Four McHenry County municipalities enacted a one-cent tax on each game played at video gambling terminals ahead of a possible state deadline prohibiting municipalities from creating such a tax.
Officials in Algonquin, McHenry, Lake in the Hills, and Woodstock approved the new tax in emergency meetings Sunday afternoon. A new bill passed by state lawmakers on Thursday included a provision that would prohibit home-rule municipalities from creating the tax beginning Nov. 1. While the bill has not been signed by Gov. JB Pritzker, local governments were working Sunday to get ahead of the deadline in case Pritzker were to sign the bill on Monday and the law took effect.
Under the new ordinances enacted Sunday, a one-cent tax will be charged for every game a person plays on a video gambling terminal in what is known as a “push tax.”
The Algonquin Village Board, McHenry City Council, Lake in the Hills Village Board, and Woodstock City Council all voted unanimously to enact a one-cent push tax beginning Oct. 31 during their emergency meetings Sunday.
McHenry and Lake in the Hills officials both addressed concern about how the tax would impact businesses and noted it is not a tax on the businesses that operate the gambling terminals.
“The businesses are not liable to collect this push tax and bring it back to the city,” said police chief John Birk. “It is the operators that are liable to collect that push tax from the player and transmit it to the city.”
Lake in the Hills Trustee Stephen Harlfinger said he doesn’t believe the tax will punish any person either and much like other sin taxes on products like cigarettes and alcohol, people who want to partake in video gambling will continue to play.
“This is a choice and a decision that somebody makes. And it was an opportunity for the village of Lake in the Hills to find an additional source of revenue to provide services and goods without having a direct impact on the residents themselves,” Harlfinger said.
Cary’s meeting to discuss the proposed tax was set for 7 p.m. Sunday night.
Local officials estimate the tax could bring in several hundred thousand dollars in revenue each year for their communities. Algonquin could be adding $150,000 to $400,000 in revenue, while Cary estimates they could add $55,000 to $225,000 in revenue from the tax. Lake in the Hills is anticipating adding $150,000 to $200,000 each year, and McHenry expects to add $252,000 and $505,000. Woodstock officials are estimating they will generate $691,863 from a push tax if the average gamble is $1.
Algonquin Assistant Village Manager Mike Kumbera told the Northwest Herald Saturday the tax will help them add a funding source for the village’s 10-year park’s master plan.
Video gambling was a steady source of income in fiscal year 2021 as well. Algonquin brought in $90,497 from 81 terminals, while Cary brought in $87,729 from 49 terminals. McHenry has received $287,342 from video gambling terminals so far this year, according to city doucments. Prior to the pandemic, Woodstock officials say they earned $239,713 from the machines.
Municipalities receive 5% from video gaming machines, while 25% goes to the state. Some state lawmakers argued the push tax takes revenue away from the state. The bill, which also includes expansions to sports betting on in-state collegiate teams, passed with broad bipartisan support.
The municipalities said there is still more work to be done to figure out how the tax will be collected.
Officials in Lake in the Hills and Woodstock expressed frustration that the state only gave them a few days of notice. Lake in the Hills Village President Ray Bogdanowski said he understands the benefits of the income from the tax, but does not like the perception of passing the tax in emergency meetings on a Sunday because of the short notice municipalities were given.
“The blame is the bill sponsors and the lobbyists that are pushing this [ban on push taxes]. This bill is an epic failure already,” Bogdanowski said.
Crystal Lake approved a push tax earlier in October in anticipation of the legislation, but has not enacted it yet. They can still enact the tax in the future, however, because they passed an ordinance to allow it prior to the Nov. 1 deadline.
Other municipalities around the Chicago area, including Oak Lawn, Tinley Park and Waukegan have previously passed push taxes.