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posted: 3/6/2013 9:37 PM

Elgin gives preliminary OK to video gambling

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Elgin is in the final stretch of allowing video gambling to come to town, even though that might amount to a revenue loss for the city.

The city council's committee of the whole on Wednesday night OK'd amending two ordinances -- one in the municipal code, the other in the liquor code -- that currently prohibit video gambling in Elgin.

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The vote was unanimous; the changes are expected to be up for final approval by the city council on March 20.

Councilman John Prigge said video gambling will be a plus for the city.

"I think pound for pound, this is one of our strongest, and it may be our best, economic incentive" in the last four years, Prigge said.

"This isn't costing us anything except votes, to say 'yes' and 'no,'" he added later.

Mayor David Kaptain, however, cautioned that video gambling's financial impact -- both to the city and business owners -- has yet to be determined.

"I'm not convinced, as councilman Prigge is, that this is the best thing we've done for the entire community," he said.

During discussions in the last couple of months, council members said that they didn't want local businesses to suffer because video gambling in allowed all around Elgin.

About 50 to 60 of the 110 establishments that currently have a liquor license in Elgin would be eligible for a state-issued video gambling license, city officials said.

A 2009 report by the firm of Arduin, Laffer and Moore Econometrics estimates that each video gambling machine would net $45,000 per year, with Elgin's share at $2,250 per year, city officials said.

With 20 establishments with five machines each -- the maximum allowed by law -- that would amount to $225,000 per year for the city.

However, those revenues to the city could be offset by revenue losses projected by Grand Victoria Casino.

Casino officials estimate a 5 percent loss in revenues due to video gambling as a whole, not just in Elgin, Assistant City Manager Rick Kozal said. Casino officials previously estimated a 2 to 3 percent loss.

Elgin's 2013 budget projects almost $11.5 million in revenues from the casino, so a 5 percent reduction would amount to $573,600.

Also, the casino's lease payment to the city is a percentage of the casino's net income, which means the city could lose an additional $100,000, officials said.

Under the Video Gaming Act of 2009, video gambling is allowed in bars, restaurants, licensed truck establishments, and clubs that derive their charter from a national veteran or fraternal organization.

Two clubs in Elgin -- the Riverside Club and Owl's Athletic Club -- are currently ineligible.

Riverside Club member Mike Flannagan said he's hopeful that will change soon with a state bill co-sponsored by state Rep. Keith Farnham.

The bill, which passed the executive committee on Wednesday, would allow local social clubs to get video gambling licenses. Farnham said he expects the bill to go to the House in the next couple of days.

"I think it was just kind of an oversight in the (original) legislation," Farnham said.

Bill Freiberg, senior trustee for the Owl's Athletic Club, said he's optimistic, too.

However, if the state law doesn't change, the club might have other options, such as becoming a bar instead of a social club, or opening a second location outside of Illinois to meet the national charter requirement, Freiberg said.

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