Illinois Gaming Board members attempted to shut down the development of "casino malls" on Tuesday, voting unanimously to reject the video license applications of three operators who hoped to open in a Hometown strip mall.
Gaming board chairman Donald Tracy reiterated a statement he made at the board's August meeting, saying he viewed such operations as "back-door casinos," circumventing the oversight and regulation of traditional casinos under state law.
The Daily Southtown exclusively disclosed in June that developers planned to open the first-of-their-kind operations in Hometown and Crestwood. Using vacancies in existing strip malls, the developers hoped to attract as many as nine independently owned and operated casino cafes to the sites in an effort to increase foot traffic and increase patronage. The state's video gambling law does not specifically prohibit such operations.
"All three of these locations relate to what have been called video gaming malls, mini-casinos, casino malls, and back-door casinos," Tracy said before the vote. "I view gaming malls as back-door casinos, as I said at the last meeting, without the traditional safeguards of licensed casinos such as regulated security, on-site oversight, position limits, self-exclusion rules and internal controls."
Tracy went on to say that he considers such casino malls "a threat to Illinois gaming integrity" and if the state had envisioned their creation, it would have specifically created riverboat, casino-like safeguards.The gaming board chairman noted a letter from state Rep. Robert Rita, D-Blue Island, stating that he and his legislative colleagues never envisioned the creation of casino malls when they passed the Video Gaming Act. In a previous column, I noted that Rita had submitted a House resolution asking the gaming board to study the issue and suggest changes to the existing video gambling legislation to address the issue of casino malls.Rita said one of the purposes of his resolution was to encourage the Illinois Gaming Board to deny licenses to operators in the proposed video casino mall sites.Under the video gambling act, up to five video machines can be installed at any site that is licensed. Such sites include restaurants, taverns, fraternal and veteran halls and, with increasing frequency, video cafes. Such cafes are relatively new businesses that have sprouted, primarily in the suburbs, that cater to women, offering wine, coffee, tea and small snacks, along with the video games.Hometown Mayor Kevin Casey, who did not attend the Tuesday gaming board meeting, found it difficult to contain his outrage when told about the board's action and the gaming board chairman's comments."They just voted to kill 50 to 60 new jobs in Hometown," said the mayor, an enthusiastic supporter of converting the Home Town Plaza, just south of 87th Street on Southwest Highway, into a casino mall."I just don't think they understand how small our town is," Casey said. "In Oak Lawn (which borders Hometown) they have video games in businesses up and down 95th Street. They're just 10 to 20 feet apart. But because they're all located on a long street, that's all right with the gaming board. I don't have a long commercial street in my town. All I've got is that strip mall and it's half vacant because Mom and Pop stores no longer exist. I'm not going to attract a Meijer, a Wal-Mart, Home Depot, or any other big box store to my town. We don't have the land or the foot traffic they need to justify that kind of store."I'm just trying to provide some economic development and jobs for the people in my community. People have been phoning my office asking to be placed on waiting lists for these jobs. Many of them are single mothers. People on low or moderate incomes who need work to pay their bills. There's nothing in the state video gaming law that prevents this sort of thing and they're only opposing this because, I guess, the people in Springfield have nothing better to do. They can't come up with a budget or pay the state's pension systems, but when I try to do something for my town they have the time to stop me."I really don't understand the logic."There are currently 5,106 video gambling locations licensed in Illinois (outside of casinos) and they have 21,431 video gambling terminals in operation, according to gaming board figures. That's the equivalent of 17 riverboat casinos.Oak Lawn has 32 licensed operators of video gambling machines and 153 video machines. While the mayor of Oak Lawn has said she opposes the expansion of video gambling in Hometown and her own suburb, she has complained that she has little authority to control their profusion due to the state's video gambling act. A suburb must approve video gambling, but once having done so cannot restrict the number of licenses, the number of games or their locations in the community.David Israel, the owner of Learsi & Co. in Northbrook, and owner of the Home Town Plaza, said he invested more than $1 million in renovations at the strip mall in order to make it more attractive to video cafe gambling operators.He told the gaming board a marketing study revealed the strip mall, directly across the street from Chicago, was best suited to attract video gambling merchants because in Chicago video gambling is illegal. Israel contends that before he spent money on strip mall renovations he talked to a gaming board attorney and was assured there was nothing in existing law prohibiting a casino mall and then had gaming board officials visit the site to gain further assurances that everything he was doing complied with the law.While Rita opposes the casino mall concept, he admitted to me there was nothing in the existing legislation that seemed to prohibit such a development. Gaming board officials at Tuesday's hearing didn't cite anything in the language of the Video Gaming Act to prohibit such a business enterprise, but merely referred to the legislature's "intent."Although the notion of video gambling malls disturbs me, I have to agree with Casey. When you drive down a busy street and see a hot dog stand with video gambling machines, next to a tavern that has a sign out front announcing it has video gambling machines, next to a family restaurant that has video gambling machines, next to an upscale video cafe such as Doty's, I am hard pressed to see the difference between all that and placing such businesses in one strip mall.Israel appeared before the gaming board in August to protest what he viewed as the organization's three-month delay in approving video licenses for the casino mall development in Hometown and seemed to be setting up the case for a lawsuit should it reject the license applications. I called him Tuesday to see if that was his plan now, but he did not return my phone call. Only one of the operators recruited to the Home Town Plaza under the casino mall concept has been approved for a license to date.Although gaming board officials refused to comment on the fate of Crestwood's planned casino mall, it seems likely from the chairman's comments on Tuesday that those operators' requests to be licensed will meet with the same fate.
The Crestwood mall would be located just south of Cal-Sag Road and west of Cicero Avenue, directly across the street from an off-track betting parlor and would be anchored by an existing bingo hall.
The Hometown operators denied licenses on Tuesday were Bella's, Gigi's and TC Pub No. 5.
It should be noted that the state gaming board approved 101 new video gaming licenses in September. At that rate, there would be another 1,200 new operators running about 5,000 new machines by this time next year, the equivalent of four new full blown casinos.
I do not oppose gambling. I am generally an advocate of the free market system. But I have to laugh every time someone tells me the market is saturated and it is going to burn itself out.
And I keep wondering when this state is finally going to get wise and try to legalize sports gambling. Everyone else is making money off of fantasy leagues. It's a billion-dollar business. And time for the government to tax it and get in on the revenue stream.
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