Updates to the Video Gaming Industry in Illinois

Illinois lawmakers recently passed sweeping legislation significantly expanding the Illinois gaming market. Below is a summary of some of the biggest changes set to come to the industry. Of course, the timelines for most of these changes are still being determined.  The Governor first needs to sign the bill, and then the Illinois Gaming Board (“IGB”) will need to write rules to implement many of these changes.  It could be several months or years before certain sections of the legislation go into effect.  We will provide you with updated information as soon as it becomes available.

Increased Taxes

The new gaming legislation led to changes in taxes that are imposed on licensees. The current tax rate imposed on video gaming terminals’ (“VGTs”) net terminal income is 30%.  Beginning on July 1, 2019, an additional 3% tax will be imposed on a VGT’s net terminal income (for a total of 33%).  Additionally, beginning on July 1, 2020, an additional  1% tax shall be imposed on a VGT’s net terminal income (for a total of 34%).  The splits of revenue between the Terminal Operator and Location will remain the same, with the obligation of the increased tax shared by both parties.  The revenue collected by this increased tax shall continue to be deposited into the State’s Capital Projects Fund, as it is today.

Additional Machines per Location

Thanks to the new legislation, any licensed video gaming location may now operate up to six (6) VGTs. This is an increase from the previous limit of up to five (5) VGTs per location.  Please note that adding a sixth VGT in your particular establishment may be subject to local municipal ordinances and approval, as well.

“Large Truck Stop” category created

In addition, the new legislation created an additional category of licensed establishments:  Licensed Large Truck Stop Establishments, which will be allowed to operate up to ten (10) VGTs. A licensed large truck stop establishment is required to possess all the same characteristics as a traditional licensed truck stop establishment.  However, it is also required to (1) be located within three (3) road miles of a freeway interchange and (2) sell on average at least 50,000 gallons of diesel or biodiesel fuel per month (as opposed to the 10,000 gallons which is required for traditional licensed truck stop establishments).

Streamlined Servicing of VGTs

Prior to these legislative changes, IGB agents were required to be physically present when any services were performed on a VGT. Once IGB rules related to this provision are enacted, the new legislation will permit Licensed Terminal Handlers to perform RAM clears, install software upgrades, perform go-lives and temporarily move VGTs for repairs without the physical presence of an IGB agent. This will allow Accel to more quickly complete repairs and swap games, which may decrease downtime and increase expected earnings.

Increased Max Bet and Max Win

In accordance with the new legislation, the max betting limit on VGTs will be increased to $4 (previously $2). The maximum cash award is also increased to $1,199 (previously $500).  

Addition of Bonus Jackpots

The legislation also creates “In-Location Bonus Jackpots,” which will allow wagers placed on one or more VGTs at a single licensed establishment to contribute to a cumulative maximum jackpot of up to $10,000. The IGB will need to adopt rules to implement these jackpots before you will see them in the field.

VGTs at Illinois State Fairs

The Illinois State Fair is now authorized to operate 50 VGTs and the DuQuoin State Fair is authorized to operate 30 VGTs.  This was previously not authorized.

Sports Betting

The legislation authorizes sports betting at existing Illinois casinos, horse racetracks, and large sports stadiums.  However, it also permits online sports betting, which has the exciting potential to bring more customers into your establishments to watch games and participate in sports betting from their devices. 

If you have questions about any of these changes, please do not hesitate to reach out to your Relationship Manager.  If you would like to read more about everything proposed through the new expansive gaming bill, check out this comprehensive overview by our friends at Fox Rothschild.