ACTION REQUESTED:
Title
Communication from the City Manager and Corporation Counsel with a Request to ADOPT an ORDINANCE DIVIDING VIDEO GAMING TERMINAL FEES BETWEEN OPERATORS AND ESTABLISHMENTS.
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BACKGROUND:
Due to the COVID-19 pandemic, mitigation measures put into place by the State of Illinois suspended all gaming through the Illinois Gaming Board between March 16, 2020 and June 30, 2020. Video gaming was again suspended from November 19, 2020 until January 26, 2021 for Region 2 (Peoria County). Hours of service continue to be restricted. Licensees were severely restricted in their ability to engage in video gaming in 2020 and that continued into 2021.
On January 12, 2021 the City adopted Ordinance No. 20-022 which generally provided the following relief to video gaming terminal license holders:
1. All video gaming licenses have been extended for two months. All licenses will now expire on April 30, 2021. No license holders have to pay any additional fees for this license extension.
2. The 2021 video gaming licenses will run from May 1, 2021 to February 28, 2022, thereby putting the annual renewals back in line with traditional due dates.
3. License holders (terminal licenses not operator licenses) will pay 50% of the license fee for 2021. Operators will pay the normal fee.
4. If a license holder who pays a discounted license fees is later found guilty by a state or hearing officer of Covid mitigation measures, the license holder will be required to pay the balance of the full license rate.
5. Late fees for the 2021 applications will not be assessed until May 1, 2021.
6. The requirements for licensees to maintain at least 60% of their revenue from food/beverage sales will be waived for 2021 license only, as the 365 days prior to renewal are likely to have irregular sales from mitigation measures.
The City did not reduce any fees for operator licensee.
The City received an inquiry into whether a terminal licensee and an operator licensee could “split” the fee paid by the terminal licensee to the City. After researching the issue, the legal department determined that the Illinois Gaming Board issued a ruling in May of 2019 stating that if a terminal licensee was to receive half or any part of the licensee fee from the operator, it could be construed as an illegal inducement. The gaming board further stated that operators cannot give anything of value to a local terminal licensee as an incentive or inducement to locate their video gaming machines in an establishment.
The state fee for terminal licensees explicitly states that it is to be split between the terminal licensee and the operator licensee.
Springfield, Illinois amended its code to formalize the allocation of responsibility for its annual terminal license by splitting the fee equally between the terminal licensee and the operator.
The attached Ordinance splits the annual fee for a video gaming terminal between the local establishment and the operator. Note that the annual fee is normally $500. However, that fee for the 2021 license year will be reduced by 50%. The reduced amount would then be split between the local establishment and the operator.
NEIGHBORHOOD CONCERNS: None.
IMPACT IF APPROVED: Local restaurants and bars, already enduring the economic hardships of the COVID-19 pandemic, will equally split the cost of the municipal video gaming terminal fee with video gaming terminal operators.
IMPACT IF DENIED: Local restaurants and bars will continue to pay the entirety of the municipal video gaming terminal fee.
ALTERNATIVES: N/A
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Grow Peoria
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Keep taxes and fees competitive.
DEPARTMENT: Legal