Galesburg considers limits on video gaming to cut back on proliferation of gambling terminals

A concern over Galesburg’s number of video gaming machines per capita has the City Council considering the need to put a cap on the number of terminals.

There are currently 33 establishments offering gaming in Galesburg, with a total of 190 gaming terminals within the city. The number of gaming machines in Galesburg ranks higher than cities such as Danville (166), Moline (165), Elgin (165), East Moline (141), East Peoria (136), Normal (111), Urbana (108), Schaumburg (106), Crystal Lake (101) and Rock Island (90).

Based upon discussions with aldermen regarding the consideration of any additional gaming licenses, the City Council will be asked to approve a moratorium be put in place that would direct City staff not to accept any new applications for video gaming.

As the City Council prepares to discuss a potential restrictions to the video gambling ordinance on first reading at Monday’s meeting, aldermen appear to have mixed feelings on a cap.

‘False hope’ or free market?

Fourth Ward Alderman Dwight White feels the gambling machines tend to prey on users who can least afford to lose the money they put in the terminals.

“I’m not in favor of anymore gambling machines,” White said. “Just look at the people who gamble — most of the time it’s people who don’t have a lot of money.

“As far as I’m concerned, it’s a game for people to give them hope, when the numbers actually show there’s very little hope of winning. The odds are against them.”

Steve Cheesman, Ward 7 alderman, says limiting the number of machines would not remedy the perception that gambling is a negative in Galesburg.

“Limiting licenses does not limit gambling,” Cheesman said. “Folks will find other places to go and the end result will not be helping whatever gambling issues that are perceived, but the end result will be less revenue for the business denied the licenses as well as less revenue for the city.

“In short, limiting gaming machines does not help with gambling issues. But, may in fact, have a negative effect on business revenue. So, I do not support a cap on them.”

A potential ordinance that would put a moratorium or cap on the number of licenses in Galesburg would not affect the operation of any previously approved video gaming licenses or the annual renewal of any current licenses.

In July 2009, Governor Pat Quinn signed the Video Gaming Act making video gaming terminals legal in Illinois. The Act allowed for video gaming terminals to be placed in certain liquor establishments, truck stops, and fraternal/veterans clubs. The Illinois Gaming Board has total jurisdiction over all gaming operations and municipalities are not responsible for administering or enforcing any provisions of the act. There was an “opt-out” provision of the Act whereby municipalities could approve an ordinance prohibiting it, but Galesburg chose to allow video gaming.

Galesburg currently has no control to stop additional machines

City Manager Eric Hanson said while the state issues licenses for video gambling, it respects caps set by ordinances of local municipalities.

The only establishments allowed to have gaming are those that serve alcohol for consumption on the premises (e.g., bars and restaurants), licensed truck stops, and fraternal and veterans establishments.

According to City Clerk Kelli Bennewitz, the number of terminals per establishment is set by the Illinois Gaming Board unless the municipality has its own ordinance setting a limitation. Currently, the state’s limit is six machines. When the Act was first approved, the limit was five machines.

In the agenda item, City administration says:

The City has seen significant growth in the expansion of video gaming and the clustering of these businesses into targeted areas of the community. In particular, one ramification of video gaming is that this use has become the primary business of several establishments. While it is possible that additional gaming terminals would generate new revenue for the City, it could also be argued that the marketplace is saturated, and additional video gaming licenses would simply further divide those establishments that are already licensed.

“We have had several requests for gaming, and Council kind of expressed some concerns about the number of establishments seeking gaming licenses,” Hanson said.”So we told them we could put some kind of ordinance in front of them that would either limit or put a moratorium on them, and they could react to it.

“Honestly, I don’t know whether it’s going to go through. This is not being driven by staff; it’s being facilitated by discussion we’ve had from various Council members.”

Hanson said currently, if an entity has the appropriate liquor license, the city has no means to deny it a local gambling license once approved by the state.

“The ordinance that’s being discussed would at least put some controls or limits on gaming machines in Galesburg,” Hanson said.   

Bennewitz provided research to City administration and Council members listing 18 Illinois cities, their population, the number of gaming establishments and the number of gaming terminals. Galesburg ranked No. 8 in both categories, ahead of communities with larger populations such as Elgin, Moline, Crystal Lake, Normal, Urbana, Schaumburg and Rock Island.

Mayor recommends cap of 200 machines

For the last several years, Galesburg Mayor Peter Schwartzman has reported on the number of establishments/machines in Galesburg and the net loss of dollars by the users of each terminal, which he says exceeded $12 million in 2023.

“Though there are people outside of Galesburg that play the Galesburg machines, $12 million works out to about $400 per resident — an astounding number in my opinion,” he said.

“The City has also looked at the number of machines in other comparable Illinois cities. Galesburg doesn’t have the most (per capita) but we are near the top.”

Schwartzman said he would be in favor of a cap of 200 video gambling machines in the city.

“There are social costs for excessive gambling in a community and given the substantial losses observed, I think capping the number at 200 machines is very reasonable,” said Schwartzman.

“This is the recommended change I will make to the Council. It will be their decision to set a cap or simply declare a moratorium.”

City nets just 5% of gambling proceeds

The net proceeds from video gaming terminals are divided as follows:

• 65.15% to the venue and terminal operators;
• 29% to the state;
• 5% to the municipality or county where the video gaming terminal is located; and,
• 0.85% to the Illinois Gaming Board

According to statistics provided by Bennewitz, Galesburg’s share of net proceeds from video gambling machines through July of 2024 was $357,709 — an average of $51,101 per month.