G-969 - 03/27/2012 - GAMING-VIDEO - Ordinances Supporting DocumentsITEM 10.11.1)
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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
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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.
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Last printed 3232012 4:51 PM
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Educate. Advocate. Empower.
QUESTIONS AND ANSWERS ON THE NEW VIDEO GAMING ACT
The Video Gaming 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 law 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 cash. 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
08A on New Video Gaming Act I July 21, 2009 (Updated March 10, 2010)
Page I 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 New Video Gaming Act I July 21, 2009 (Updated March 10, 2010) Page 2 of 4
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'dry' 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 fraternal
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 July 21, 2009 (Updated March 10, 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, videc
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.iml.org
The Illinois Gaming Board: www.iRb.state.il.us
Mon New Video Gaming Ad j July 21, 2009 (Updated hrch 10, 2010)
Page 4 of
veronica Garcia works on a machine at Incredible Technologies In Arlington Heights. The company, which makes arcade and electronic gam-
ing machines, has begun manufacturing Its first line of video poker games, which are slated to be unvelled In Illinois.
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Tribune reporter
soon as September, but only if gaming
officials overcome steep staffing shortages
to opprove thousands of licenses.
Even when the games are finally nnuhing
after nearly three years of delays, more than
35 percent of the state's population live in
areas where the games remain illegal, a
Tribune analysis has found.
That's because 77 communities have
on
$200 million
But before
Even if gambling begins
by year's end, local bans
could shrink payout
plenty of hurdles to clear, the Tribune
7 found.Amongthem:
® The Illinois GamingBoard has completed
its review of only 46 of 144 license
applications received from manufacturers,
distributors and "terminal pperators" —the
owners of the games who will place them in
establishments,
GO Gaming officials have yet to accept
applications from thousands of bars, restau-
rants, truck stops and fraternal organiza-
tions that plan to offer the games, or to start
investigations needed to approve those
licenses.
® Game manufacturers have yet to be given
final technical specifications from the state
and still most have their games tested by
independent laboratories to ensure they
W. Illinois approved video poker wagering nearly
are three years ago, and many hurdles remain. Please turn to Page
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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., ( "Video 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 Tkle 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:
Gopal G. Lalmalani
Village President
ATTEST:
Charlotte K. Pruss
Village Clerk