Gambling-parlor issue looming large in Champaign

Gambling-parlor issue looming large in Champaign

CHAMPAIGN — When the city legalized video gambling in 2012, Chuck Zelinsky figured it wouldn't expand beyond a few truck stops and veterans clubs.

"Evidently, somebody found a loophole," said the finance officer for American Legion Post 24 on West Bloomington Road. "The rest is history."

A recent surge in so-called gambling cafes, where most go to play slots and video poker but can also eat and drink, has left Champaign with 19 such establishments (five of them named Lacey's Place) out of the 59 that have video-gambling licenses from the city.

"I mean, you've got these things next door to each other," Zelinsky said. "There's just a saturation of it."

The numbers could be even higher if the city council hadn't put a freeze on video-gambling expansion last year, giving members time to consider regulating the activity. There are no specific video-gambling rules on the city's books now; instead, establishments must abide by the same rules as any other business with a liquor license.

Of the video-gambling venues in Champaign, 26 are bars or restaurants, 19 are gambling cafes, five are veterans or fraternal clubs, and four are gas stations. The remaining five are a mix of golf courses, hotels, bowling alleys and music venues. An interactive map of the locations of each licensee, current as of Jan. 3, is below.

One week before the city's video-gambling-license freeze is set to expire, the council will decide Jan. 16 whether to add regulations. Members have expressed mixed opinions on the issue in the past, with Tom Bruno being staunchly anti-regulation and Greg Stock leading the effort for change.

Zelinsky remains hopeful that enough members will vote to put a cap on cafes.

"I wish we could peacefully co-exist," he said, "but I'd like to see their growth stop."

'Sign of the times'

Don't get Zelinsky wrong: Video gambling helped Post 24 when it was struggling financially. That was one of the effects the Illinois Video Gaming Act was intended to have when then-Gov. Pat Quinn signed it into law, a move applauded by veterans and fraternal organizations statewide.

"This has been a godsend to us as far as the income we're getting from it," Zelinsky said. "We're not making tremendous amounts of money, but it has allowed us to make significant improvements to our building and the grounds. We were also able to significantly increase the money we donate to Legion programs."

In November 2017, the most recent month the Illinois Gaming Board has data on, $56,787 was put into Post 24's gambling terminals and $40,384.19 came out. Twenty-five percent of the profit went to the state, 5 percent went to the city and the rest, $4,920.86, was split between the terminal operator and Post 24.

But that kind of profit — or any kind of profit, for that matter — isn't always guaranteed.

Amvets Post 3, on West Hill Street, made around $60 off the terminals last month, said Treasurer Bill Brown. That's less than the $100 monthly license payment for the club, which is only open to members and their guests but occasionally hosts groups.

"When we first got (terminals), we were doing better, and now there's so many of them out there," Brown said. "There are some customers that don't come in anymore because they can go to" gambling cafes.

For comparison's sake, consider Lacey's Place, a cafe located less than 6 miles away in the Village at the Crossing. In November, $167,633 went into its terminals and $121,775.97 came out, leaving $13,757.17 to be split by the establishment and the terminal operator.

For the first 11 months of 2017, the five terminals at Lacey's of the Crossing generated $150,192.49 to be divvied up between the business and terminal operator — nearly three times more than the combined intake of Post 3 ($5,830 from four terminals) and Post 24 ($47,048.96 off five).

Like Zelinsky, Brown never dreamed there'd be so many gambling cafes in Champaign. Not only is he considering getting rid of Amvets' terminals, he's also thinking about shutting down the post altogether.

"It's just a sign of the times — several (veterans clubs) have closed; the money's just not there anymore," Brown said. "Our membership is way down — they're all getting old, dying off or moving to warmer weather."

'Whole new industry'

When video gambling first arrived in Champaign, then-Mayor Don Gerard worried it would come to this.

Gambling cafes "do take away from veterans halls and locally owned establishments," said Gerard, who as mayor doubled as the city's liquor commissioner. "I wanted to curb their growth with a massive liquor-code overhaul, but that was still in process when I lost re-election. And there wasn't a clear-cut way to curb it at the time because of how loose rules are with the state."

Gerard said he's not a gambling man and that he finds the cafes "distasteful." But given a choice, he'd rather enable a vice like gambling than, say, alcohol addiction.

"You might go drunk-drive kill somebody, but you're not going to gamble-drive kill somebody," Gerard said. "If you're in a bar and have an addictive personality, I'd rather you spend money on games of chance instead of liquor."

Deb Feinen, who succeeded Gerard as mayor, thought that when gambling was enacted, it would mostly be contained to existing establishments "rather than a whole new industry popping up around gaming." She attributes the rise in cafes to how gambling is regulated — through liquor licenses rather than having a separate category.

Whether that remains the case in Champaign should be determined by month's end.

'Little gold mines'

The final version of Champaign's proposed video-gambling regulations hasn't been released yet, but Deputy City Manager Matt Roeschley said he's confident that whatever's passed will apply to all locations — ones that exist now and ones that open in the future.

When the council last discussed regulations, in September, it considered a separate, $1,000-plus annual gambling-establishment liquor license for cafes, a $250-plus annual terminal fee and a $500 annual gambling rider.

Such a gambling-establishment liquor license would also allow cafes to operate without serving food, a current requirement that many cafe operators don't like, according to city staff. And the rider could require a 12-month waiting period before a business is allowed to open.

To prevent overcrowding of cafes in the bar-and-restaurant districts where they're allowed now, the council also discussed changing zoning regulations, limiting them to certain areas. Some council members said that would need to be done carefully.

"It's possibly concerning to say, 'Gambling can go in these parts of town,'" Stock said in September.

Tom Fiedler, operator of local terminal supplier Melody Gaming, said he believes the ideas discussed in September would financially hurt the people they were designed to help.

"There's the misconception that these terminals are little gold mines, but it's a huge investment," he said. "Champaign has a lot of marginal gambling locations that make half the average profit."

Fiedler said he isn't against the idea of all regulation. He worked to get the state to pass video gambling and thought cities would put in more rules to prevent gambling-cafe growth.

"The city missed by allowing (cafes) to open up as restaurants when they really aren't," Fiedler said of the current liquor-license model. "It didn't take as clear or easy of an approach as it could, and now it's stuck between a rock and a hard place."

Cha-ching in Champaign

When Gov. Pat Quinn signed the Illinois Video Gaming Act of 2009 into law, it was with the hope that cash-strapped veterans and fraternal organizations would be among the big beneficiaries.

Then came the explosion of so-called video-gambling cafes — Lacey's and Dottie's, Jim's and Boochie's.

In November, the 58 establishments in Champaign with video-gambling licenses received $348,874.96 in tax revenue, to be split with terminal operators. Only one service club ranked in the upper half in intake — at No. 29.

MOST-PROFITABLE VIDEO-GAMBLING LICENSEES IN CHAMPAIGN, NOVEMBER 2017

Rank Name/address Wagered Won Their cut*
1. Mach 1, 902 W. Bloomington Ave. $352,778.00 $276,894.36 $23,665.12
2. Circle K, 4202 W. Springfield Ave. $231,576.00 $182,262.24 $14,794.21
3. Lacey's Place, 2508 Village Green Place $167,633.00 $121,775.97 $13,757.17
4. Dotty's Cafe, 501 S. Mattis Ave. $237,971.00 $192,551.84 $13,625.79
5. Tumble Inn, 302 S. Neil St. $177,290.00 $133,203.62 $13,225.97

SERVICE CLUBS WITH VIDEO-GAMBLING LICENSES IN CHAMPAIGN, NOVEMBER 2017

Rank Name/address Wagered Won Their cut*
29. VFW Post 5520, 609 Edgebrook Drive $60,555.00 $42,966.61 $5,276.55
30. Am. Legion Post 24, 705 W. Bloomington Road $56,787.00 $40,384.19 $4,920.86
32. Am. Legion Post 559, 704 N. Hickory St. $55,752.00 $41,123.44 $4,388.62
48. FOE Lodge 3075, 605 Edgebrook Drive $21,242.00 $16,038.54 $1,561.03
57. Amvets Post 3, 203 W. Hill St. $4,682.00 $3,951.02 $219.28

* — Establishments share their portion of the tax revenue with the gambling-terminal owners/operators.

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Local Yocal wrote on January 07, 2018 at 7:01 am
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These businesses re-direct cash that could have gone to local businesses, but instead those funds are re-directed to government and a few business operators. It's a pity there is such a large appetite for quick-win money. A study of who frequents these establishments would understand from where this money is drained. The theory would be it's the working poor who are frequenting these "gaming" parlors. 

Bystander wrote on January 07, 2018 at 8:01 am
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Yodler, you wouldn't know what a working poor person looks like let alone your disgusting habit of feigning concern for people you don't interact with. 

Free enterprise in free markets dictate what goods and services will be available in the market place. If there weren't a demand for video poker, then there would not be this sudden flurish of video poker sweeping the city. Funny how government regulations revolve around garnering revenue for the City of Champaign. $1000 licensing fee? Sounds like the City of Champaign wants more of a piece of the action. The only problem the City government has to work out is what City government salaried position do they want to pay with the new tax revenue. 

Local Yocal wrote on January 07, 2018 at 8:01 am
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These businesses extract usable money that would benefit the local economy. These businesses prey on people's weaknesses. The only disappointing inaction by the City of Champaign is that they don't offer a limit to how many of these parasitic businesses are we going to allow in the city. I agree with your observation that it appears the City of Champaign wants more of the action so they don't mind the damage these businesses do. Ex-mayor Gerard is relieved no one will crash their car because of gambling, but no account is made of the household budgets crashed with evictions and power shut offs.

Bystander wrote on January 07, 2018 at 8:01 am
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You're just seeing what sticks to the wall, Yodler, because there has been no sudden uptick in power shut offs and evictions. You forget there is such a thing as personal responsibility on the part of the customer. They don't gamble with more than they can afford to lose. Or else we'd see more homeless people. In 5 years, we see nobody on the streets because of a gambling addiction. 

rsp wrote on January 07, 2018 at 1:01 pm

Lots of people gamble with more than they can lose and they do it every day. Just because you don't see it or identify it doesn't mean it doesn't happen. When they shut off someone's power do they put up a sign saying it was because the person gambled away their money? Isn't driving home drunk a form of gambling? That you won't get caught or kill anyone?

By the way, have you polled homeless people on why they are homeless? Given all my experience with homelessness and the community, it is very rare to find people with the understanding of how they got there. That's with the exception of people who are homeless for very short periods of time or cases of domestic violence.

Bystander wrote on January 07, 2018 at 2:01 pm
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"Just because you don't see it or identify it doesn't mean it doesn't happen."

It doesn't happen or else there would have been an article on it by now. Gambling doesn't cause homelessness. 

ohnoes wrote on January 07, 2018 at 12:01 pm

It's not quite that simple.  My mother had a gambling problem before she died of cancer.  Fortunately she was gone before this huge crop of gambling houses popped up in town because at least before she had to go to Peoria to throw her money away.  You see, these people who gamble, they have family and friends who would really rather not see them on the street, so they do what they can to keep that from happening, but it puts a damper on their economic health and strain on relationships.  I was afraid that I was going to wind up taking her in, which would have provided its own assortment of difficulties.  By the time she was done, she had taken out a home equity loan and she'd borrowed money from her mother who was of course on a fixed income.  I also have a second cousin that I grew up close with who's been battling the gambling addiction demon the past couple of years and I've been bailing him out, trying to get him to go to a group, he finally found one and it seems to have helped, but not after about a year and a half of strain on everyone who cares about him.  

I know what you mean about personal responsibility, I've traditionally been someone who's all about free markets and not instituting prohibitions and regulations, but I've found that there are limits to every ivory tower philosophy and if you haven't really experienced the damage that these leeches can do to a person, preying on their weaknesses, that's what it is, an ivory tower philosophy.  This progress is built on the backs of people who can't afford it and can't control themselves.  Trust me, I've spent a lot of time trying to pull my cousin out of it, with quite a lot of disappointments and set backs, I'm very familiar with the problem, as is his adult daughter, his parents, his siblings.  It's not just the individual putting the money in the slot that it affects.  If you're okay with your family winding up on the street... well, that speaks for itself.

Bystander wrote on January 07, 2018 at 1:01 pm
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If you sell alcohol, you're going to attract a few alcoholics. Likewise with gambling. Some people can't control themselves. It happens. The market should be allowed to exist even if a few go overboard.

CU-newbie wrote on January 07, 2018 at 2:01 pm

I want to thank the news-gazette for a comprehensive article about this whole matter.  We need this kind of information to make up our minds as part of the electorate

cwakefld wrote on January 10, 2018 at 3:01 pm

No one ever gambled and drove and killed themselves or someone else. How about we leave people alone and quit trying to legislate decency?