McHenry City Council open to raising video gaming terminal max to six per establishment

‘That’s going to be a lot of help,’ one restaurant owner says, but some aldermen question impact

McHenry officials signaled Monday they could let establishments with video gaming licenses in the city have up to six gambling terminals, an increase from the current cap of five.

The move is expected to bring in more revenue and a maximum of 25 more machines into the municipality, bumping the total number to more than 200 terminals.

The proposal delighted Maria Martinez, owner of The Patroons Mexican Restaurant on Route 31, which has five gaming terminals right now.

“That’s going to be a lot of help,” Martinez said, noting the restaurant would try to add a sixth as soon as the McHenry City Council formally passes an amendment to its video gaming policies allowing an extra machine.

Sometimes, people who come into restaurants linger just for machines to become free when all are in use, she said.

“People are waiting for machines,” she said.

Some members of the McHenry City Council expressed reservations about approving the increase, which will only take effect after city staff members bring a formal ordinance back to elected officials for final approval. Monday’s council meeting included just a discussion of the idea, which a majority of elected leaders indicated they supported.

One of those hesitant to back the proposal was 3rd Ward Ald. Jeff Schaefer, who suggested instead finding other ways to give businesses a break like offering discounts on liquor licensing renewals as a way to help out some establishments hit by pandemic-related closures.

“The only time that there’s ever been at our busiest establishments that I’ve seen people waiting for a seat the gaming machines has been possibly on a Friday or Saturday night for about an hour time period. I don’t think it’s in as much demand as we think it is,” Schaefer said.

About $4.8 million was wagered in January across 175 terminals in 38 establishments in the city of McHenry, according to the Illinois Gaming Board. That translated into a profit of nearly $390,000, and more than $132,000 was paid in taxes, about $19,000 of which went to the city and the rest to the state.

Based on those figures, and assuming each of the 25 video gaming establishments in McHenry with five machines now would add one if the city moves forward with approving the increase to six, city staff projected there could be an additional $33,306 per year in city gaming tax revenue with 25 more machines, and a total of $58,306 in total city revenue, counting the $1,000 in annual licensing fees for each machine.

State records indicate even more revenue than that could be gained without a pandemic, as the coronavirus in January depressed gaming revenues, since there were restrictions on gambling activity in place due to the outbreak during that month.

In January 2018, for instance, with 157 video gaming terminals across 34 establishments in McHenry, the city netted $33,725 in revenue for the month, and in January 2019, it was more than $34,000, Illinois Gaming Board records show. Not every video establishment in McHenry has the current max of five, board records from January this year show.

“I don’t see the revenue would be a big compelling reason to go to six,” 7th Ward Alderman Sue Miller said. “I’m not belittling the request of the license holders, but I don’t think $30,000 is a huge revenue generator in the big scheme of things.”

She noted the council in the past did not immediately change local rules to let six terminals per establishment when Illinois gaming officials moved to allow it in the state.

But the COVID-19 pandemic and its sudden decimation of economies has motivated city officials to consider the potential revenue from the move in a different light than they would have before the public health crisis, City Administrator Derik Morefield said.

“A year ago or a year and a half ago, I probably would have said, yeah, $60,000 or whatever to the city, or $8,800 per machine for the businesses is negligible. After [COVID-19], every dollar I’ll take for the city at this point,” Morefield said.

He guessed about half of the 25 establishments that have five gaming terminals would be ready to quickly jump to the new maximum of six, once it imposed.

He also said it has been years since anyone has proposed bringing a new gaming parlor to the city, where there is little else aside from video gambling to attract patrons.

“I do not think we have gotten a video gaming cafe request in a long time, because we got to the point where we just out and out said to a potential establishment that our City Council is not interested in those types of businesses in this community, and they moved on to the next community,” Morefield said.

Ultimately, a majority of the council indicated they were supportive of moving forward with a move to the state maximum of six per establishment in the city, citing Illinois law allowing that number of machines in area businesses.