Suburbs near Wisconsin cash in on video gambling

Fox Lake Mayor Donny Schmit said he had no idea what to expect when the first video gambling machine flickered on in the village more than a year ago.

"Residents said they wanted (video gambling) to keep up with businesses in other areas where it was approved," Schmit said. "But, the village was going to receive such a small portion of the overall that we only budgeted $12,000 in revenue from it in the first year. It was a shot in the dark."

That estimate turned out to be far too low after the municipality raked in about $93,338 in revenue since the state allowed video gambling machines to operate in bars and other locations.

Fox Lake was one of the top two suburbs in revenue, second only to Lake County neighbor Waukegan, which had $154,472, according to a Daily Herald review of first-year figures provided by the Illinois Gaming Board.

Video gambling revenue from other suburban communities included McHenry with $83,950, unincorporated Kane County with $64,627, Hoffman Estates with $46,100, Wauconda with about $44,423 and Wood Dale with $37,089.

"I feel like we hit the jackpot. It's really been a boon for us," Schmit said of Fox Lake, where the revenue funded the village's Pace Bus program and a community development consultant. He said future gaming revenue is earmarked for capital improvements.

While video gambling produced at least some revenue in every suburb that allows it -- ranging from $128 in West Dundee to nine communities that collected more than $30,000 each -- acceptance is far from universal.

Opponents continue to warn of a host of social problems associated with video gambling, and one expert expressed concern about possible oversaturation in some areas. Officials in some communities that have refused to approve video gambling say the revenue stats don't change their position.

Video gambling is permitted in bars, restaurants, truck stops and fraternal orders in communities where it has been approved. Generally, 5 percent of revenue goes to the municipality, 25 percent is sent to the state, and the terminal operator and business owner split the rest.

Video gambling was approved by Illinois lawmakers in 2009, but lawsuits and delays meant the machines did not go live until mid-September 2012. Experts generally use figures from the first full month of gambling in October 2012 as the start for compiling statistics.

Between October 2012 and October 2013, more than 180 locations installed machines in Cook, DuPage, Kane, Lake and McHenry counties. Fox Lake and Waukegan have the most locations with 17 and 16 respectively. Statewide, local governments collected $11.9 million in video gambling revenue in the first year.

"Overall, I believe it has been a benefit for communities in terms of the financial aspects, as well as in terms of not having to put forth additional major resources toward collecting the financial benefit," said Joe Schatteman, the deputy legislative director for the Illinois Municipal League.

"When you see a small community like Fox Lake bring in around $90,000 in the first year, I'd say that is a financial benefit to them."

Schatteman, who is the organization's gambling liaison, said the revenue in places like Fox Lake, Waukegan, McHenry, Wauconda and Antioch could be due to their proximity to Wisconsin, where such gambling is illegal.

McHenry, Fox Lake and Wauconda -- all less than 30 minutes from the Dairy State -- had more than $221,000 combined in video gambling revenue.

"The nearest casino for people in southern Wisconsin is in Milwaukee," Schatteman said. "So for communities like Fox Lake that are minutes away from the Wisconsin border, it's easier for residents to drive over the border and gamble."

The lack of a riverboat casino nearby may be another factor.

"A town similar to Fox Lake in population, but located minutes from the Joliet casino, only did $2,400 in October," Schatteman said.

"So, being a border community without a riverboat is paying off."

However, he expressed concern about video gambling becoming oversaturated in some areas, and the effect that could have on future revenue.

For example, as of November, video gambling was in 41 locations in McHenry, Fox Lake, Antioch and Wauconda, and another 12 locations in nearby Richmond, Johnsburg and Spring Grove.

"You have to wonder how many machines they have there and whether the area will eventually become oversaturated," he said.

"When you really think about it and look at the number of video poker machines out there, it's really a lot for a smaller community."

Meanwhile, critics continue to decry gambling and the damage they say it does to the economy and to people with an addiction. Anita Bedell, executive director of the Illinois Church Action on Alcohol and Addiction Problems, said too many towns have focused on the revenue video gambling generate, but ignored the money lost to the local economy.

"Video gambling is a terrible way to get money from people," Bedell said. "The more you play, the more that money will be gone."

Officials in Barrington and Gurnee that have rejected video gambling say they aren't swayed by first-year revenue figures.

"Extrapolate out the amount of money put into the machines and imagine if that money was spent in stores," said Gurnee Mayor Kristina Kovarik, who admitted being a fan of video poker and has played in casinos in Las Vegas and Mississippi. "We live and die by consumer spending. I want people to come here to shop and eat."

But Schmit said sales tax revenue has increased slightly in Fox Lake since gambling went online.

"The only item that seems to generate less money now than before is lottery sales," he said. "I've checked with police and they haven't reported any negative problems from gambling. Honestly, I have nothing negative to say about the machines at all."