Gambling Operators Sue Illinois Over Profit Sharing Rules
Operators of video gaming terminals throughout the state of Illinois have raised issue with the State’s regulations in regard to profit sharing. The regulations are said to be unfounded according to operators and many have decided to join forces and sue the state over the issue.
The focus of the lawsuit has been sated clearly by the operators’ counsel, “The amount in profits the Video Gaming Act divvies out to each party is not rationally related to the contributions or investments each party may make toward the business or the amount each party has at risk.”
Operators Want More Say
Laredo Hospitality Ventures and Illinois Café & Services Co have been the chief architects of the suit, which targets the Illinois Gambling Board. The operators have argued they should have more power in negotiating their own revenue sharing contracts with bars and restaurants, who offer their terminals to patrons throughout the state. As it stands, Illinois legislation requires all operators to split their revenues evenly with local establishments.
Loredo and Illinois Café & Services together operate over 100 casino venues throughout the state, alongside restaurants, bars and other retail centers that house video gaming terminals. With a combined workforce of near 500, the two entities contend the regulations hurt their bottom line and stifle growth.
Dan Webb, Attorney for the two companies told the Associated Press in a statement that, “I can think of no other industry where, by law, a business is forced to give up 50 percent of their profits and is strictly prohibited from even trying to negotiate better terms.” Beyond the 50% of profit sharing with venue owners, operators have to pony up 30% of their net revenues to the State in gaming taxes. The State takes 25% of that figure, with the remaining 5% going to local governments.
Webb insists his clients invest a minimum of $200,000 in each gaming location. With nearly 6,000 participating locations statewide, it is estimated that the State’s gambling industry produced more than $1 billion in revenue last year alone.
It has been argued that gaming overall for players is hindered by such regulations, and better negotiated contracts would allow for higher operator revenues and an improved experience all around.
Fortunately, operators already enjoy some of the most relaxed gambling regulations in the United States, with additional casino expansion legislation expected to be passed this year. Riverboat gambling, pari-mutuel wagering, charitable gaming, and a lottery are all already staples of the State’s gambling industry.
Operators Enjoy Relaxed Regulations
Senate Bill 7, the expansion legislation mentioned above, will authorize Chicago’s first land-based casino. The city is considered one of the most sought after markets in the country because it is massive and remains virtually untapped when it comes to casino infrastructure. Many of the Loredo and Illinois Café & Services are located within the limits of Cook County, which encompasses the city of Chicago.
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