The development of miniature gambling establishments in preexisting strip malls has become a hot button issue for industry regulators in Illinois. These first-of-their-kind operations were planned as a solution for vacancies in malls, as well as a way to increase foot traffic and patronage. While the state’s video gambling laws don’t expressly prohibit these unique casinos, the gaming board took a clear stance on the issue in a vote earlier this week.
The Illinois Gaming Board took a stand against the development of “casino malls” on Tuesday, voting unanimously to reject the video license applications of three operators who hoped to open in a strip mall in the city of Hometown, which borders Chicago. The state’s gaming board chairman reiterated the board’s position following the vote, stating that he viewed these operations as “back-door casinos” that circumvent the oversight and regulation of traditional casinos.
In particular, proposed casino malls would sidestep many of the safeguards of normal casinos, including issues such as regulated security, on-site oversight, position limits, self-exclusion rules and internal controls. As a result, the gaming board considers these establishments “a threat to Illinois gaming integrity.”
Casino malls take advantage of the state’s recently enacted video gambling act, which allows up to five video machines to be installed at any site that is licensed. Originally, this was meant to enable gaming options at restaurants, taverns, fraternal and veteran halls, but it has also led to the creation of video cafes, which are located primarily in the suburbs and offer wine, coffee, tea and small snacks in order to create a social gathering spot.
For the Illinois gaming board, the way in which the video gambling act has been used thus far has been a cause for concern. In a recent letter, one representative stated that members of the board never envisioned the creation of casino malls when they passed the act. For that reason, a resolution has already been submitted asking the gaming board to study the issue and suggest changes to the existing video gambling legislation to address the issue.
Not everyone held the same position on the creation of casino malls, however. The mayor of the city of Hometown was outraged at the board’s actions. In addition to killing the opportunity to add 50 to 60 new jobs in the small town, the mayor highlighted a lost opportunity to increase foot traffic in the city and, potentially, spur future growth.
When considered on a statewide basis, the decision to block the Hometown casinos seems a bit more arbitrary. There are currently 5,106 video gambling locations licensed in Illinois – not including casinos – with more than 21,000 combined video gambling terminals in operation.
The owner of the proposed casino mall was similarly distressed by the decision. In a recent interview, he stated that he invested more than $1 million in renovations in order to make the strip mall more attractive to video café gambling operators. Before he spent this cash, he says that he was assured by the gaming board that there was nothing in existing law prohibiting a casino mall at the location.
For prospective gaming café owners in Illinois, loopholes in the current gambling laws are causing serious headaches. Look for the state to make efforts to close these loopholes in the near future, but don’t expect Hometown to give up on its casino malls without a fight.