The Land of Lincoln is Fast Becoming the Land of Slots

The Chicago Crime Commission is launching a campaign to eliminate the sweepstakes machines in the state. The commission is sending out a report to local law enforcement that claims the machines are illegal and cites twelve other jurisdictions where the games were determined to meet the legal definition of gambling machines. The Illinois Gaming Commission agrees with the Crime Commission.

But not everyone else agrees, including the lawmaker that introduced the amendment being used by those who have the machines and claim they are legal. It is complicated and confusing and the final determination will probably come through legislation and not from one of the commissions, the courts or local law enforcement officers. It is not a big problem at the moment as it is estimated that there are only 100 of machines in the state. Still, it has the potential to become problem for the state’s casinos. There are ten casinos operating in Illinois with 11,000 slot machines; in September those machines generated $98 million in win. But the slot machines in casinos are only a small part of the story of slot machines in Illinois.

In 2009, the Illinois Video Gaming Act passed. The act was intended by the governor to generate hundreds of millions of dollars for state funded construction. The implementation of the act got off to a slow start; it is now starting to produce the revenues the governor anticipated. There are currently over 18,000 slot machines in Illinois outside of the casinos, in September they generated $57.8 million in win and in 2013 paid the state $90 million in taxes.

Not all of the non-casino slot revenue comes at the expense of the casinos, but a great deal of it does and it will only get worse. In 2013, 1000 new machines were added a month. The rate has slowed somewhat in 2014, but it is likely the number will approach 30,000 in another five years. That many slot machines will have a major impact on the state’s casinos.

So, those 100 sweepstakes machines may not seem like much today. However, if the number continues to grow and they gain a semi-legal status there will be, in time, thousands of those as well.

An anti-crime group in Illinois launched a campaign Thursday to eradicate unregulated casino-like kiosks in bars and other venues that mimic legal video gambling. Associated Press, 10-17-14

Today, some 4,500 establishments in Illinois are licensed for video gambling, with more than 18,000 video poker and slot games statewide, not including casinos. Chicago Tribune, 10-16-14

Abe Lincoln would not have recognized the Illinois of 2014. The state he left was hardly a gambler’s haven, but that started to change in the 1990s. The first casino opened in Illinois in 1991 with approximately 1100 slot machines. That is a far cry from the 29,000 slot machines in 2014. Legislation is introduced yearly to add casinos and slot machines; the 2012 version would have allowed as many as 7000 addition slot machines in the state’s casinos and race tracks.

The question being begged is of course; just how many slot machines can be crammed into the state. The small bars, truck stops, Veteran and Fraternal Establishments are permitted five slot machines and they will continue to prosper regardless of how many slot machines there are in the state. It is a no risk and low investment opportunity for those establishments as the slot machines can be purchased or leased with no cash required.

The situation is very different for the casinos. They have investments of millions of dollars, properties to maintain and employ thousands of people. Insurance, utilities, taxes, and the other expenses associated with operating a major casino, make the situation a very high risk one and casinos will not do quite so well as the small establishments when there are thousands more slot machines in the state. The state coffers will do well; those slot machines pay their fair share of taxes. However, the state’s economy may not benefit in the same way from the stand-alone slot machines as from the casinos. The small establishments do not stimulate the economy with either the level of capital investment or number of people employed as the casinos.

In the long run, being the Land of Slots may or may not be good for Illinois, but it will certainly not be good for the state’s casinos.


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