As area economies creep toward recovery, video gaming machines are providing an answer for municipalities searching for ways to raise their declining tax coffers.
“Back when this [video gaming] first started, we knew we were in desperate need of police vehicles,” said Rock Falls city administrator Robbin Blackert. “Unfortunately, like every other municipality we don’t have money coming out of our ears in our general fund.”
Blackert said Rock Falls was one of the first cities in Whiteside County to pass a video gaming ordinance which, under state law, dictates video gaming revenue to be taxed at 30 percent, with five-sixths of the proceeds going to a state capital improvement fund and one-sixth to local governments.
“We earmarked our video gaming revenue stream for police vehicles and we are now leasing four new vehicles,” Blackert said.
She said the leasing program costs Rock Falls around $41K annually and the current income from video gaming is coming in at over $45K a year.
So, if the City of Rock Falls were sitting in front of a video gaming terminal, it would have just lit up, played a little tune and paid out four new police vehicles and more than four thousand dollars in mad money.
“Gaming is a great funding stream,” Blackert said. “We are enjoying it. We’re not going to be building any palaces with it, but it is timely and we have good, solid law enforcement as a result.”
Video gaming went live about a year ago in Illinois and video gaming terminals are now up and running in restaurants and businesses throughout the suburbs.
Savanna mayor Tony McCombie echoed those sentiments, saying they are averaging near $2K monthly.
“At the end of October we had received about $9K from gaming and those funds are used in our civic or general fund,” said McCombie. “We had projected about $6K from gaming for our budget and here we are with five months of our budget left and we are already at $9K. It is actually a pleasant surprise.”
She said she hears regular positive feedback from some of the businesses that host video gaming machines.
“Our business owners are pleased with the outcome of gaming as well,” McCombie said. “It’s all working out well.”
According to statistics posted on the State of Illinois Gaming Board web site, gamblers wagered an estimated $458.3 million and won $422.6 million during the first six months of legalized video gaming in Illinois.
“We have not experienced any particular problems with video gaming,” said Morrison city administrator Barry Dykhuizen. “We’ve had nothing reported from our police department and no significant increases in crime.”
He said Morrison is funneling their gaming revenues into their general fund operations and cash flow.
“We are anticipating about $12K in revenue this year,” Dykhuizen said.
Who pays the price?
While video gaming generates noteworthy revenue for state and local governments, it carries the potential to create gambling addiction and related social ills.
“The problem is they focus on revenue, and don’t consider the cost to the community,” said Illinois Church Action on Alcohol & Addiction Problems Executive Director Anita Bedell.
She said gaming machine owners and the establishments that feature them are the big winners, while residents and communities are losers. However, area municipal and county administrators say they have seen no problems with gaming and Illinois Gaming Board Spokesman Gene O’Shea said the State of Illinois would create programs for people who have an addiction to video gaming machine gambling, if needed.
“We already have something for gambling addiction in the casinos,” said O’Shea. “How that will work with video gambling has yet to be determined. It will depend on, to some extent, the need. I’m not saying that there won’t be a need, but we have to be aware of it. And the only way to be aware of it is if people come forward and let us know.”
Sterling City Manager Scott Shumard said they are not experiencing any problems with gaming.
“If it were not for the extra revenue coming in we would not know it was going on,” Shumard said.
He said they are directing the revenue to their general fund.
“Some of our other revenues haven’t been as strong as we hoped and I think we’ve seen a drop off in the replacement tax in the last few years, but I think gaming is kind of helping to fill that gap.”
Replacement taxes are revenues collected by the State of Illinois and paid to local governments to replace money that was lost by local governments when their powers to impose personal property taxes on corporations, partnerships, and other business entities were taken away. These taxes resulted when the new Illinois Constitution directed the legislature to abolish business personal property taxes and replace the revenue lost by local government units and school districts. In 1979, a law was enacted to provide for statewide taxes to replace the monies lost to local governments.
Shumard said he expects further growth.
“I understand we are adding five more machines this week and as more people add machines I expect we will see increasing revenues,” he said.
Statewide, video gaming machine owners and operators shared $36.4 million of net income from video gaming during the last six months, but some areas are not participating - yet.
Carroll County administrator Michael Doty said the county did not take action on video gaming because there are only about a half dozen liquor licenses in its unincorporated areas and none of those licensees are offering video gaming.
He said revenue collected from establishments with electronic gaming that are located in municipalities goes to those municipalities, while revenue collected from establishments in the county’s unincorporated areas goes to the county.
“The board talked about it and they decided not to take action upon it at that time, but will look at it sometime down the road if someone becomes interested in gaming,” said Doty.
Whiteside County administrator Joel Horn said they are earmarking their video gaming revenue stream for the county’s capital improvement fund.
“That funding will be used to pay for improvements around the court house,” Horn said.
Whiteside County currently licenses 14 gaming machines in three locations and receives more than $2K monthly or slightly over $25K annually.
According to a 2012 estimate from the Illinois Commission on Government Forecasting and Accountability, video gaming could eventually raise $345 million to $640 million a year for the state. The estimate was based on the projection that 45,000 to 65,000 video gaming machine terminals would eventually be operating throughout the state. There are currently around 6,000 video gaming machines operating in about 2000 locations statewide.