East Dundee businessman touts legalized video gaming
By Mike Danahey firstname.lastname@example.org June 27, 2012 9:57PM
Owner Jill Hoppe (left) would like to have legal video gambling at her establishment Hoppes Corner on Liberty Street in Elgin. Frank Gumma (right) owns a East Dundee business, Ideal Amusements, which would supply this bar with the machines if Elgin allows it. June 25, 2012 | Michael Smart~Sun-Times Media
Local coin-operated machine business owner Frank Gumma has been supplying are municipal officials with information packets that include data culled from gaming overseers in five states which allow the sort of video gaming that Illinois soon will have.
According to those figures, the most recent annual takes were a net $606 million at 14,727 terminals in Louisiana; $215.5 million at 9,114 terminals in South Dakota; $1.125 billion at 17,308 terminals in West Virginia (which includes race tracks, too); $720.5 million at 12,202 terminals in Oregon; and $349.3 million at 17,892 terminals in Montana.
The annual take per machine ranged from more than $19,520 in Montana to almost $65,000 across the terminals in West Virginia, where those at racetracks netted about $75,000 each per year.
In Elgin, Jill Hoppe hopes the city council will consider those numbers and allow video gambling at the bar she and her husband Tom own — Hoppe’s Corner at 1075 N. Liberty St. on the city’s northeast side.
“Tom has been working here since 1972, bought in as a partner in 1977, and we became full owners in 1982,” she said.
Hoppe said her place is a neighborhood bar with mostly middle-aged regulars who rarely go to the Elgin casino. The bad economy hurt her business, and she is worried that some patrons might go to bars in other towns for the gaming draw.
Hoppe also said increases in licenses and fees in recent years implemented by the city haven’t helped her bottom line, and she is fretting a 3 percent liquor tax going into effect in July in Elgin.
“The city gives incentives and exemptions on fees to bring new businesses to town, but not much like that for us. And I was at a meeting where the mayor said that service clubs give back to the community. Well, bars give back, too. We’re the first to be called when clubs and charities and even churches need things. Here at our place, we give to the fire and police department causes, and to local sports teams and kids teams, and have fund-raisers for PADS (Public Action to Deliver Shelter) and for two people who are battling breast cancer.”
- Mike Danahey
Updated: July 29, 2012 6:59AM
As someone who has been in the coin-operated machine business for more than 40 years, Frank Gumma of Algonquin has been looking forward to this August.
That is when legal gaming machines finally can be installed in bars, restaurants, truck stops, veterans and service organizations in Illinois towns and unincorporated areas that have opted into the state program.
From his perspective, towns that have opted out or are on the fence about allowing such betting should thoroughly consider the economics of that decision.
With Hampshire, Hoffman Estates, Huntley, Lake in the Hills and South Elgin already on board, and Hanover Park probably set to approve such gambling, “Let’s not give people an excuse to leave Elgin,” Gumma said.
After tabling the matter June 13, Elgin City Council members are set to discuss the matter again in July. What some of the council would like to see is only allowing the video gaming at service clubs — a move that might be challenged in court by other types of establishments in the city.
Carpentersville, East Dundee and West Dundee have outright bans on such gaming. But, Gumma said, each of those towns is still feeling the impact of the recession. A recent example would be last month’s closure of the Best Buy store in West Dundee, which village officials say has led to a $200,000 shortfall in tax revenue and resulted in budget cuts for the village, he noted.
Gumma runs his family’s business, Ideal Amusements, which has been located in East Dundee for seven years. According to the company’s website, Ideal Amusements “operates all types of coin-operated amusement devices such as Digital Downloading Juke Boxes (TouchTunes), Golden Tee Golf, Dart Games, Bar Top Touchscreen Games, Prize Redemption Games, Pool Tables, ATM Machines, and all other types of state-of-the-art amusement games.”
Gumma has set up a sister business, Ideal Gaming LLC, for video gambling. Gumma also is the founder of American Vending Sales of Elk Grove Village, which is a distributor of video gaming machines and which he no longer owns.
Illinois has set up a system in which licensed manufacturers sell machines to distributors, which in turn lease or distribute them to licensed operators (such as Ideal). The operator then places the equipment in a licensed establishment.
“The Illinois Gaming Board (which is overseeing the effort) has a reputation as being the toughest in the country,” Gumma said.
Allowing this form of gaming is part of the 2009 Video Gaming Act, designed to use revenues collected to pay for a $31 billion capital improvement program throughout the state.
“This almost became a business that never was,” Gumma said.
Gumma explained that for about 20 years, the Illinois Coin Machine Operators Association has been lobbying to have legal video gambling in places that serve alcohol. Three years ago — with the state’s finances in disarray, unemployment high and infrastructure work of all sorts needed — “The time was right to get it done,” Gumma said.
Initially, the bill didn’t have an opt-out clause — and when Gov. Pat Quinn required it, that led to a lot of confusion, Gumma said. Adding to the delay was a lawsuit filed by Blackhawks owner and liquor businessman Rocky Wirtz.
The capital bill is partially funded through additional alcohol taxes, and Wirtz complained that it imposed “arbitrary, widely disproportionate new taxes on beer, wine and spirits that are not based on real and substantial differences.” In July 2001, the Illinois Supreme Court unanimously overturned a lower-court decision, paving way for the act to be implemented.
Prior to the 2009 legislation, the Illinois Gaming Board only had to oversee casinos operating in Illinois. Then it had to come up with a way to oversee rules that had the potential to apply to the 15,000 or so establishments in the state that are licensed to pour liquor, Gumma said.
Gumma noted that thus far, there are about 70 licensed operators in the state, including himself. Gumma’s business already supplies coin-operated machines of the non-gambling type to establishment across northern Illinois.
Machines for gambling will be the same as ones found in casinos such as poker, blackjack and line games, the latter of which Gumma feels will be the most popular.
Bets cannot be more than $2 a pull, and payouts on any one pull or hand are limited to $500.
As such, the players “aren’t the same players as at casinos,” Gumma said. “These are more casual players. And there’s a study that shows only about 3 percent crossover.”
However, Elgin Mayor Dave Kaptain has said the Grand Victoria Casino is concerned that such gambling will have an impact on its bottom line — which has been shrinking in the wake of the state’s smoking ban, the recession, and the opening last year of the Rivers Casino in Des Plaines.
The act calls for the gaming vendor and the host establishment to each get 35 percent of profits, with the state getting 25 percent and the local municipality 5 percent.
Gumma expects that a good many of his clients will have three machines. Those machines cost about $15,000 each and typically have a lifespan of about five years.
“But a caveat is the software can be replaced, meaning they could last longer,” Gumma said.
Working on details
Gumma can check all the machines he oversees via the Internet — and the state has an electronic record of play and takes. Payouts will be in cash.
Some issues still need to be addressed. For example, there is no self-exclusion list set up as with casino where compulsive gamblers bar themselves from gambling.
While waiting for the legislation to go into effect, Gumma said his job has included helping customers fill out paperwork to have the machines; working up drawings related to the placement of the machines; and making sure that spaces chosen meet the requirements for holding the games.
He’s also been encouraging owners who want such gaming in their establishments to generate a dialogue with officials in their respective towns.