Illinois Bars to Install Video Poker Machines

Video Poker Machines to Install in Chicago land Bars

The law passed in 2009 and the starting line is filled with video poker machine operators ready to blitz Illinois, especially the Chicagoland area.  The final approvals and applications for the gaming licenses are expected by fourth quarter of this year, 2010, Chicago is expected in second quarter of 2011.  I am here to clear up some of the questions surrounding the much anticipated integration of the Las Vegas tradition into the Chicago bar scene.

Let me start by saying, “I am in total support of this new gaming law!”   Being a past bar/restaurant owner and a spectator to the hospitality industries falling profits and traffic, gaming machines will only bring much needed profits to such a beaten industry.  In some cases, gaming profits could even cover a bar’s rental expenses for the year.

So lets review some areas where you might have questions:

1.) The Illinois Law

The Illinois Law was instituted in July 13, 2009.  It qualifies the following to become hosts of the video poker terminals; bars, clubs, restaurants, truck stops, fraternal and veteran organizations.  Each of these locations are designated as a “Host”.  There will also be the “Operators”‘ who supply and service the machines.

The gaming license is attached to your current liquor license and you do need a liquor license to host the machines in your establishment.  Each license also allows the establishment to host one and up to five machines.  The area to where the poker machine terminals are to be installed must be a restricted 21 and over area.  This makes it easy for bars and clubs, but if you are a restaurant that allows patrons of 20 and under, you need to have a designated room for the machines.  The good news on this restriction is your operator might front the cost to the build out of the room, if needed.  As the host, you are expected to supply the power and internet access to the video poker terminals.

The Illinois gaming license for the host is expected to be around $500 a year.  Yearly renewals are unknown at this time.  This cost must be paid by the “Host”; the bar or restaurant owner.

2.) Video Poker Terminal Hosting Restrictions:

Here is a list of general licensing rules for the hosting location of the video poker terminals:

• No criminal background
• No illegal practices regarding video gaming conduct
• No questionable business practices or financial arrangements incidental to video gaming conduct
• Must be an IL Resident or business owner in IL for at least 48 months prior to 7/13/09
• Valid liquor license
• Cannot be located within 1,000 ft of other wagering institutions
• Cannot be located within 100 ft of school, church or place or worship
• No transfer or assignment or licenses permitted

3.) Illinois Video Gaming Act: Revenue Sharing Breakdown

Here is the breakdown on how the revenue sharing will be handled in Illinois.  This is standard across the board and cannot be manipulated, so get it out of your head if you plan on negotiating your cut with the operator.  50-50 is non-negotiable with your operator.

• 30% off total revenue goes to the State of Illinois
• Operators and hosts split the after-tax profits 50-50 (35%-35%)
• Operators collect all Video Gaming Terminal revenue and pay tax and host
• Operators must submit and report all Video Gaming Terminals to the Illinois Gaming Board within 15 days of collection

What does this all mean to you?  Each machine is expected to have a 20% hold, giving a 80% player pay back.  The average terminal is expected to see $500 a day in player revenue, with 80% being paid back to the player, the machine will hold $100.  30% to the state and 35% to the operator leaves 35% ($35) after tax to the host, bar owner.  That comes out to $12,600 per year in additional revenue per terminal, $63,000 on five terminals.   With only a $500 cost (IGB License) to the host, where is the negative?

Also, very important and please make sure to take note: the operator cannot bribe you or pay your gaming fee to help persuade you to use their services.  Not only is it against the law, but you can end up losing your bar and carrying a class 4 felony.  So “PAY TO PLAY” beware!

4.) The operators responsibility to the host

Here is a list of items that are the responsibility of your operator.  This will be the company that will install and service your video poker machines.  The operator will also be funding the cost of the machines, which can carry a heavy cost of up to $20,000 per machine, so make sure to treat your operator like a genuine business partner.  They are placing a very heavy investment into your establishment.

• Each terminal must be licensed prior to placement in the establishment
• Every terminal must be tested and approved by the state
• Terminal may not directly dispense coins or cash — only vouchers
• Maximum wager played per hand is $2
• Win cannot exceed more than $500
• To service, maintain or repair terminal, person must be a licensed technician, terminal operator or employed by terminal operated
• Operators to supply all money for all payouts
• Terminals will be linked to a central communication system
• File, report and pay all revenue and taxes to the Illinois Gaming Board

5.) Illinois Video Gaming Act: Local City and Town Opt-out

If you are wondering about your local town, well….here is the list.  Each town has the option to opt-out of the gaming license law.  Meaning, if your establishment lands in any of the following towns you will not be allowed to carry the video poker terminals in your location.  To make it even worse, you are even forbidden to carry any of the NON-PROFIT gaming terminals that are currently in the market or in your establishment.  Those terminals need to be removed by the end of July 2010.  Basically, you get both broken ends of the stick!

Current Opt-Out Towns and Cities

• Addison                       Elburn                         Lake Forest                   Rochester
• Batavia                          Elmhurst                    Libertyville                  Rosemont
• Beach Park                  Evanston                    Lincolnwood               Schiller Park
• Burbank                        Glen Ellyn                  Lisle                                South Holland
• Burr Ridge                   Glenview                    Metawa                          Villa Park
• Bloomgindale             Hanover Park          Mount Prospect         Wayne
• Buffalo Grove            Hawthorn Woods   Naperville                     West Chicago
• Carbondale                  Highland Park         North Brook                Wheaton
• Carol Stream               Itasca                          Oak Park                        Wilmette
• Country Club Hills   Kildeer                        Oak Brook Terrace    Winfield
• Darien                            La Grange                  Orland Park
• East Dundee                Lake Bluff                  Palos Heights

Illinois Cities & Towns Considering the Opt-Out. If your town is on this list, get down to town hall and voice your opinion on why your town should allow the video poker machines.

• Arlington Heights                Oswego
• Campton Hill                          Park Ridge
• Deerfield                                  West Dundee
• Elgin                                          Winnetka
• Gurnee
• Lindenhurst

6.) How to Get Started!

Wondering how to get started?  Is your town NOT on the opt-out list and you plan to have terminals in your bar or restaurant but do not know where to start.  I have done some home work and I am glad to report to you some ideas on where to start.

You need to find an operator to install and service your terminals.  Since no contracts can yet be signed due to no licenses available till the end of the year, you can still commit to your operator.  Operators are currently signing LOI (Letter of Intent to Install).  I have found one VERY SOLID operator here in Illinois and I highly recommend Lattner Entertainment Group.  Lattner is a very well known casino and gaming company.  The company works with a variety of Horse Track management companies and OTB (Off Track Betting) sites, which goes to show quality, experience and history.

Since no licenses are obtained and operators are still in the application process, not all operators are going to obtain their license.  YEP, you heard it correctly!  You might have been approached by an operator but they do not have a license to install the machines.  If the owners behind Lattner Entertainment cannot obtain a license for the video poker terminal install, who can?   They are the safest bet in the city!  I would almost bet, no pun intended, that they receive their license faster and quicker than any other operator, due to their background and history.

Lattner also has one of the best player programs on the market.  Being a gaming company, Lattner has player cards that benefit the player for gaming at your location.  You basically become part of a larger system, which gives even more benefit to your location and to the player.  Their player rewards system is expected to be very well constructed, so we are eager for their launch.

As you can see, its better to be serviced by an actual gaming company than some local coin operator that handles pool tables and Juke Boxes.   There is much to the casino gaming world and I would recommend having a top operator in your corner.

You can contact Lattner Entertainment Group by visiting their website at www.thebestvgts.com or call their current reps at 312-890-6385.

Hope this article helps and answers some of the questions you might have in regards to the Illinois gaming license and the video poker machine gaming law here in Illinois.

If you have any other questions or need to start the application process, contact me direct for further details at mikej@myclubcrawler.com

Related Links:

Current Amusement Video Poker Machine Removal

Illinois Gaming Board (IGB) Video Poker Rules and Regulations

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