PEORIA – A recent law change in Springfield had members of the Peoria City Council worried the effect 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 large share of the fees to get video poker machines and the like – and people like Councilmembers Beth Jensen and Sid Ruckrie
“The only one who gets hurt at this, or the only business that gets hurt, are our small businesses.
Added Jensen: “This is going to hurt the little taverns and bars.”
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What’s changing with fees in new legislation
In December, the Illinois Legislature passed new rules that require all fees to be even divided 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 pay a $ 500 license fee, but each gaming machine would be even split between the two entities, they said.
For example, the gaming company will now pay $ 1,000 each year. That’s the $ 500 license plus half of the $ 1,000 registration costs for both 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, 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.
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 is split between the state, the city, the bars and the video gaming companies.
‘Easier for me to absorb it’
Ken Humphrey, owner of VIP Lounge at the corner of Glen Avenue and Sheridan Road, said he’s okay with the increase. Sure, he’s not going to pay more – but he’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 pays $ 488,764 in state last 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 the city get a third and then the tavern or bar gets a third, Humphrey said.
Which is why, he said, paying an extra $ 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 this.
“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 biggest one, so it’s easier for me to absorb it than someone doesn’t make a lot of money at it.”
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So, the Illinois Municipal League on their stances regarding the changes. She’s planning to bring back council data on how many other cities charge in fees.
To mitigate the effect on local businesses, which needs to be allowed to operate, companies do not have to do so. 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 creates a higher burden for the local businesses. This is not a decision of whether these machines will or will not exist, but about the viability of the business in many cases, “Ruckreigel said.