Gambling-parlor issue looming large in Champaign

 

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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

RankName/addressWageredWonTheir 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

RankName/addressWageredWonTheir 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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