The report also notes that these cafes flout regulations to prevent gambling addicts from entering their facilities or playing slots.

It is absurd for public officials to continue to allow predatory and unsupervised neighborhood casinos to operate in loopholes of our laws. The public was told legalizing video slots would get rid of the unregulated and untaxed machines out bars; but now two years and 18,000 slot machines later, the Chicago Crime Commission announced a scourge of illegal slots and we’ve found hundreds of casino cafes operating in the shadows of legality.

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The Video Gaming Act deems any licensed retail establishment where alcoholic liquor is drawn, poured, mixed, or otherwise served for consumption on the premises, eligible to be licensed to have up to five slot machines. This vagueness in law is the loophole that cafe operators, as well as flower shops, gas station food marts, liquor stores, tobacco stores and even a pool supply shop, are exploiting to obtain slot licensure from the state. A local license for on-premise consumption, even for occasional wine tastings, allows a business to be classified as an establishment by the IGB.

Stop Predatory Gambling conducted a study of IGB records based on multiple-license holders and keywords to compile a working list of video gaming cafes, as they are not clearly listed in the state’s data. The study found:

As of last month, there were 987 slot machines active at the 198 casino cafes operating in the state. Since September 2012 cafes had total gambling revenue of $138.6 million.

  • Cafe operators’ slots have cleared $39 million in income over the past two years, with the top 10 cafes making $7.3 million in slot income on $26.1 million in revenue.
  • The three largest operators of casino cafes are Blackhawk Restaurant Group with 36 cafes licensed doing business as Betty’s Bistro, Emma’s Eatery, Penny’s Place; Illinois Cafe & Service Company, LLC with 31 licensed cafes doing business as Dotty’s; and Laredo Hospitality Ventures, LLC with 23 licensed cafes doing business as Shelby’s and Stella’s.
  • Last month 12 percent of the new establishment licensees approved by the IGB were for new casino cafes and there are 68 pending applications for additional casino cafe-type businesses.
  • Cook County has the most cafes open with 51 followed by Winnebago with 31, DuPage with 13 and Sangamon with 11. Casino cafes are operating in 42 counties across the state.
  • There are also at least 110 liquor stores, food marts and tobacco stores that are have obtained licensure as establishments for video slot machines, but are not included in this analysis.
  • Five gentleman’s clubs have also filed IGB applications for slot machines.

At these neighborhood slot parlors, critical public safety rules imposed on casinos such as the self-exclusion list to prevent gambling addicts from having access to a slot machine, prohibitions on businesses marketing to problem gamblers, or garnishment of winnings for back-due child support are not enforced. They are essentially unsupervised casinos on the street corner.

Gambling is so important to casino cafe operators, some brands are open 20 hours a day, and others impose a three-drink maximum on their patrons. Numerous local communities are grappling with the explosion of casino cafes and slot businesses.

While the large chains were the first to enter the market, now dozens more entrepreneurs are trying to get in on the action. Currently at least 68 more, cafe-type businesses have filed applications with the IGB to operates slot parlors, where gambling would be the primary revenue of the business.

The primary purpose of these cafes is gambling regardless of what their proprietors say or claim, slots were supposed to be limited to bars, restaurants and taverns but this loophole is allowing in all sorts of mini-casinos. From their cafe layouts, limited food and beverage offerings, to their marketing schemes, everything is geared around operating a slot parlor. If the casino cafe loophole isn’t closed by the General Assembly, hundreds more neighborhood casinos will open across Illinois in the months ahead.

This study on casino cafes follows the recent announcement by the Chicago Crime Commission that “sweepstakes” machines were prevalent across the state. Sweepstake machines are nearly identical to video slots, but are unregulated, untaxed and the state’s top regulator has said they are illegal.

Bills to impose regulations on casino cafes and sweepstakes machines were considered, but not passed during the last session of the General Assembly.

Here is the complete report. To enlarge, click the rectangle icon in lower right corner.

Stop Predatory Gambling: Illinois Casino Cafe Study

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