 46 of 144 Bcame tolegallypaywlnneracouldbeplu dines could shrink payout a llcetiore received from manufectimm, .,,,.., .. a..,,e_�.. __,.. r€s__,__ P Y xp .. rears ofdelaya, more then shtab populndan live In a¢fwmd mein illegal, a have, yot, to accept _- _.___.___-. 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