Video Gaming Terminal Laws And Regulations In Illinois

When discussing legal gambling in Illinois, it is essential to include video gaming terminals (VGTs), which are widely recognized by tourists and business owners in the Prairie State.

Video Gaming Terminals (VGTs) have been a source of controversy in Illinois and beyond due to their resemblance and operation similarities to slot machines. Critics have raised further concerns about their legality.

Regardless of one’s perspective, it is a fact that video gaming terminals are legal in Illinois. The recent gambling expansion has solidified the legality of VGTs, suggesting that this status will likely remain unchanged in the foreseeable future.

The Illinois Gaming Board oversees the regulation of VGTs, establishing rules that both operators and players must follow. The key rule to understand is the state’s definition of these gaming devices.

What are video gaming terminals?

Video gaming terminals in certain locations are known as video lottery terminals due to their regulation by the state lottery. These devices consist of an exterior console with controls and an internal computer.

In order to play, players must place a minimum bet, and depending on the game’s outcome, they may either win a return on their stakes or lose their bets.

The presentation of games varies among different consoles. Some consoles offer a wide selection of games to choose from, while most focus on virtual versions of traditional card games or slot machines.

In June 2019, the Sports Wagering Act was passed, amending Illinois’ VGT laws and resulting in the following effects:

• Video Gaming Terminals (VGTs) have been approved for use at the DuQuoin and Illinois state fairs.
• Increased the maximum bet limit.
• Expanded the maximum number of terminal licenses permitted at a licensee’s location.
• Provisions were included that impose restrictions on licenses in malls.
• Incorporated regulations pertaining to licensed large truck stop facilities.
• Increased the terminal tax.

Now that you know what a VGT is, the next important thing to learn is how to use it from a player’s perspective. It’s just as easy as using a slot machine at a casino.

How do I play a VGT?

If you have experience using a slot machine at an Illinois casino, you will easily grasp how to operate a VGT. The functionality of most gaming machines is very similar.

After selecting your bet for the game, simply press a button to start playing. The computer system will then use the operator’s algorithm to determine the outcome of your play, which will be displayed on the screen.

You are allowed to play for as long as you like, but there are state regulations that control the maximum bets and winnings. Each play cannot have a wager higher than $4, and the highest cash prize for a single play is limited to $1.19 by state law.

Certain games feature progressive jackpots where the prize amount grows as players continue to play without winning. The state has capped the maximum cash payout for these prizes at $10,000, but individual operators may choose to offer extra prizes based on their particular locations.

Similar to a casino slot machine, these machines dispense tickets that players can exchange for cash. While state law allows establishments up to three days to pay out certain prizes, most prizes can typically be claimed immediately by players.

Illinois not only sets legal standards for VGTs, but also closely monitors all aspects of their installation, operation, delivery, and transportation.

What are the Illinois laws regarding VGTs?

Basically, there are a lot of rules and laws that regulate video gaming terminals. In addition, local authorities in the state have their own standards for these machines.

Nevertheless, the key legal obligations for individuals interested in gambling responsibly include meeting the minimum age requirement, self-exclusion, and obtaining the necessary licenses.

Individuals under 21 are prohibited from entering gaming areas where VGTs are present. Additionally, those who have self-excluded from gambling in Illinois must take responsibility to avoid these locations.

Therefore, it is important to note that playing these games is only legal if the operator and site hold a valid license. Participating in illegal VGTs can result in potential prosecution at both the local and state levels.

Some cities, counties, and towns in Illinois have implemented restrictions or bans on VGTs within their jurisdictions, even though they are legal at the state level. The Illinois Gaming Board maintains a current list of local governments with these regulations in place.

The Video Gaming Act, passed in 2009, legalized VGTs in IL and put that body in charge of regulating them in the state. However, the most recent gambling legislation in 2019 updated several parts of the original act.

The Video Gaming Act has authority over various aspects of Video Gaming Terminals (VGTs), including:

• Who can participate in VGT games?
• Who can operate it.
• Who can provide maintenance for the machines?
• How to handle payouts.

A brief history of VGTs in Illinois

Before the Video Gaming Act was put into effect in 2009, Video Gaming Terminals (VGTs) in Illinois were commonly known as “grey machines” because state law did not explicitly ban or allow their use.

In 2019, the act brought VGTs to the same level as sports betting, creating a regulated and taxed system for their operation overseen by the IGB. This is the current status of the industry.

• Governor JB Pritzker signed SB 690 into law on June 28, 2019, bringing in multiple amendments to the VGA.
• In October 2012, the state saw the introduction of its first licensed Video Gaming Terminals (VGTs) in operation.
• Governor Pat Quinn signed HB 255, which included the Video Gaming Act, into law on July 13, 2009.

Who can host VGTs in Illinois?

Illinois state law permits a range of physical establishments to host Video Gaming Terminals (VGTs).

Nevertheless, it is imperative that the financial records for the VGT operations are maintained independently from any other nonprofit or for-profit entities operating in the same facilities.

Additionally, it is important that gaming sections are separate from other areas of the building. In Illinois, Video Gaming Terminals (VGTs) are commonly found at locations like:

• Adult entertainment boutiques
• Bars
• Lodges serve as the gathering spots for fraternal organizations.
• Gas stations
• Liquor stores
• Nightclubs
• Restaurants
• Taverns
• Truck stops
• Locations where veterans’ organizations gather, such as VFW halls.

Operators must obtain and maintain a license from the Illinois Gaming Board (IGB) in order to conduct operations. The IGB restricts the number of game providers that operators can partner with, currently recognizing only five companies for collaboration.

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

Starting in June 2019, players at the DuQuoin and Illinois state fairs will have access to VGTs. These gaming machines are anticipated to debut for the first time in 2021.

VGT revenue in the Prairie State

Starting in July 2020, the state will levy a 34% tax on the total revenue generated by VGTs, which is the amount left after operators have paid out players’ winnings. Additionally, the state mandates that these winnings must be at least 80% of the handle.

Operators are required by law to evenly distribute any profits with providers, which is the remaining revenue after expenses and taxes are paid off. The legislation specifies that taxes collected from VGTs are designated for the Capital Projects Fund.

In 2019, VGT operators in Illinois produced a net terminal income of over $145.6 million, as reported by Accel Entertainment, a game provider accredited by the IGB.

On the other hand, a report released by ProPublica in January 2019 offered a different view on Video Gaming Terminals (VGTs) in Illinois. The report showed that the expenses associated with overseeing these machines have surpassed tax earnings and have not met initial expectations.

The consistent revenue shortfall can be attributed in part to the impact of the COVID-19 pandemic on this business, as well as on all other gambling activities in Illinois.

How COVID-19 is affecting VGT gaming in IL

In March 2020, Pritzker ordered the closure of all VGT areas to the public in an effort to reduce the spread of COVID-19. These areas remained closed until early July, when Pritzker allowed them to reopen with specific limitations in place.

Restrictions are still in place at facilities statewide, such as increased spacing between machines for social distancing and limiting capacity to either 50 people or 50% of the fire code capacity, whichever is smaller.

In the gaming sections, it is mandatory for both employees and guests to consistently wear face masks properly. However, the enforcement of this rule is uncertain and only applies to certain regions within the state.

If any of the 11 regions in Illinois exceed a certain limit, such as a positivity rate of 8% or higher for three consecutive days, Governor Pritzker could impose further restrictions on VGT rooms. This has already happened once in Region 4 in mid-August.

Illinois residents can find information about these levels in their local areas on the IDPH website. But, the VGT industry in Illinois has seen other new developments in 2020, not just COVID-19.

How has video gaming impacted Illinois businesses?

The answer depends on which businesses you are considering. For some businesses, running them has become an extra source of income, while for others, the results have been disappointing.

A report from Accel Entertainment proudly announces that the operation of VGTS in Illinois has produced millions of dollars in revenue and resulted in the creation of thousands of jobs. It should be noted that opinions on this matter may differ depending on the individual.

Yet, the company has a significant stake in those figures as it is one of the five firms authorized by the IGB to provide games and machines to VGT operators.

ProPublica’s report reveals that the state is reallocating casino tax funds meant for supporting local businesses to cover VGT administrative expenses. This has sparked debate over whether this move will ultimately benefit or harm the state, depending on individual viewpoints.

Casinos have historically opposed the use of VGTs, claiming that VGT rooms compete with their operations. However, determining the extent of this competition is difficult.

Do VGTs cannibalize Illinois casinos?

When objectively analyzing this question, there are several variables that are difficult to control. One of the primary challenges is determining the number of VGT players who would have visited casinos if VGTs had not been introduced in certain areas of the state.

Additionally, determining the conversion rate of VGT players transitioning to casino patrons in the event of VGT machines disappearing is difficult. Furthermore, there is a lack of data on the overlap of VGT players in Illinois who also engage in casino gambling.

However, it would be a mistake to assume that Illinois casinos are not affected by the presence of Video Gaming Terminals (VGTs). It is plausible to consider that without VGTs, some players who currently use them may choose to play slot machines at casinos instead.

It is difficult to pinpoint an exact number for the impact, but it is clear that casino slots and VGTs are definitely competing due to their similarities.

VGT rooms located in the same or nearby areas are competing with each other. The recent debate is focused on the differing local regulations for VGTs.

What’s the deal with the ‘push tax?’

Local governments in Illinois have the authority to establish their own rules for VGTs, with 63% of the state’s population living in areas where these machines are either banned or subject to stricter regulations than those set by the state.

After HB 3136 was passed, numerous towns quickly approved a one-cent “push tax” for every use of a VGT by players.

This tax is commonly known as a push tax because it is applied each time a player presses the button to make a play.

In Oak Lawn and Waukegan, a one-cent fee is charged for each push. Despite the tax being enforced in both cities, operators are pushing back and refusing to pay the additional charges. In Oak Lawn, this resistance has led to fines being imposed by the city.

Raising taxes to a certain level may not be a prudent decision, as it could incentivize businesses to engage in illegal operations using machinery. However, this is not a major issue in Illinois at the present time.

What about illegal VGTs?

While these can be found in IL, it is challenging to accurately gauge their prevalence. Unlicensed VGTs, on the other hand, do not seem to be operating prominently.

This is because most manufacturers require businesses or individuals to have the proper licensing from regulatory bodies in order to purchase their machines. Furthermore, the availability of these machines in the secondary market is very scarce.

Additionally, players in Illinois do not see the risk as worthwhile. The operators cover the taxes from their profits rather than the players having to pay from their winnings. As a result, illegal video gaming terminals in Illinois remain scarce.