Video Gaming Terminal Laws And Regulations In Illinois

When discussing legal gambling in Illinois, it’s impossible to have a complete conversation without mentioning video gaming terminals (VGTs). These are the form of gaming that many travelers and business owners in the Prairie State find to be the most familiar.

The legality of VGTs has always been a controversial, and not just in Illinois because they resemble slot machines in appearance and function. However, there are some further arguments made by opponents.

Regardless of one’s opinion, video gaming terminals are explicitly legal in Illinois. It doesn’t seem that’s going to change anytime soon because the latest gambling expansion package included VGTs.

The Illinois Gaming Board regulates VGTs, so that means there are rules that operators and players should know. The first is how the state defines said gaming devices.

What are video gaming terminals?

Video gaming terminals are also known as video lottery terminals in some places because the state lottery regulates them. They are simple in substance: It’s a console with a computer inside and exterior controls.

Players can wager money and, based on the outcome of the game, either lose their wagers or receive a return on their investments. You can’t play the games unless you wager a minimum amount.

The presentation of the games varies from console to console. Some consoles offer players a choice of multiple games as well. However, most are based on virtual representations of physical card games or slot reels.

In June 2019, Illinois amended its VGT laws with it’s Sports Wagering Act. The law had the following effects:

• Authorized VGTs at the DuQuoin and Illinois state fairs.
• Increased the amount of maximum wagers.
• Increased the number of terminals licensees may have on their premises.
• Added provisions restricting licenses in malls.
• Added provisions concerning licensed large truck stop establishments.
• Increased the terminal tax.

So, now that you know what a VGT is, the next important thing to understand is how to operate one from a player’s perspective. It’s just as simple as a slot machine at a casino.

How do I play a VGT?

If you’ve ever played a slot machine at an Illinois casino, you’ll be a quick study on a VGT. Operating most of the gaming machines is essentially identical.

After you place your wager appropriate to the game you’re playing at the time, you’ll press a button to start the game. The computer inside determines the result of your play based on the operator’s algorithm and then displays that result on the screen.

You can play for as long as you like, although there are state rules about maximum wagers and wins. The maximum amount you can wager on one play is $4. State law restricts the maximum cash award for a single play to $1.19.

Some games feature progressive jackpots, meaning the prize pool grows as players play but do not win. The state maximum for a cash payout of that type of prize is $10,000. Individual operators can offer bonus prizes relative to their specific locations, however.

Similar to playing a slot at a casino, machines dispense tickets that players can use to cash out. State law does give establishments up to three days to pay certain prizes, but players can claim most prizes upon demand.

Those aren’t the only legal standards for VGTs in Illinois. The state regulates nearly every aspect, from installation to operation, to how they’re delivered and transported.

What are the Illinois laws regarding VGTs?

Simply put, there are plenty of regulations and statutes governing video gaming terminals. What’s more, some municipalities in the state have their own standards for the machines as well.

The most important legal standards for interested players, however, involve responsible gambling. That includes a minimum age, self-exclusion and appropriate licensure.

If you’re younger than 21 years old, you can’t even step foot in the gaming area inside a building where VGTs operate. If you’ve self-excluded yourself from gambling in IL, it’s also on you to keep out of these areas.

Finally, it’s only legal to play these games if the the operator and site is in possession of a valid license. Playing illegal VGTs leaves you liable to local and state prosecution.

Some cities, counties and towns in Illinois have limited or outlawed VGTs within their borders; although, they are legal in the eyes of the state. The Illinois Gaming Board maintains a list of which local governments have such ordinances that it updates daily.

That body has regulated VGTs in the state since IL legalized VGTs in 2009 with the Video Gaming Act. However, the latest gambling law in 2019 updated several sections of that act.

The Video Gaming Act governs many aspects of VGTs, including:

• Who can play on a VGT.
• Who can operate it.
• Who can service the machines.
• How payouts must be handled.

A brief history of VGTs in Illinois

Before the passage of the Video Gaming Act in 2009, VGTs were known as “grey machines” in Illinois. That’s because state law neither explicitly forbid nor outright authorized their operation up until that point.

With the act, VGTs got the same treatment as sports betting in 2019. A regulated and taxed framework for their operation came to life under the auspices of the IGB. That’s where the industry sits today.

• June 28, 2019: Gov. JB Pritzker signs SB 690, amending the VGA in several ways.
• October 2012: First licensed VGTs start operating in the state.
• July 13, 2009: Gov. Pat Quinn signs HB 255, which includes the Video Gaming Act.

Who can host VGTs in Illinois?

Illinois law permits a variety of brick-and-mortar establishments to host VGTs.

However, accounts must be kept separate for the VGT operations and any nonprofit or for-profit organizations operating in the same buildings.

Additionally, gaming areas must be separate from other parts of the building. Examples of places you are likely to find VGTs in IL include:

• Adult entertainment boutiques
• Bars
• Fraternal organizations’ meeting places, i.e., lodges
• Gas stations
• Liquor stores
• Nightclubs
• Restaurants
• Taverns
• Truck stops
• Veterans’ organizations’ meeting places, i.e., VFW halls

Prospective operators must obtain and maintain licensure with the Illinois Gaming Board (IGB). The IGB also restricts which providers of the games operators can work with, currently recognizing only five such companies.

The IGB maintains a list of current establishments licensed to offer VGTs.

As of June 2019, players will also be able to find VGTs at the DuQuoin and Illinois state fairs. The first time those should be available is 2021.

VGT revenue in the Prairie State

As of July 2020, the state levies a 34% tax on aggregate revenue for VGTs. That’s what’s leftover after the operators payout players’ winnings, which the state also mandates must be at least 80% of handle.

State law requires that operators split any profit (revenue left over after paying expenses and taxes) equally with providers. The applicable law says that tax dollars collected from VGTs go to the Capital Projects Fund.

A report produced by one of the game providers the IGB recognizes, Accel Entertainment, says that VGT operators in IL generated over $145.6 million in net terminal income in 2019.

A January 2019 report by ProPublica showed a very different take on VGTs in Illinois, however. The report shows how expenses associated with regulating the terminals have outweighed tax revenues and far underperformed estimates.

Part of the reason for a continued miss at revenue estimates is the COVID-19 pandemic. Like all other forms of gambling in IL, it harmed this business.

How COVID-19 is affecting VGT gaming in IL

In March 2020, Pritzker ordered all VGT areas to close to the public to help stem the spread of COVID-19. They remained closed through early July when Pritzker allowed them to reopen with restrictions.

Restrictions remain for those facilities statewide. They include adding additional space between machines to allow for social distancing and a capacity limits of 50 people or 50% of fire code, whichever is lesser.

Employees and guests must also wear face masks properly at all times while in the gaming areas. The situation is still tentative, however, and specific to certain areas of the state.

If one of the 11 regions the Illinois Department of Public Health (IDPH) has divided the state into passes a threshold, like three consecutive days of 8% positivity rate or higher, Pritzker may issue further restrictions upon VGT rooms. This has already happened once, in Region 4 in mid-August.

Illinoisans can find information on these levels in their areas on the IDPH website. COVID-19 isn’t the only thing that 2020 has introduced to the VGT industry in IL, however.

How has video gaming impacted Illinois businesses?

That depends on which businesses you’re looking at. For establishments that operate them, it’s been another revenue stream. For other businesses, however, returns have been disappointing.

Again, it depends on who you ask as well. An Accel Entertainment report boasts millions of dollars in revenue and thousands of jobs created by the operation of VGTS in Illinois.

That company has a vested interest in those numbers, however. It’s one of the five companies the IGB licenses to provide games and machines for VGT operators.

A ProPublica report shows the state diverting millions of dollars from casino taxes, some of which should have gone to support businesses in the state, to cover administrative costs for VGTs. So whether the net impact has been positive or negative for the state is in the eye of the beholder.

Casinos have long opposed the operation of VGTs, arguing the VGT rooms cannibalize their businesses. However, that’s difficult to quantify.

Do VGTs cannibalize Illinois casinos?

There are a few variables in objectively looking at this question that are hard to control for. The first of those is it’s nearly impossible to know if and how many VGT players would instead frequent casinos if VGTs had never existed in at least parts of the state.

Also, it’s difficult to factor for the rate at which casinos would convert VGT players to customers of their own if legal VGT machines suddenly disappeared. Lastly, not much data exists on how many VGT players in IL also gamble at casinos.

With all that said, it’s similarly foolhardy to assume there is no detrimental effect for IL casinos due to the presence of VGTs. It’s fair to assume that some VGT players would instead play slots at casinos if VGTs weren’t an option.

It’s just difficult to put an exact number to that effect. Because of the similarities of slots at casinos and VGTs, however, they are definitely competitors.

VGT rooms in nearby or the same jurisdictions compete with each other as well. The existence of disparate local regulations for VGTs is a subject of recent controversy.

What’s the deal with the ‘push tax?’

The state does allow counties, cities, and towns to institute their own regulations for VGTs. As a matter of fact, 63% of Illinoisans live in areas where VGTs are either banned or restricted above and beyond state law.

With the passage of HB 3136, several towns rushed to approve a one-cent “push tax” for each time a player uses a VGT.

It’s called a push tax because it’s literally a tax upon each time a player pushes the button for a play.

In Oak Lawn, it’s a penny for each push. Waukegan has also instituted a similar tax. Operators have pushed back, however, refusing to pay the additional taxes. In Oak Lawn, that’s led to fines from the city.

There is a point to which taxation increases wouldn’t be prudent, as they would actually incentivize businesses to try to operate the machines outside of the legal system. In IL, that currently isn’t much of an issue.

What about illegal VGTs?

These do exist in IL, although the prevalence is hard to accurately assess. Unlicensed VGTs don’t seem to be operating all that prominently, however.

That’s because most of the manufacturers won’t sell to a business or person unless they are licensed to have the machines by their appropriate regulatory bodies. The number of these machines on the secondary market is also very minimal.

It’s also simply not worth the risk for players in IL. The taxes are paid by the operators out of their revenue, not by players out of their winnings. For all these reasons, the instances of illegal VGTs in operation in IL remain low.