Round Lake Beach Passes Gambling Ordinance

Round Lake Beach passes video gambling ordinance August 27, 2012
Round Lake Beach passes video gambling ordinance August 27, 2012
With little fanfare and about ten people in the audience, the Round Lake Beach Village Board passed a video gambling ordinance by a 4 to 2 vote with one Trustee being on vacation. Three residents spoke out against the ordinance and one business owner spoke in favor of it.

When I asked how much income the ordinance would generate for the village, I was told by Mayor Hill that it was not easily determined because only four of the sixteen eligible liquor license owners have expressed an interest. However, the sales pitch that was given to the Board at a previous presentation estimated that each gaming terminal would generate $147.00 per day which would amount to approximately $7.35 for the village. If the four interested businesses each had the maximum of five gaming terminals, for a total of twenty, that would result in the Village taking in $140/day or $980/wk or $4,214/month or $51,100/year. At first glance you would probably say that’s a pretty tidy sum for doing little or nothing with just your hand hanging out waiting for the check.

The problem is that it’s “fuzzy math“, people! I had asked the Board if anyone had run the numbers to find out what funds would be generated and all they could give me was the $147.00 figure from the presentation. So, let’s work with that number and see how the company making the presentation came up with it and if it is even feasible for our little town with many low income earners.

Here’s how the Video Gambling “Act” would play out after everyone involved paid their required fees to be a part of it.

First, no wager can be more than $2.00 and the maximum payout on a hand cannot exceed $500. The Act requires that “terminals must theoretically pay out no less than 80% of amounts played”. That leaves 20% to work with when it comes to profits and village revenue.
Of that 20%, the State will take 30% of which they will keep 25% and give the Village 5%. The remaining 70% of the “Net” terminal income will be split 50/50 between the owner of the machine and the business proprietor. Using these figures, here is what has to happen for the gaming terminal to generate $147/day, thus earning $7.35/day for the Village.

This is JUST for ONE terminal (five are allowed per establishment)
Daily amount gambled: $2,450.00
Payout must equal 80% $1,960.00
Taxable amount (at 30%) $ 490.00
State’s share (25%) $ 147.00
Village’s share (5%) $ 7.35

As you can see, a terminal would have to generate $2,450.00 per day to pay the village their share of the projected $147/day earnings. Let’s take it one step further, though. Suppose that the business was open for 12 hours each and every day (say from 10:00 AM to 10:00 PM). In order for ONE terminal to generate the promised $147/day it would have to have 204 games played per hour or 3.4 per minute or one every 18 seconds! That’s if they were One Dollar games. (Remember, most people wager on the low side so $2.00 machines may not be as popular.)

If an establishment had five terminals they would have to have customers dropping a WHOPPING $12,250 PER DAY to generate the projected $147/day per terminal.

Can you see where I’m going with this? If you take JUST the current FOUR establishments that have shown an interest in video gaming terminals, multiply that by FIVE terminals per establishment, and you now need to generate $49,000 PER DAY to end up with $147/day as projected. Do you really believe that the area residents will be dropping a WHOPPING $49,000 PER DAY into video gambling machines? Now do you see why I am calling it “Fuzzy Math” and wishful thinking?

Let’s look at the business owners (such as Kristof’s who was at the meeting) reasons for wanting video gambling. The establishments would wind up with $93,896.25 annually based on the projected $147/day “NET” terminal income and after the 50/50 split with the machine’s owner. ($147.00 x 70% x 5 terminals x 365 days and split 50/50)

Personally, I think that the business owners as well as the Village are being sold a bill of goods, just as if they had bought shares in Groupon (currently worth 25% of its initial public offering). Does a businessman like Kristof really believe that he will be able to suck a total of $12,250.00 out of the pockets of Round Lake Beach residents every single day when three other establishments may be trying to do the same as well as neighboring village establishments? There is NOT that much available ‘loose change’ laying around in this town.

Do you believe that the Mayor and village Trustees were sold a bill of goods which is unsustainable even if a portion of the 80% payout is gambled back into each terminal? It will take ‘fresh’ money from other players to reach the anticipated goal and that amount of money does not exist in this village.

The video below is just the portion of the meeting where the vote is taken.

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    • Gene Carey

      Mayor Hill = Yes
      Trustee Armstrong = No
      Trustee Butler = Yes
      Trustee Mount = Yes (was local and by approval voted by speaker phone)
      Trustee Smith = No
      Trustee Valadez = Yes
      Trustee Mattingly = Out of town/vacation (per attorney, too far to vote electronically)

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