PEORIA – A recent law change in Springfield had members of the Peoria City Council worried the effect it will have on bars and taverns, saying that it punishes the «little guy.»
The change to the state’s video gaming licensing rules means local businesses will pay a bigger share of the fees to obtain video poker machines and the like – and people like Councilmembers Beth Jensen and Sid Ruckriegel said it wasn’t fair during last week’s council meeting.
«The only guy who gets hurt on this, or the only business to get hurt, are our small businesses. The ones who weathered the storm of the pandemic,» Ruckriegel said.
Added Jensen: «This is going to hurt the little taverns and bars.»
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In December, the Illinois Legislature passed new rules that require all fees to be split evenly between the local bars and the «terminal operators» – the companies that own and supply the gambling machines.
That would mean a change to the city’s current fee structure: Bars and gaming companies split a $500 fee, but only the gaming companies pay $1,000 for each machine, said city attorney Chrissie Kapustka.
Under the new rules, the bar and gaming company will each pay a $500 license fee, but each gaming machine would be subject to a $1,000 annual registration fee that is split evenly between the two entities, she said.
For example, a bar with two gaming machines that paid just $250 last year for a license (the other half of the license and the fee per machine paid by the gaming company) will now pay $1,000 each year. That’s the $500 license plus half of the $1,000 registration costs for the two machines.
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This change would also mean that City Hall will bring in about $250,000 less each year into its coffers. Currently, Kapustka said, there are 60 bars in Peoria with video gambling licenses that brought in $474,000 last year in licensing revenue. The new fee structure will drop that to $218,000 annually.
The new rules will not affect the amount Peoria gets from taxes collected on video gaming. In February 2022, the city took in $84,000 in tax revenue from all the machines within the city. The total revenue was $1.6 million, which was split between the state, the city, the bars and the video gaming companies.
Ken Humphrey, owner of VIP Lounge at the corner of Glen Avenue and Sheridan Road, said he’s OK with the increase. Sure, he’s not wanting to pay more – but it’s not going to wipe him out.
His business is the largest in the city for revenue from video gaming machines.
According to the state of Illinois, VIP Lounge paid $488,764 to the state and $84,269 to the city of Peoria during a period from February 2021 to February 2022. Illinois splits the total revenue three ways: The gaming company gets a third, the state and city get a third and then the tavern or bar gets a third, Humphrey said.
Which is why, he said, paying an additional $2,000 or $3,000 a year isn’t going to put him out of business. But for smaller places, it might be enough to do so.
«It’s probably fair, but if you call the lowest person on the totem pole, it would be a different thing as it would affect their business,» he said. «I’m the largest one, so it’s easier for me to absorb it than someone who isn’t making a lot of money at it.»
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So far, the city of Peoria isn’t challenging the new state rules – Kapustka said that she has yet to hear from other cities or even the Illinois Municipal League on their stances regarding the changes. She’s planning to bring back comparison data to the council on how much other cities charge in fees.
To mitigate the effect upon local businesses, which need to obtain other licenses and pay other fees that gaming companies do not, Jensen asked if there was a way to have a sliding scale based upon the number of machines or the size of the business. That answer could come at the next council meeting.
“This proposal, as presented, raises ongoing annual fees on existing businesses. And in the example given by staff, this higher burden to the local businesses produces less revenue to the city. This is not a decision of if these machines will or will not exist, but about the viability of the business in many cases,» Ruckriegel said.
