Antonio Ruiz and Mike Sanduta play the video gaming machines during a break at work. Trattoria Peppino is the first restaurant in Elmwood Park to be issued a video gaming license and now has four video gambling machines in the back of the business. on March 8th, 2014. | Jason Glosniak/for Sun-Times Media

Mayor Rahm Emanuel has long been dead-set against video gambling for fear that Chicago would become saturated with video machines in bars and restaurants in already challenged neighborhoods.

But that was before unregulated “sweepstakes” devices that look and work almost exactly like video poker machines started popping up in bars, gas stations, convenience stores and laundromats all over the city, depriving Chicago taxpayers of any tax revenue at all.

On Monday, Ald. Pat O’Connor (40th), the Emanuel floor leader who replaced Ald. Edward Burke (14th) as chairman of the City Council’s Finance Committee, said it’s time to face that new reality.

If Chicagoans are “accepting of” the proliferation of illegal machines, it’s time to “look to the model that at least allows the city to get its share” of the revenue to help chip away at a looming, $1 billion spike in pension payments.

“While a casino is certainly something that people are looking at, that’s several years away. This is a much more immediate potential. … It is a revenue source that could address pensions. It is a revenue source that, right now, is going on under our noses untapped,” O’Connor said Monday.

“It’s not a panacea. But most people are saying minimally, you’d be looking at $80 million a year as a potential income. And that is before you would look at potentially changing the state formula for the share between municipalities and the state, which I believe is something the state would consider, given the potential to come into the city and basically increase their revenue significantly.”

O’Connor noted he already has an ordinance pending in committee that would “get rid of the illegal machines popping up all over” Chicago.

Retailers now making an unregulated killing from those machines have “some loophole in the state law they’re trying to point to” but “most people in the Law Department are saying they’re illegal machines, no matter how you slice it,” O’Connor said.

“They’re in gas stations. … There’s no age limit. Little kids are playing them in laundromats,” O’Connor said.

“Under the state formula, people who own them are vetted. They can only be in establishments that have a liquor license. And they’re limited to adults. Whereas right now, it’s open season.”

Video gambling opponents have condemned it as the “crack cocaine of gambling.” They worry about the negative impact of having machines in every other tavern.

Emanuel shares that view.

Four years ago, Ald. Ray Lopez (15th) introduced an ordinance authorizing video gambling in Chicago, only to be shot down by the mayor.

“I’m opposed to it. I’ve said that many times. I’ll repeat it. I’m opposed to video gaming. I don’t support it. If we’re going to have gaming, it should be isolated or in a central location like a casino. I don’t want to see it spread throughout the city of Chicago. I don’t think that’s good for the type of city we want to have,” the mayor said then.

At the time, O’Connor agreed it made no sense to authorize video gambling while a mega-casino proposal that has eluded Chicago mayors for decades was still pending in a stalemated Springfield.

“If you allow gambling throughout the city, trying to get gambling at one particular site is far less compelling. It weakens our case,” the mayor’s floor leader said then.

O’Connor acknowledged Monday the mayor remains dead-set against the idea of legalizing video gambling in Chicago.

“It’s not a question of going against what he wants. He doesn’t like it in any sense. And he’s kind of embraced the casino because he thinks if it was down on the East Side where the other casino is, we could basically pick off the Chicagoans who were going there [to Hammond] anyway,” O’Connor said.

But with Emanuel a lame duck, O’Connor apparently feels free to go against the mayor’s wishes.

He has mentioned video gambling at several recent aldermanic forums with his four challengers in the 40th Ward when asked about revenue ideas to help solve the pension crisis.

“The Council might disagree with me. The mayor certainly disagrees with me. But factually speaking, that is a legitimate place to look” for new revenue, O’Connor said.