Latest Post | Last 10 Posts | Archives
Previous Post: That funding is not what it appears
Next Post: Question of the day
Posted in:
* Basic facts to remember when talking about legalized poker machines. The quotes are from Rep. Lou Lang (D-Skokie)…
“While you can argue this (video gaming machines) is a dangerous and addictive form of gaming, there are 65,000 of these machines licensed only for amusement throughout the state now. Many are (illegally) paying out.” […]
Lang said by legalizing and regulating gaming payoffs the total number of machines would be reduced across the state from 65,000 to 40,000 and he added establishments violating laws regarding the machines would lose their liquor licenses. […]
Under the new law, net revenues from the machines would be taxed at a rate of 30% with 25% going to the state and 5% going to the local municipality.
The law provides local municipalities the ability to ban the legal gaming machines from their communities through either a vote of the city council or village board or through a referendum vote of the people.
Those amusement licenses on existing poker machines will all expire soon. And then they can’t be renewed. The state has the right under the new law to seize those unlicensed machines and destroy them and take away the liquor licenses of violators. That’s a particularly important point to remember. Tavern owners don’t like to endanger their licenses.
The referendum requirements are probably way too high, but local governments can ban the machines, and I expect at least some will do so.
* The basic problem with the law as I see it is that the GA gave oversight powers to the Gaming Board, which doesn’t have the resources to deal with the new reality. That oversight should’ve gone to the Illinois Lottery, which already has a statewide network and the machines that go with it. The Gaming Board is gonna be overwhelmed…
First up for the Gaming Board is settling on regulations and establishing, among other things, how gamblers will be paid their winnings and determining which bar owners must submit to criminal background checks, board spokesman Gene O’Shea said.
“It’s an understatement to say this is a major undertaking,” O’Shea said.
Then, the Gaming Board will seek proposals from companies to create and maintain a central computer system to keep track of “how much money goes in and how much money goes out,” O’Shea said. All video poker machines will have to come from licensed manufacturers, which have not been selected yet. The whole process could take 18 months or longer, O’Shea said.
Giving the program to the Lottery would’ve also avoided bringing the coin operated machine distributors into the equation. Andy Shaw of the Better Governement Association makes this point in a recent op-ed…
That will be to the delight of the mob, which has its fingerprints all over this business
Saloons provide jobs and sales taxes. The state might get its cut, but will it come at the expense of municipalities?
As noted above, municipalities will get a cut from the games. And now that all the profits will have to be reported, that will likely mean more taxes will be paid.
* A factually incorrect objection in the SouthtownStar…
A 2005 report by the North Carolina Family Policy Council says video gambling is “socially devastating.” Video poker has been legal in North Carolina since 1993. The report says it is difficult for police to monitor illegal payouts, even with regulated machines.
Actually, those NC video poker machines are licensed for “amusement only” - the same as in Illinois before our new law. You can’t use that “study” (which is more of a report than a study, anyway) to compare Illinois’ future with NC’s present. Also, that NCFPC group seems far more interested in limiting “homosexual rights” than video poker.
Thoughts?
posted by Rich Miller
Friday, Jul 17, 09 @ 11:46 am
Sorry, comments are closed at this time.
Previous Post: That funding is not what it appears
Next Post: Question of the day
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
Also, that NCFPC group seems far more interested in limiting “homosexual rights” than video poker.
Yikes! That is irrelevant! Stick to the poor facts they have in their report and discredit them through it instead!
Comment by VanillaMan Friday, Jul 17, 09 @ 11:49 am
Yeah, way to taint the well, Rich…
Comment by Johnny USA Friday, Jul 17, 09 @ 11:52 am
LOL
Look, if I wrote a “study” about hockey, you could legitimately undercut my report by saying I’m a political reporter who also loves baseball.
Comment by Rich Miller Friday, Jul 17, 09 @ 11:53 am
I fully agree, that last shot on the NCFPC is a pure ad hominum attack.
That they come to a different conclusion than you about that controvesial topic doesn’t undermine the quality of their work on another topic.
Comment by doc Friday, Jul 17, 09 @ 11:56 am
===the total number of machines would be reduced across the state from 65,000 to 40,000 ====
I disagree with Rep. Lang on this point. Obviously there are bars out there that have more than 5 machines and those will have to cut back. But most of those have that many machines not because there are customers waiting to play but because they are older machines that can only play one type of game and they want to offer their customers some variety. The newer machines will all have multiple games to chose from so not as many will be needed.
But the reason I think the number will go up is because none of the national companies that own restaurants or hotels (TGI Fridays, Hilton, etc) now have them. But most of these places will probably now but them in. Some of the hotels already have 4 - 5 separate liquor licenses and that means they might have 25 in their premises. As an example just look in downtown Springfield. Between the Abe Lincoln Hotel and the Hilton there might be up to 50 machines. Why drive to Peoria or East St. Louis when you have your mini-casino right there.
Comment by Been There Friday, Jul 17, 09 @ 12:00 pm
The video poker bill, as I understand it, contains a $500 cap on payouts. That, in my opinion as a gambler, makes it a sucker bet and I don’t think people are going to play as much. Artificially capping the payout will result in less revenue simply because gamblers will find a better way to risk their money.
I assume the $500 cap only applies to new video poker and that the same machines in the casinos won’t be bound by that cap. I hope someone can clarify that for me.
Comment by 47th Ward Friday, Jul 17, 09 @ 12:02 pm
I don’t buy the argument that the Mob will profit by making payouts legal. They profited when they were illegal.
Legalizing booze and the Lottery were big hits to Mob interests. They had to move on to other things — like government (Dem or GOP) and unions.
Comment by wordslinger Friday, Jul 17, 09 @ 12:04 pm
Sorry Rich I have to disagree with you and Lang on the point that there will be fewer machines under this law. It simply isn’t realistic.
Go into any dive bar and VFW and sure you may see 4-5 machines, tops. But this law will allow them in every bar and restaurant serving liquor. I can’t believe the general public or any reasonable person who would now find slot machines in their regular tavern, chain restaurant and every other place where you can pour liquor as somehow a reduction in the spread of gambling machines across the state. This varies, of course, by region. Downstate there are certainly more. But check the suburbs, check bars on the North Side of Chicago and everywhere else. They are some places, but not even close to most.
Another enlightening fact, Senate President John Cullerton says he has never even seen these machines out there and I bet that is the same for most voters. Now they will see them everywhere.
How can you not call that an expansion? Your argument is simply industry spin, although I do think you personally believe it.
Comment by anon Friday, Jul 17, 09 @ 12:06 pm
Another response to poster:
There is not a limit of $500 on payouts, there is a limit of a $500 win per spin. That means the machine can pump out a ticket with thousands of dollars on it, you can just only have a top jackpot of $500.
Again, more industry spin.
Comment by anon Friday, Jul 17, 09 @ 12:09 pm
And one more thing… We talk about other states that do this. Great, now we are in the company of Louisiana and West Virginia. Good job Illinos!
Comment by anon Friday, Jul 17, 09 @ 12:10 pm
===Go into any dive bar and VFW and sure you may see 4-5 machines, tops===
Wrongo.
Also, those bar owners will have to pass background checks, and they might not all make it.
Comment by Rich Miller Friday, Jul 17, 09 @ 12:12 pm
Thanks Anon,
I might be misunderstanding this, but if I hit a royal flush on a 5 quarter bet, most machines I’ve seen in casinos would pay about $1200. So by capping that at one spin payout at $500, (presumably to help some legislative sponsors feel better about spreading the scourge of gambling throughout the state), they end up making it such a bad bet that no one plays and the expected revenue falls well short of the target.
That’s not spin, it’s just bad policy.
Comment by 47th Ward Friday, Jul 17, 09 @ 12:13 pm
let the machines roll! i don’t want to play them, but apparently some people do. just like I don’t want to play any games from the Lottery. and besides, the State supports the Lottery so I don’t see much difference.
thanks for the info on the “policy council,” outing them as bigots. they also decide to weigh in on IVF in a more measured fashion but with fear about anyone other than married people having children.
Comment by Amy Friday, Jul 17, 09 @ 12:14 pm
>The referendum requirements are probably way too high, but local governments can ban the machines, and I expect at least some will do so.
Rich, the understanding I gathered from a town hall with Rep. Mark Walker in Arlington Heights is that the bill punishes municipalities that ban the machines by denying them some funding (I don’t recall exactly which funding).
Also, racetracks are specifically prohibited from installing them.
Comment by Dr Kilovolt Friday, Jul 17, 09 @ 12:15 pm
One more point,
I understand capping the maximum wager, that makes a bit of sense. Odds should determine the jackpots, and 500-1 is artificially low for video poker odds. If the odds to hit a straight flush are 1000-1, and I bet $2, I want to receive $2000, not $500.
Does that make sense?
Comment by 47th Ward Friday, Jul 17, 09 @ 12:18 pm
===the bill punishes municipalities that ban the machines by denying them some funding ===
Yeah, they wouldn’t get the funding from the bets.
Comment by Rich Miller Friday, Jul 17, 09 @ 12:19 pm
Rich, the legislation I read didn’t require any additional background check for tavern owners. They simply must pass the one they already do to have a liquor license. Distributors and others will have to get certified by the IGB, but not the establishment owners.
and finally, I don’t see what you are missing — If you can tell me even more than half of every liquor establishment you go in has five slot machines, then fine this isn’t an expansion.. or you just need to find better hangouts.
Seriously rich, Applebees, Buffalo Wild Wings, Weber Grill, Dave and Busters, or most upscale Lincoln Park and Lincoln Square bars have slot machines?
Comment by anon Friday, Jul 17, 09 @ 12:21 pm
A far more reliable study was done by BIll Eadington a few years ago on the effects of ‘convenience gambling’ on the social fabric of communities and people. Australia has already gone through the revenue potential versus the social cost equation of video poker in local bars and taverns by deciding, in some locations, that it is not worth it.
Comment by walter sobchak Friday, Jul 17, 09 @ 12:27 pm
===Distributors and others will have to get certified by the IGB, but not the establishment owners.===
Wrong.
From the new law…
No person may be licensed as a video gaming terminal manufacturer, distributor, supplier, operator, handler, licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment if that person has been found by the Board to:
(1) have a background, including a criminal record, reputation, habits, social or business associations, or prior activities that pose a threat to the public interests of the State or to the security and integrity of video gaming;
(2) create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of video gaming; or
(3) present questionable business practices and financial arrangements incidental to the conduct of video gaming activities.
Comment by Rich Miller Friday, Jul 17, 09 @ 12:33 pm
===Also, those bar owners will have to pass background checks, and they might not all make it. ===
While I agree with you on this point I also know people already buying up bars and contemplating opening brand new ones just to take advantage of this.
===500-1 is artificially low for video poker odds===
I agree these odds are low but don’t forget that these machines are not limited to just video poker. They can and will be slot machines and need to pay out at least 80%. Most of these machines now you are lucky to get a 50% payout and they seem to be doing alright. The market will determine if they pay out more.
Comment by Been There Friday, Jul 17, 09 @ 12:44 pm
== Wrongo.
Also, those bar owners will have to pass background checks, and they might not all make it. ==
There is a VFW in Springfield that has something like 12 or 14 (I was there for a wedding reception).
The background checks are going to be a challenge (it will likely require 2 people to be checked at each venue (perhaps as many as 10))
For some of the challenges on that
http://htsblog.blogspot.com/2009/06/trib-talks-video-poker.html
Also with the rules limiting how many machines anyone can control (as a % not a raw number) I don’t see how you push machine one out until you have at least 20 machine distributors day one. Otherwise you might be breaking the law when you push the first machine out (since you would have more than 5% of the market).
Also if I was the gaming commission I would be sure I documented carefully when I got everyones application and make sure to process them in order.
Comment by OneMan Friday, Jul 17, 09 @ 12:55 pm
Antoine Walker’s problems underscore the dangers of gambling. If one can run through NBA star money at casino’s, God only knows how many mortals will be ruined by video poker.
Comment by Quizzical Friday, Jul 17, 09 @ 1:03 pm
I reviewed the law for a sports club. We currently have 5 machines that the Club OWNS outright. That means we do not split with anyone. Being a closed club only our members and spouses can play. If we net $1000 per month, under the new plan we will only make $350 because we have to pay the 30% tax AND split the rest with the Terminal Owners. We are actually considering selling our current machines, and giving up the Video machines all together.
I do not beleive the state will have near the revenue they estimated from the Video Poker tax. I believe a lot of clubs will give them up.
To any LEGISLATOR READING:
This bill will cost the state at least a fortune for the mainframe that the machines must connect to or the service provider on contract.
My solution is why not let the elgible bars/clubs etc be allowed to buy the machines (or lease them if they wish) and require them to report monthy to the state. If they get audited and it is found they falsified the reports then they loose their liquor license. IF this was allowed most clubs would continue to keep the machines, however I believe a large number of them will get out due to the lack of profit.
Comment by He Makes Ryan Look Like a Saint Friday, Jul 17, 09 @ 1:17 pm
Naive with blinders on is the most polite way I can describe the pro position.
We know we will create a new bureaucracy to select the vendors and vet the facilities.
There will be a huge skimming process whereby not all revenues will be reported.
Opportunities for bribes for special treatment will be created at several levels.
There will be many more machines installed over time than anyone thinks.
Social costs will be greater than projected.
…and many more unintended consequences.
Thank you Illinois and Chicago Democrats.
Comment by Plutocrat03 Friday, Jul 17, 09 @ 1:17 pm
===Thank you Illinois and Chicago Democrats===
You’re welcome Pluto, but in all honesty, the IL GOP deserves as much credit for this cowardly approach to funding critical state priorities as my party does. Cross and Radogno prefer gambling expansion to raising other taxes, so when we need to rebuild roads and bridges, we don’t have many choices left.
Comment by 47th Ward Friday, Jul 17, 09 @ 1:25 pm
No one is more efficient at cleaning out other people’’s wallets than the Chicago Dems. Unfortunately they are even more skilled at spending the collected money several times, so the ‘needs’ for new revenue are never ending.
Perhaps the Chicago machine could find a better use for TIFF money than spending it on “Big Willie”
School kids and city workers don’t really need any more money anyway.
Comment by Plutocrat03 Friday, Jul 17, 09 @ 1:36 pm
Will the new law make these immediately legal across the state or are they already illegal in some communities and will remain so unless the local law is changed? If the latter, how does this impact the resulting distribution of the machines and the revenue they will bring to the state? If they are already banned in Rockford or Springfield or Chicago, that would mean a lot less revenue from the get go.
Comment by Pot calling kettle Friday, Jul 17, 09 @ 2:09 pm
interestringly enough, the majority arguments in favor of legalizing video poker - revenue gernating, regulation, reducing crime etc - are all arguments which support legalizing marijuana.
Comment by Ghost Friday, Jul 17, 09 @ 2:20 pm
The next way to avoid the income tax is legalizing prostitution…but instead it would just be massage parlors in local bars because it’s already being done for amusement only. And of course that would prevent homosexuality, too.
Comment by Abe's Ghost Friday, Jul 17, 09 @ 2:22 pm
Fed Up, take it somewhere else please. 99% of the commenters here know what they are talking about. The other 1% just want to throw partisan bombs.
PS: it is could HAVE, not could OF. We’ll also accept could’ve.
Comment by 47th Ward Friday, Jul 17, 09 @ 2:36 pm
fed up, if you swear like that one more time in a comment I will ban you for life. Period.
Understood?
Comment by Rich Miller Friday, Jul 17, 09 @ 2:46 pm
Rich my apologies.
- 47th Ward - Friday, Jul 17, 09 @ 1:25 pm:
===Thank you Illinois and Chicago Democrats===
You’re welcome Pluto, but in all honesty, the IL GOP deserves as much credit for this cowardly approach to funding critical state priorities as my party does. Cross and Radogno prefer gambling expansion to raising other taxes, so when we need to rebuild roads and bridges, we don’t have many choices left.
47th you did not need one Gop vot to pass a tax increase you could HAVE but did not. You Could Have banned gambling but did not. The GOP is not a factor in IL. The DEMs have had complete control for the last 6 years but infighting and corruption are more important to the dem party than any actual platform or agenda. The dems have broken this state and you just refuse to wear the jacket. the Gop has nothing to do with it because they are not even a factor until overtime sessions but your party is to corrupt to even pass a budget on time.
Comment by fed up Friday, Jul 17, 09 @ 2:57 pm
I’ll try to type slower for you fed up,
This thread is about a major legislative initiative to finance a capital construction budget. The video poker proposal was supported by Democrats and Republicans alike. Ergo (that’s Latin for therefore), this is a bi-partisan initiative.
Is this your first time at Capitol Fax? The capital budget, financed with video gambling, has been among the highest priorities of Leaders Cross and Radogno. I think it is a horrible way to fund government priorities, and I think the Democrats are just as gutless as the Republicans on this.
Do the Democrats deserve most of the blame for the sorry state of affairs facing Illinois? Sure. Are the Republicans blameless? Not a chance.
I’m a Democrat, not a sycophant (look it up).
Comment by 47th Ward Friday, Jul 17, 09 @ 3:08 pm
Thank you typing slower. It does not matter what the bill is about the fact still stands the Dems did not need one gop vote to pass the bill. If the Dems wanted to raise taxes to pay for a capital bill the could have. If the dems wanted to ban all gambling they could have. The Gop is a non factor in Ill politics. Saying we have legal video poker because thats what the GOP wanted is a cop out. The dems did not need one gop vote to pass any bill they wanted. They chose to pass gambling expansion because they felt it was a better choice and now you want the gop to take some of the blame when you read the criticism. In your response please use more words like sycophant it is very educational.
Comment by fed up Friday, Jul 17, 09 @ 3:23 pm
Most of the GOP have decided that it is their duty to follow along behind the Dems and carp about whatever happens in the legislature. Unfortunately, they rarely offer up any concrete ideas.
The current budget woes are an excellent example, the Dems put up bone-headed plans and the Repubs complain about them but offer no alternatives. Then the Dem plan passes and we are all stuck with a fiscal mess. It would be nice if the Repubs would come out with a complete budget plan of their own that is balanced and responsible and shows what they would keep and what they would cut and how they would pay for it. That goes for the capital plan as well.
At this point they have a lot more to gain than to lose. At the very least the Repubs would be able to show some leadership, and it might push the Dems to put out something more reasonable.
Comment by Pot calling kettle Friday, Jul 17, 09 @ 3:41 pm
Just because the Dems can pass things without Repub votes does not leave the Repubs powerless. It is just easier for them to claim to be so.
Comment by Pot calling kettle Friday, Jul 17, 09 @ 3:44 pm
The entire capital package could not have been passed without Republican votes in the House because the debt requires a three-fifths majority.
Let’s move along, please.
Comment by Rich Miller Friday, Jul 17, 09 @ 3:45 pm
I find it interesting that the video poker bill, which was mentioned in Illinois Issues earlier this spring as a Mautino stand alone is now a Lang thing.
Comment by Pot calling kettle Friday, Jul 17, 09 @ 3:50 pm
The 65,000 number for existing machines used by Lang and his allies is bogus, as Mark Brown has established.
The capital plan passed in May when a simple majority sufficed. Nonetheless, the majority of Republicans in both houses voted for HB 255.
Comment by reformer Friday, Jul 17, 09 @ 4:02 pm
If illegal payouts are widespread now, then the state will be licensing bar owners who are now engaged in illegal gambling. There’s an appropriate qualification!
Comment by reformer Friday, Jul 17, 09 @ 4:04 pm
===The capital plan passed in May when a simple majority sufficed. ===
As I posted above, the debt portion of the capital plan required three-fifths majorities in both chambers.
Comment by Rich Miller Friday, Jul 17, 09 @ 4:11 pm
The discussion digressed, so I was still wondering…how does this impact existing local bans on video poker and small scale gambling? Are they tossed out or still in place?
Comment by Pot calling kettle Friday, Jul 17, 09 @ 4:16 pm
Pot, I think it depends on whether the community has Home Rule or not.
Comment by yinn Friday, Jul 17, 09 @ 7:20 pm
The IGB is going to regulate video poker like it regulates the casinos.
They have to draw up the administrative rules dictating how this will work. You can bet (pun intended) that a lot of people aren’t going to be happy with how thy do it.
There will be criminal background checks on anyone who will have control of the machines.
This may take up to three years to get off the ground.
Bet on it. The Legislation is poorly written by industry insiders. Now the regulators will have their say.
Comment by Wait and see Saturday, Jul 18, 09 @ 12:39 pm
The State already has in place a way to track video poker placement. Every liquor establishment is inspected periodically by the “booze comish”. Every coin op machine must have coad (coin op amusement device) stamp. Video poker machines are licensed as “simulated gaming divice”. If the state simply raised the cost of stamps from $30 to $500 per year and allow 5 machines to liquor establishments they could save millions on start up cost and administrative cost. And they could start tomorrow.
Comment by In the Biz... Thursday, Jul 23, 09 @ 8:43 pm