McHenry doesn't want gambling parlors, but defining what those are is no sure bet

The McHenry City Council has been clear in the past: It does not want gambling cafes or parlors in the city.

The problem, City Administrator Derik Morefield said, is defining what a gambling cafe is.

"This is a whole topic we wrangled over in 2016 or 2017," Morefield said, as McHenry tried to define what a gambling parlor looks like or develop guidelines for the city to follow.

"We couldn't come up with anything to define it," Morefield said.

The desire to not allow gambling parlors - where a majority of the business revenue comes from gambling - played into the council turning down a gambling license request by Shelly's Corned Beef back in March.

Chris Goluba and Mitchell Voss sought a liquor and video gambling license for a location at 4300 W. Elm St., in the McHenry Shopping Center. The liquor license was approved in March but the gambling license was not, with Aldermen Andrew Glab, Victor Santi, Sue Miller and Patrick Devine (who did not run for reelection this year) voting to deny the request.

Voss and Goluba returned at the Nov. 6 council meeting, again asking for that gambling license.

The men brought boxed corned beef sandwiches and handed them to council members prior to the discussion and vote.

Shelly's Corned Beef is based on a concept from The Corned Beef Factory with locations in Chicago, Carol Stream and Woodstock, Goluba said, adding the meats come from Chicago, and the plan was to pair sandwiches with beers from local breweries.

The McHenry location, which was empty for four years, is completely remodeled, and seats 24 to 30 people with space for six more at the bar, Voss said.

The Corned Beef Factory owners, with whom they have a licensing agreement, "will not allow us to use this concept without a gaming license," Goluba told the council at the Nov. 6 meeting.

Ultimately, the council approved the new request on a 6-1 vote, with Glab voting no.

"It really turns me off ... that the company won't allow it, unless we give them video gaming," Glab said.

In October, the owner of the International House of Wine and Cheese in Richmond, Tom Jiaras, also received a video gambling and liquor license for a new location at 4005 W. Kane Ave. in McHenry.

According to his application, the bar would have a specialty drink menu rotating quarterly; the food would be charcuterie boards, flatbreads and paninis; there would be a retail sales section; and they would offer seminars and classes. The video gambling license was approved on a 4-3 vote with Santi, Chris Basi and Michael Koch voting no.

Those approvals led Assistant City Manager Monte Johnson to ask for board clarification on the gambling license policy at a recent city council meeting. He takes calls weekly from companies, letting them know the city has not approved gambling parlors in the past. Often, those inquires do not move past his screening questions, Johnson said.

"It needs to be a real restaurant or a real bar" to get board approval, Johnson said, adding he didn't want to waste a business' or council members' time on a business plan which they would not approve.

When Illinois legalized video gambling, "I recall the council at the time was ready to approve video gaming to support the businesses we had here at the time," Glab said. "Right off the bat, we had a couple of gaming entities that came into town."

McHenry has not approved stand-alone video gambling cafes, but has allowed the machines at its existing bars and restaurants. According to the Illinois Gaming Board, McHenry had 41 gambling locations supporting 210 machines as of October. So far this year, McHenry's portion of taxes on the machines comes to $587,319.70.

In the past, McHenry also has required businesses seeking a video gambling license to operate for a year first to show the business did not need revenue from the machines to be viable.

David McArdle, the city attorney, said his concern is there is no "bright line" to indicate whether a business could receive a gambling license or not. For a liquor license, "if you fall within these eight standards, you get a license," McArdle said. "For gaming, we have nothing like that, and most towns don't."

Without that bright line, it is difficult to say a gambling license denial is not capricious or arbitrary, McArdle added.

When he tells callers the city won't approve a gambling cafe, most understand, Johnson said.

"I have a list of people to call if we change" to allow the cafes, Johnson said.

The council did not take a formal vote, but members indicated they wanted to hear the proposals from businesses, even if they looked like gambling cafes.

"Even if it doesn't meet certain criteria, if it is something new and different, the council might bend on it," Glab said.