Doug and Karen Kent run three establishments in Springfield — the Burger Bar, Always After Five and the Sunset Inn. All three places have an added attraction to the business itself — five video gaming machines to play if you are so inclined.
“It’s been a tremendous uplift for us,” Kent said, especially after the indoor smoking ban went into effect. “That really knocked the wind out of all of our locations. Gaming has been the backbone of all of our businesses.”
But Kent is worried the wind is going to be knocked out of his places again if state lawmakers raise the tax on video gaming machines. “You’re talking about cutting our income in half,” Kent said. “That income is wages, our improvements, it’s inventory and new menus. There’s just so much we do with that money and we’re very, very dependent on it. To have this kind of a tax increase to me is just insane.”
Kent was attending a news conference Wednesday with the Bet on Main Street coalition, a group of small business owners and veterans’ organizations who have video gambling machines in their establishments and who say they rely on revenue from those machines to keep going.
“Our message to Illinois lawmakers today is simple: When considering tax policy, bet on main street small businesses, not on out of state-owned Wall Street casinos,” said Michael Bond, CEO of Tap Room Gaming, a terminal operator based in Libertyville.
Under Illinois law, video gaming terminals pay a tax of 30 percent on its returns, higher than taxes imposed on casinos or horse racing. That has amounted to $1.5 billion since 2012, Bond said.
Bond also said video gaming has created 700 new businesses around the state and supports 32,000 jobs.
In his budget proposal, Gov. J.B. Pritzker said he wants to restructure the tax structure that applies to video gaming, something the administration said would generate $89 million. Pritzker said he wanted to target entities that are running hundreds of machines at multiple locations around the state.
“The governor proposes that marginal net terminal income that exceeds $2.5 million per year be taxable at a 50 percent rate rather than the current 30 percent rate,” the administration’s budget proposal said.
The state takes its cut off the top and then the terminal operator and the business split the rest. Smaller operators in the coalition say they’ll be caught up in the higher tax structure.
“If it goes through it’s going to be very detrimental to us,” said Jimmy Duncan of AMVETS post 100 in Jacksonville. “The AMVETS, like many organizations, was really on the ropes during the recession and afterwards. We nearly closed our doors.”
After the arrival of video gaming, Duncan said, things turned around and the organization was able to build up its clientele. It used funds from gambling to make badly needed repairs to its building and also make charitable donations to the community. Last year, he said, those donations almost hit $200,000.