Five years after the first legalized video gaming machine went online, Illinois now has one terminal for every 481 residents — a ratio so small, so unexpected, that even some operators and lawmakers are surprised by the proliferation.
The upturn of the chiming, flashing machines perched in diners, truck stops and sleek gaming parlors has sent millions of dollars into government coffers statewide, but also has raised serious questions about whether the trend has gone too far.
As he looks at the proliferation of machines, Michael Gelatka said it's been of historic importance for the state.
“We think it has been one of the greatest small-business stimulators, probably in decades, in the state of Illinois,” said Gelatka, an executive board member and recent president of the Illinois Gaming Machine Operators Association and owner of G3 Gaming, a video-gambling company in Lansing. “It’s bringing additional revenue streams for over 6,000 establishments across the state and revenue for small towns across the state that never had the ability to generate that revenue in the past.”
The Video Gaming Act, which legalized video gaming, came about in 2009 as a way to help fund a $31 billion capital program approved by lawmakers that same year. The law also was seen as a way to help businesses struggling after the state’s indoor smoking ban went into effect the previous year.
After several years of delay, the first state-sanctioned terminal went online in September 2012.
“We helped fund a huge infrastructure bill that created a lot of jobs, we expanded small businesses throughout the state of Illinois that also created jobs, and we brought in some needed revenue for the state of Illinois,” said Rep. Lou Lang, D-Skokie, who sponsored the original video gaming bill. “I think, despite the fact that some are not huge fans of the concept, it generally seems like it has been a success.”
A total of $44.4 billion has been played on machines, with the state netting $882 million and municipalities $176 million.
The state collects a 30 percent tax on net terminal income, or the amount gambled minus what is paid out, with 25 percent going to the state and the other 5 percent going to the local municipality. The remaining 70 percent of the income is split evenly between the businesses that host the gambling and the machine operators.
Recent years have seen a proliferation of “gaming parlors,” small businesses that often fill empty storefronts and emphasize the machines over food or drinks. Machines have even popped up in businesses not typically thought as gambling havens, such as floral shops and laundromats.
The law sets a minimum game payout of 80 percent. Each individual bet has a maximum of $2, with a maximum $500 payout per bet.
The other cost of gaming
For Anita Bedell, no amount of money generated from video gaming is enough to offset the social costs.
Bedell, executive director at Illinois Church Action on Alcohol and Addiction Problems, said for every $1 gambling brings in, taxpayers pay $3 to address the accompanying uptick in addiction, crime and bankruptcy. The numbers come from a report by the National Gambling Impact Study Commission and subsequent academic studies.
The money may support cities' bottom lines, but Bedell said it's not worth the social cost and the way gambling has “changed the character” of those cities that allowed it.
“It’s hard to walk into a place that does not have video gaming machines,” she said. “Places where so many families go, where they should never be at.”
Greater access to legal gambling also has raised the risk for addiction, according to the record of calls made to the 24-hour addiction center set up by the Illinois Council on Problem Gambling.
The center receives an average of 20 calls a month from people who identify their problem as video gaming, said council administrator Bill Johnson. Before 2012, when those who wanted to play the machines had to go to casinos, there were no records of video gaming addiction being reported.
“What I think we’re seeing is the proliferation of the machines is exposing more people to the possibility of addiction,” he said, adding about 3 percent to 5 percent of the nation's population are affected by problem gambling.
The council has no official stance on the machines, and Johnson stressed that the majority of those who play the machines do not develop gambling problems. His concern is the amount of money generated from the machines that goes back to necessary social services.
“I think we should have a safety net,” he said.
Part of the money does fund services for those struggling with addiction, said Gelatka, noting the amount of information on and near the machines that provide resources for those who struggle with addiction.
Boon for bottom lines
Some cities have started discussions on the direction of video gaming in their communities. The Champaign City Council has had a temporary moratorium since February that bans installing and operating video-gaming terminals in newly licensed liquor-serving establishments. The moratorium was approved to allow time for analysis and deliberation about more gambling regulations.
Springfield Mayor Jim Langfelder recently said he'd talked to city attorneys about possibly limiting further expansion of video gaming.
How many machines that will operate in Illinois remains to be seen, though a report from the Commission on Government Forecasting and Accountability shows the proliferation of the machines has started to slow.
An average of 838 new terminals were activated each month between September 2012 and June 30, 2014, the end of the state's fiscal year, according to the commission. That number dropped to 272 per month in fiscal year 2015, and down to 263 machines per month in fiscal year 2016.
The number also could be affected if state lawmakers approve a long-discussed plan to expand gambling in Illinois. A plan to allow new casinos in Chicago, Danville, Lake County, Rockford, Williamson County and southern Cook County, and to allow video gaming at horse racetracks, was not approved before the end of the spring session, but could come up again this summer.
The rise in video gaming has proven a stiff challenge for casinos, the original place where Illinois residents could play some slots.
At the end of 2012, Illinois' 10 casinos brought in $1.63 billion in total adjusted gross receipts and saw 16,157,869 people go through their doors, according to the Illinois Gaming Board. In 2016, the casinos collected $1.41 billion, and admissions dropped to 12,344,698.