After grilling Grand Victoria Casino representatives on their long-term plans, Elgin City Council members agreed to lower the casino's lease payments.
Starting Jan. 1, the casino would pay the city $1 million or 3 percent of the casino's net income, whichever is less, for the city-owned land it sits on. That's down from this year's $1.7 million. Councilmembers approved the move in a 7-2 vote Wednesday, with Toby Shaw and Terry Gavin casting the dissenting votes.
Lease payments were $2.5 million in 2011, $2 million in 2012 and $1.6 million in 2013. Other casinos pay little or nothing in leases to their respective municipalities, Assistant City Manager Rick Kozal said.
Video gambling machines are expected to continue eating away at the casino's profits, which already took a 40 percent hit after the statewide smoking ban in 2008 and the building of Rivers Casino in Des Plaines in 2011, casino officials said.
Projections show there will be 600 video gambling machines in Elgin by 2017, generating $22 million, of which $11 million normally would go to the casino, casino General Manager Jim Thomason said.
"You're the landlord and I'm the tenant," Thomason said. "It's been 20 years and our (current) agreement doesn't reflect the conditions of the market today."
The casino is weighing other long-term revenue plans, Director of Marketing Suzanne Phillips said.
Ideas include expanding parking, building a hotel next door, and building a permanent or semi-permanent entertainment venue at Festival Park, she said.
The concert series at Festival Park, which started last year, has had a positive "halo effect" on the casino and downtown businesses, Phillips and Thomason said.
Downtown business owners said they generally agree.
Toom Toom Thai owner Toom Wiitanen said she's seen an uptick in clientele on concert nights. "Sometimes they come early, or they stop by later to buy something," she said.
Ray Maxwell, owner of Elgin Antiques, said there's been more activity overall.
"What I have noticed is more people downtown," he said. "I don't think (the concerts are) the only reason, but I think that certainly helped."
However, there hasn't been much growth of businesses near the casino, Gavin said.
"We are both sharing the pain, so to speak, and you are asking us to share a little more pain for this possible proposal at Festival Park," he said.
Councilwoman Carol Rauschenberger said she hopes the casino will invest into expanding entertainment.
Gavin said there is no guarantee of that, at which Thomason appeared to bristle.
"We've been here 18 years. If you don't know our stats, fine," he said.
The casino already has invested more than $1 million in concerts at Festival Park, he said.
The new lease would allow the casino to stay through 2054. Under the current lease, the casino could stay through 2024.
Councilman John Prigge asked Thomason if the casino would have considered leaving before 2024.
"I don't know," Thomason said. "If the numbers keep going where they're going, I'm going to be leaving pretty quick."
Councilman Toby Shaw said he's "not a gambling fan."
Grand Victoria has been a good partner to the city, Mayor David Kaptain said. "You can't ask somebody to do more for a community than they did."
The city also gets a percentage of gambling revenues from the casino, along with $1 per patron.