Elgin commission wants to limit video gambling, charge new fees

Elgin is headed toward implementing licensing fees for video gambling and limiting the types of establishments that will be able to get those licenses in the future.

The new fees would be $25 per video gambling machine for bars, restaurants, and nonprofit clubs like veteran and fraternal organizations, and $1,500 per machine for distributors.

Moving forward, video gambling licenses would be available only to establishments that have certain types of liquor licenses: class A and AA licenses, which are for bars; class C licenses, held by nonprofit clubs; and class E, E-1, E-2 and E-3 licenses, which are for restaurants.

The video gambling licenses would be nontransferable and new ones would have to be approved by the liquor commission, just like liquor licenses. All establishments that currently have video gambling, which includes truck stops and service bars, would be grandfathered in.

A majority of the liquor control commission - which comprises the entire city council - gave the nod Wednesday to the plan, which the commission had been debating since the fall. Final ordinance approval is required by the city council.

Councilman Terry Gavin objected to the $1,500 distributor fee, saying he wanted it to be $1,200, as the commission had discussed during previous meetings. Councilwoman Tish Powell proposed the increase Wednesday and the others agreed. Council members John Steffen and Corey Dixon were absent.

There are 32 establishments with a total 145 video gambling terminals in Elgin, according to the January report from the Illinois Gaming Board. There are eight licensed distributors in the state.

The new fees would amount to $221,125 in revenues for the city. Mayor David Kaptain had proposed setting that aside to fund grants for social service organizations, but Councilman Toby Shaw said he'd rather allocate it to the general fund because earmarking creates "an expectation in perpetuity." No clear consensus was reached Wednesday.

Video gambling net proceeds amounted to nearly $6.5 million in Elgin last year, according to state data. Five percent, or about $325,000, went to the city, 25 percent to the state, and the remaining 70 percent was split between the establishments and the distributors as per their own agreements, Corporation Counsel Bill Cogley said.

Kaptain said he didn't get any negative feedback about the possible $25 fee from nonprofit clubs, as long as the bulk of fees is charged to distributors. Commissioners agreed they didn't want the burden to fall on local businesses.

Bob Karas, owner of Alexander's Restaurant in Elgin, said he's OK with the proposed new fees, which other suburbs also charge. The proceeds from two video gambling terminals in his restaurant greatly add to his bottom line, he said. Karas said he owns 10 establishments in the suburbs, and at least three or four are being kept afloat by video gambling because of decreasing profitability in the restaurant business, he said.

The city made a mistake in not implementing video gambling licensing fees when video gambling became allowed in 2013, Kaptain also said.