A look at the slow-going expansion of statewide gambling
By Jake Malooley|
Last week, Rahm Emanuel and Pat Quinn engaged in a bit of a public-relations pissing contest regarding the slow-going expansion of gambling in Illinois. For the umpteenth time, the mayor publicly pressured the governor to sign the gambling-expansion bill, stalled since passing the state legislature in May, that would allow the creation of five new casinos, including one in Chicago. With its projected annual $140 million take, Emanuel asserted, the city could fix the CTA, the pothole-ridden roads, the crumbling schools. On top of that—nudge, nudge!—as many as 20,000 construction and 10,000 casino jobs would be generated.
Quinn called the mayor out for “putting the cart before the horse” by hypothetically spending casino cash he didn’t have. The governor has criticized the legislation as being better suited for the enrichment of the gaming industry than for protecting the public and preventing corruption. “No mayor,” Quinn said, “is gonna put [himself] before the people of Illinois as long as I’m governor.”
Emanuel volleyed back, saying, “I will not allow Chicago’s future to be held hostage because the state obviously has other financial issues and their resources have been drying up over the years.”
While Quinn hems and haws on the expansion bill, a piece of gambling legislation he did sign is gradually being carried out. The Video Gaming Act, passed in 2009, legalized slot-like video gambling machines in bars, restaurants, truck stops, off-track betting parlors, and fraternal and veterans’ organization meeting places to generate 30 percent of the funds necessary for the state’s $31 billion capital plan. A lawsuit challenging the validity of the capital bill delayed its implementation, but a state Supreme Court ruling in July upheld the program.
“The rollout is slow, very slow,” Illinois Gaming Board spokesman Gene O’Shea told me last week. “I have no idea” when video gaming machines will be installed in bars, he said.
“We’ve heard a million different dates thrown around,” says Daniel Schrementi, spokesman for recently licensed video lottery terminal manufacturer Incredible Technologies, an Arlington Heights–based company that has games in some Illinois casinos but is best known as the creator of the wildly popular Golden Tee arcade game franchise. “We’ve heard as soon as six months and as long as two years or even worse.”
O’Shea admitted the “short-staffed” office of the IGB, which regulates gaming in the state, is swamped trying to choose a vendor to create the required central communications system. Connecting the statewide network of video lottery terminals, the system will allow the IGB to monitor how much money goes into the machines and how much they pay out, very similar to the structure of Illinois Lottery.
According to the law, the breakdown of video gaming revenues is as such: 70 percent will be split about evenly between the licensed video gaming establishment, which can have up to five units, and the terminal operator, a licensed company that will install and maintain the units; 25 percent will go to the state; and 5 percent will be given to the municipality.
Earlier this month, the IGB finally began issuing licenses to video lottery terminal manufacturers (seven), distributors (12) and suppliers (two). (Terminal operators and each bar wanting video gaming also have to go through the licensing process.) Companies I spoke to that received their licenses called the IGB’s vetting extremely thorough. “Financial records on all the principals in the company, state police background check, the principals were all fingerprinted,” said Vince Gumma, president of the distributor American Vending Sales Inc. “Very extensive investigation.”
For these businesses, there’s a definite sense of jockeying at the starting line. An estimated 45,000 machines will go into establishments with on-site liquor sales and consumption, which projections indicate will generate more than $1 billion a year for the state. “You’re seeing a lot of companies coming newly into the marketplace,” Schrementi says. Following specs laid out in the Video Gaming Act, he says the 26-year-old Incredible Technologies has already manufactured terminal prototypes, including a video lottery version of Golden Tee.
But it might not just be state-approved firms that are licking their chops at the promise of video gaming revenues. John Pastuovic, spokesman for the Chicago Crime Commission, says the nonprofit organization (now headed by former police Supt. Jody Weis) hasn’t changed its position since just after the legislation passed. In an August 25, 2009, release, Pastuovic warned of the connection between organized crime and video gambling, which he calls “the crack cocaine of gaming.”
When I asked O’Shea for reassurance that the IGB’s regulation will keep the mafia from corrupting video gaming in Illinois, he gave a sobering take on the situation. “I can’t guarantee anything,” he said. “At casinos we have people that are actually there. But with video gaming it’s completely different: It’s everywhere. It’s impossible for us to be everywhere. That’s the reality of it.”