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Illinois House proposal could pave way for video gambling in Chicago

Illinois House proposal could pave way for video gambling in Chicago

A Springfield ally of Mayor Brandon Johnson has introduced a measure that could help pave the way for Chicago to legalize the kind of video poker and slot machines that have proliferated at bars and restaurants across the state over the past decade.

The proposal from Democratic state Rep. Kam Buckner of Chicago comes as City Hall continues to seek new revenue streams to help stabilize its nearly $17 billion budget and pay for Johnson’s progressive policy proposals.

In addition to helping address the city’s revenue needs, the Illinois House measure also aims to address racial disparities within the state’s video gambling industry by finding a way for Chicago businesses to swap the legally murky sweepstakes machines that can be found at bars, gas stations and even laundromats around Chicago for state-licensed — and taxed — betting devices.

Since legalized video gambling went live statewide in 2012, Chicago has never lifted its local law banning the devices that have become a fixture at taverns, restaurants and other liquor-serving establishments throughout many suburbs and downstate. That’s given rise to the spread of the largely unregulated and untaxed sweepstakes machines, especially in Chicago.

Those machines — which state regulators long have contended are illegal gambling devices that also have been featured prominently in several recent federal public corruption trials — look like traditional video poker terminals. But they instead allow customers to put in money in exchange for coupons for online merchandise, then play slot-like games and cash out winnings. Sweepstakes machines also offer an option to play for free, which supporters say puts them on the same legal footing as promotions like the long-running Monopoly sweepstakes at McDonald’s.

But because of the Illinois Gaming Board’s long-held opposition to sweepstakes machines, businesses that have them likely would be deemed ineligible for a state video gambling license if the city were to lift its prohibition.

That scenario would take an especially hard toll on minority-owned businesses in the city that have come to rely on extra revenue from sweepstakes machines, said Buckner, who recently introduced the House measure.

Part of Buckner’s bill calls for creating a task force to lay out a process for phasing out sweepstakes machines that would include authorizing video gambling in Chicago, with the caveat that establishments that have had sweepstakes machines be afforded the opportunity to apply for a video gaming license.

What’s more, a larger goal, Buckner said, is to address racial disparities within the state’s video gambling industry, which generated more than $2.8 billion post-payout income last year, with nearly $960 million in tax revenue flowing to state and local governments.

“It’s not enough just to kind of have equity be something that we are that we’re trying to accomplish,” he said. “You’ve got to actually put some skin in the game and create processes to actually do that.”

While Buckner and other critics note a lack of diversity in the video gambling industry, the Gaming Board doesn’t track any data on the race or ethnicity of license holders because it isn’t required to do so under state law, Gaming Board spokeswoman Beth Kaufman said.

Nevertheless, Buckner’s proposal also calls for the newly created task force to be charged with investigating disparities in the industry and working with the Gaming Board to rectify the lack of minority ownership in the industry.

Buckner characterized his proposal as a conversation starter rather than a finished product and said he plans to continue conversations with City Hall, state regulators and participants in the video gambling industry. The Johnson administration will play a key role in those conversations, Buckner said.

“It’s still early, but we can’t do anything … without having them completely bought in,” he said.

The House proposal comes as Johnson’s administration is searching for new sources of revenue to help stabilize the city’s finances and achieve the mayor’s goals, particularly after voters last month rejected the Bring Chicago Home referendum that would have raised the real estate transfer tax for higher-end property sales that supporters hoped would have generated $100 million annually for homeless services.

Johnson expressed an openness to legalized video gambling while campaigning for mayor last year, and his hand-picked chair of a City Council subcommittee said it’s an option under consideration in a forthcoming report on recommendations for new revenue.

“No one would disagree that we need to look at every revenue option,” said subcommittee Chair Ald. William Hall, 6th. “But we must first … make room for voices, make room for opinions, look at best practices.”

Hall said he personally has concerns about creating a pathway for businesses that have participated in illegal gambling to get a state gambling license.

A mayoral spokesman said last week that Johnson “has not taken a position on the legalization of video gambling in Chicago.”

City officials have met with Buckner “to ensure that the city’s regulations are in no way impeding efforts to diversify the state’s” video gambling industry, Johnson spokesman Cassio Mendoza said in an emailed statement.

How much tax revenue Chicago could generate from video gambling is unclear, as is what impact slots and video poker machines at neighborhood bars and restaurants would have on the city’s new casino, where the local share of the revenue is dedicated to police and fire pension funds. For years, mayors opposed allowing video gambling in Chicago in favor of the city having a casino.

The city of Springfield, which has more video gambling machines than any other municipality in Illinois, collected $2.5 million in local tax revenue from the devices last year, according to a report from the legislature’s Commission on Government Forecasting and Accountability.

Aside from City Hall, Buckner is in talks with Gaming Board officials, who have voiced early concerns about his proposals.

The measure as introduced “does not adequately address the problem of illegal sweepstakes machines, and it raises other significant regulatory, administrative, and gaming integrity concerns,” Kaufman, the Gaming Board spokeswoman, said in a statement. “Combatting unlicensed and illegal gambling, including sweepstakes machines, is a longtime IGB priority.”

The Illinois Gaming Machine Operators Association, a leading industry trade group, had no comment on Buckner’s proposal.

The plan just introduced in the House comes after the state Senate last year voted without opposition to approve a measure that would immediately ban sweepstakes machines, the latest of several attempts to address the issue. The Senate’s proposal, approved more than a year ago, has yet to receive even a committee hearing in the House.

Sweepstakes machines were thrust into the spotlight nearly five years ago when federal authorities arrested then-state Rep. Luis Arroyo, charging the Chicago Democrat with bribery in connection with his side job as a City Hall lobbyist for a sweepstakes company.

Arroyo, who was charged with conspiring to bribe then-Sen. Terry Link, pleaded guilty to one count of honest services fraud and was sentenced in May 2022 to nearly five years in federal prison.

Link, a Lake County Democrat who was wearing a wire for the FBI during his conversations with Arroyo in 2019, was sentenced last month to three years of probation for failing to pay taxes on campaign funds he used for personal expenses.

In a related case, James Weiss, the husband of former state Rep. Toni Berrios and son-in-law of former Cook County Assessor and Democratic Party Chair Joseph Berrios, was sentenced last year to 5 1/2 years in federal prison for his role in the bribery scheme.

Arroyo and Weiss sought to influence Link, who at the time spearheaded gambling legislation in the Senate, to pass legislation that would benefit Weiss’ sweepstakes machine businesses.

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