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Video gambling has hot hand in Illinois

Alice+Hayden+plays+video+games+with+her+children%2C+11-year-old+Benjamin+Hayden+and+9-year-old+Madeline+Hayden%2C+in+their+Orlando%2C+Fla.+home%2C+Aug.+14%2C+2014.+Experts+say+that%2C+although+more+women+have+cracked+video+gaming%27s+predominantly+male+work+force%2C+the+business+still+has+a+gender+gap.+%28Joe+Burbank%2FOrlando+Sentinel%2FMCT%29
Alice Hayden plays video games with her children, 11-year-old Benjamin Hayden and 9-year-old Madeline Hayden, in their Orlando, Fla. home, Aug. 14, 2014. Experts say that, although more women have cracked video gaming's predominantly male work force, the business still has a gender gap. (Joe Burbank/Orlando Sentinel/MCT)

Alice Hayden plays video games with her children, 11-year-old Benjamin Hayden and 9-year-old Madeline Hayden, in their Orlando, Fla. home, Aug. 14, 2014. Experts say that, although more women have cracked video gaming's predominantly male work force, the business still has a gender gap. (Joe Burbank/Orlando Sentinel/MCT)

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Alice Hayden plays video games with her children, 11-year-old Benjamin Hayden and 9-year-old Madeline Hayden, in their Orlando, Fla. home, Aug. 14, 2014. Experts say that, although more women have cracked video gaming's predominantly male work force, the business still has a gender gap. (Joe Burbank/Orlando Sentinel/MCT)

By Becky Yerak | Chicago Tribune

The lounge at Bertrand Lanes bowling alley was the first Waukegan business to get a license to install video slot machines.

Ask owner George Lawrence why he decided to offer gambling and he rubs his thumb and index finger together — the gesture for money.

“It keeps the doors open,” said the 78-year-old Lawrence.

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Today, four years after Illinois began allowing licensed businesses to install up to five video gambling machines each, more than 50 Waukegan businesses, including bars and restaurants, have followed Bertrand Lounge’s lead and installed machines.

Some are shoehorned into nooks the size of coatrooms. But video gambling’s legalization also has led to the opening of wagering cafes where the emphasis is on the slots, and the sale of food and beverages, like a $1 coffee or a $3 domestic beer, are incidental.

Add up all the video gambling machines scattered in small venues across the state — there are more than 24,000 machines, the equivalent of 20 casinos — and you’re talking real money. The amount of money left over after paying video gambling winners for the first time exceeded $1 billion in fiscal 2016.

That’s a 27 percent increase, making video gambling the hot hand in Illinois’ gaming industry.

But not all municipalities are scrambling to get in on the winnings, and other gambling formats are seeing anemic gains, at best. Overall, the Illinois gambling industry’s “hold” — money left after paying winners — was $3.67 billion in 2016, up 5.6 percent from the previous year, said a report by the state’s Commission on Government Forecasting and Accountability, a data provider to the General Assembly.

In Cook County, the games can be found in suburbs such as Berwyn, where Michael Anthony’s pizzeria had been rolling in a different sort of dough for about 26 years before it added video gambling terminals four years ago, after people started asking for them.

Revenues from the machines have helped the business upgrade its bathrooms and buy a stand-alone $5,000 freezer, said president Nancy DiBiase.

“Some people were scared that it would bring in bad business, but it hasn’t,” she said. “In a month like February, when business is slow, it helps,” including to meet payroll, she said.

While Michael Anthony’s was around long before video gambling, legalization of the relatively new wagering format in Illinois has inspired some business startups. Take Debbie Hanson.

By day, she sells food-service equipment. In her off hours, the Waukegan native owns Lucky Jack’s Gaming Cafe, one of the busiest video betting parlors in her hometown. It opened last year.

Earlier this year, Lucky Jack’s also opened parlors in Zion and in North Chicago, and it plans to open early next year in Park City. Hanson’s son, brother, niece and sister work for Lucky Jack’s in various capacities, from construction to bookkeeping to management. The business is named after Hanson’s late father, who enjoyed gambling, and each location has a theme.

The one in Waukegan, which opened last year, aims to conjure up a mini Las Vegas casino. The other two have jazz and billiards themes.

“When I found out they legalized gambling here, if I wanted to play a machine, just going into a bar, I didn’t like the atmosphere, and so I thought, let’s open something focused just on gamers,” Hanson said. “It’s a family business so it has been a lot of fun too.”

Most patrons are regulars, she said. Employees who notice a car idling outside, with motorists craning their necks to look inside, will give a thumbs-up or thumbs-down sign to convey whether any of the five machines is open. Inside, gamblers can play between a penny and $2 per spin on the Lucky Jack’s slots. Some machines have keno and poker.

Seating is available for gamblers waiting for a machine, and individually packaged moist towelettes are in a bowl on the counter for patrons to grab. Some customers have requested a TV be installed in a lounge area, which serves beer, wine, nonalcoholic drinks, chips and pizza.

But Hanson decided against it because the serious gamblers say they like the quiet. Shirley Winters, 63, has been visiting Lucky Jack’s three times a week for about six months. She said the atmosphere is “nice,” the staff “accommodating,” and the place “clean.” She previously trekked to Potawatomi Hotel & Casino, in Milwaukee, when she wanted to gamble.

“By the time you drive up, and think about the gas and the time, this is more convenient,” said the retiree, who brings about $50 with her each time.

Down the street, Gojo’s Cafe & Pancake House, established in 1978, has five machines that were installed about two years ago. Customers seem to enjoy them, and the restaurant hasn’t had any problems stemming from them, said Nick Gountanis, one of Gojo’s owners.

One couple, he says, regularly come in for breakfast and then play the machines, go home, return for lunch, and play the machines some more. Video gaming revenues, after payouts, are taxed at a flat 30 percent rate. Five-sixths of those tax proceeds go to the state and one-sixth to the local government. Remaining revenues — the other 70 percent — go to the establishments, like Lucky Jack’s, and the video terminal operators.

In the year ended in September, almost $12.7 million was played at Lucky Jack’s in Waukegan, and $11.7 million was won by gamblers, according to Illinois Gaming Board statistics. That means the terminals netted just shy of $1 million. Of that, more than $246,000 went to the state and about $49,000 to Waukegan. The rest is split between Lucky Jack’s and Gold Rush Gaming, its terminal operator.

Lucky Jack’s competition in Waukegan includes Dotty’s, a chain of gambling cafes whose locations resemble coffee shops. Along a stretch of Waukegan’s Grand Avenue, Dotty’s has two cafes in quick succession. Signs on the door say one must be at least 21 years old to enter.

Statewide, Dotty’s has almost 60 gambling cafes and 350 workers. About 60,000 people work at licensed video gaming establishments in Illinois, said Steve Patterson, a spokesman for Dotty’s, which is a member of the Illinois Retail Gaming & Operators Association.

In Waukegan, a resolution passed in 2014 earmarked virtually all of its cut of gambling revenues for the underfunded pension plans of its police officers and firefighters. Were it not for video gambling, the resolution said, taxpayers might have to cover the shortfall. Not every municipality, however, is looking at the terminals as a cash cow.

Chicago, Naperville and Arlington Heights don’t allow them. In Forest Park, where video gambling also is prohibited, a recent effort to put a ban on the ballot for a vote next month fell short of the required signatures. Parties opposed to video gambling say they hope to get the binding referendum on the ballot next year.

The wording would have been: “Shall video gaming be prohibited in the Village of Forest Park, Illinois?”

In 2013, a nonbinding referendum in Forest Park asked voters a similarly worded question, and about two-thirds supported continuing the village’s prohibition. Residents behind the latest effort were concerned the Village Board might overturn the current ban on its own. The cities with the most video gambling terminals are Springfield, Rockford and Decatur.

The counties with the most machines are Cook, Lake and Winnebago counties, the commission report said. Other forms of gambling aren’t faring so well, as gamblers reallocate where they’re doing their spending. The commission’s report showed the lottery’s hold rose an estimated 0.6 percent in fiscal 2016 to more than $1.1 billion.

Casinos’ hold fell 2.1 percent to $1.43 billion.

For a while, a new casino in suburban Chicago provided a jolt of energy to the state’s wagering scene. The 2011 addition of a 10th casino, Rivers in Des Plaines, helped Illinois surpass Iowa in gaming revenues. Rivers is by far the biggest revenue-producing gambling hall in the state — doing twice the business of second-place Joliet Harrah’s, the commission’s report said.

But for the first time since it opened, the Des Plaines’ casino’s revenues dipped last year, and now Illinois again lags Iowa in casino revenues. Some gambling companies are hedging their bets between video gambling and casinos, which in Illinois are limited to 1,200 betting positions each.

Earlier this year, Toronto-based private equity firm Clairvest Group, which has been an investor in Rivers, spent $32.5 million for a minority stake in Bolingbrook-based Accel Entertainment, a licensed video gambling terminal operator in Illinois.

Prairie State Gaming, which operates more than 1,100 terminals at 270 bar and retailers in Illinois, is owned by Penn National Gaming, whose properties include Argosy Alton and Hollywood casinos in Aurora and Joliet.

The amount of money left over after paying winners at Illinois horse racing, once the dominant form of gambling in Illinois, is estimated to be down 3.6 percent for fiscal 2016, to $129 million, the commission said. The ponies face an even bleaker outlook next year, reflecting the closing of two Illinois racetracks.

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(c) 2016 the Chicago Tribune

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Distributed by Tribune Content Agency, LLC.

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