2 years in, video gambling a boon for business, local government

Inside Jeremy Casiello's new business is a symbol of everything people who dislike gambling fear: A poster of Al Capone wearing a classic gangster grin suggesting he's getting away with something and doesn't care who knows.

The photo is a remnant of the closed Al Capone's Hideaway and Steakhouse near St. Charles. When Casiello is done with renovations, the Capone poster will be gone. But in its place will be something that may have brought a smile to the face of Chicago's most notorious mobster - video gambling machines.

Casiello owns three other establishments: The Dam Bar and Grill in Geneva and two Alley 64s, in Palatine and St. Charles. All three communities ban video gambling. But two years into the legalization of the machines, communities and business owners who've taken a gamble on allowing the new industry say they've reaped many benefits and seen few, if any, drawbacks to the devices.

Since the machines were legalized, $10.6 billion has been wagered statewide among 20,552 machines. The state's take was almost $211 million; local governments collected about $42 million.

"It's money that's there for the taking," Casiello said. "We have customers who leave our places all the time like, 'Hey, we're shooting up to Elgin. We're going to do a little gambling and come back.' We're losing business to the communities that have gambling. It's not like these communities that ban gambling are stopping anyone from doing it. It's just these politicians in these towns have just such old-school thinking, and they can't get around it."

In Casiello's world, Mount Prospect Village President Arlene Juracek would be an old-school thinker. As a village trustee, she voted to ban video gambling and hasn't changed her position since.

Juracek said she's not anti-gambling. She just doesn't see any need to introduce the machines, even if they delivered on the promises of new revenue.

Business is holding its own without gambling, which doesn't fit the community's image as welcoming to families, she said. Juracek also fears a new brand of crime gaining a foothold.

"I wouldn't think the crime would be at the establishments," she said. "I would think it would be more behind the scenes with the suppliers and distributors, that the underworld would be involved with those machines."

Juracek also associates video gambling with casinos she's seen on Native American reservations.

"It's sort of a last-gasp option for those communities," she said. "It says you have no other viable way of making money. For the state of Illinois to turn to that model is a very sad commentary about what the legislature thinks the state's prospects are."

In contrast, Fox Lake Mayor Donny Schmidt pushed for video gambling as a village trustee and has no regrets. The community of 10,537 people is among the Illinois' leaders in video gambling revenue, as 112 machines at 24 establishments have drawn $24.6 million in bets since 2012. Gamblers pocketed about $18.2 million of that. The state got a cut of nearly $1.6 million. And nearly $317,000 poured into Fox Lake's coffers, triple the amount Schmidt expected.

"When people saw the dollars coming in, everybody jumped on board," he said. "Our sales taxes have been either flat or a little bit down, and this money makes up for that. So we've been able to pave a few more streets and contribute a few more dollars to the fire district. The real advantage has been for our business owners."

Indeed, the 24 businesses with machines reaped a profit of more than $4.4 million, according to state records. Schmidt said the cash is a big help because local businesses never fully recovered from the statewide indoor smoking ban in 2008. He didn't want them to suffer a new disadvantage of losing customers to other communities that allowed video gambling. But he also didn't want to create a new burden for law enforcement.

"We had some concerns that the machines would fuel petty crime like breaking into homes and disputes inside the businesses, but none of the fears have come to pass," Schmidt said. "We've had no enforcement issues."

That doesn't surprise Michael Gelatka, president of the Illinois Gaming Machine Operators Association.

"Video gambling is not the scary boogeyman that a lot of people made it out to be," he said. "Cities like Darien and Lombard and Algonquin have all done polling when they were looking to opt-in, and none of them came up with any increase (in crime) that was tied to video gambling."

Gelatka says complaints that regulations on the machines are not strict enough are a paper tiger. In fact, the machine operators association supports even stronger regulations and full background vetting of potential licensees and distributors.

It also would consider state-mandated blacklisting of problem gamblers to address any noncriminal social problems related to video gambling. Currently, blacklisting is on a volunteer basis for both establishments and gambling addicts.

Problem gambling and the destruction of families is another fear many local politicians have cited in implementing video gambling bans.

Jerry Skogmo, executive director of the Renz Addiction Counseling Center, said he has not seen those fears manifest. The center, based in Elgin, is one of 16 gambling addiction treatment providers in Illinois.

"It's been slow for gambling addiction patients," Skogmo said of the past two years. Part of that lack of demand for treatment may stem from many communities taking a wait-and-see approach and only recently permitting video gambling. Skogmo said he expects treatment demand may increase in the near future. Renz Center will market its gambling treatment program more heavily in preparation for that demand.

But some bar owners do their own policing as well.

"When we see them losing all their money, we'll talk to them," said Ann Castle, co-owner of Booker's Bar & Grill in South Elgin. "Come up here. Let me buy you a pop. Get away from that machine for awhile."

Castle says she does that because she doesn't want to see people lose all their money. Nor does she want to lose customers because they've lost all their money. Video gambling regulars saved her business.

The state's smoking ban and subsequent recession were a one-two punch that would have knocked Castle out of the business she'd been in for 25 years if video gambling didn't come along.

"It was scary," she said. "I'd say 2009, 2010 and 2011 were three really hard years. Probably everybody in this area thought that they weren't going to make it. We kept throwing money at the bar, and sooner or later we didn't have any money left to throw."

Then Castle installed the video gambling machines. She soon had two lines on weekends. One was for drinks. The other was people waiting to play the machines. About $1,000 a week, she thought, would be enough new income to keep her doors open. It's done more than that. State records show an after-tax profit of about $609,000 in two years.

The windfall took even her accountant by surprise.

"Sunday night is amazing," she said. "Lots of times I won't have any customers at the bar, but my machines are full. I'll see the bar receipts and ask my bartender why she stayed open. She'll tell me all the machines were full."

All that action comes from Castle's regulars; she estimates only about 5 percent of the people playing the machines are new customers. And because of that, she's had no problems with rowdy behavior.

"I haven't seen a downside to it," Castle said. "I don't think it's hurt our community. It hasn't brought in a bad element. For people who have concerns, I'd tell them it's a tough economy right now to be a small-business owner. You've got to get everything they'll give you. Plus, we're putting a lot of money back into the community with those machines. It's keeping all my employees working."

Meanwhile, Casiello, owner of the closed Capone's Hideaway, said he is tired of waiting for St. Charles, Geneva and Palatine to embrace video gambling. He envisions his renovated restaurant in unincorporated Kane County, where video gambling is legal, being a giant in-your-face success to those three communities and any other naysayers.

"The biggest reason we bought this place is because of the video gambling," Casiello said. "People think owners of businesses are just making money hand over fist because we're in the sin industry.

"We've got bills like everyone else. We employ a lot of people. We pay for the industry we're in. With this video gambling, I hope I can give my people raises for a change. I hope I can afford to put money back into the tavern."

Things could change next spring in St. Charles. Mayor Ray Rogina said that might be the time to retake the pulse of his community on the topic of video gambling.

"I would certainly being in favor of a public hearing," Rogina said. "Let the people speak to the matter."

Rogina acknowledged getting pressure to legalize video gambling not just from Casiello, but from nonprofit organizations such as the local Moose lodge. Indeed, Rogina chastised city aldermen for not even allowing the Moose to engage them in a public conversation about video gambling a few months ago. Rogina supports the Moose Lodge request. But he says the jury is still out on video gambling in a for-profit setting.

"Certainly it's a revenue source, so it's worth consideration," Rogina said. "But you're not going to jam something down the throat of the people. I would support what the people want. Let's have a conversation."

Gambling: Fox Lake mayor says village has had no enforcement issues