IGB Meeting Update: April 2022

Every month, the Illinois Gaming Board (“IGB”) meets to discuss any changes in the Illinois gaming market and issue licensing and disciplinary decisions. What follows is a repost of the notes by our friends at Fox Rothschild in their “At Stake” Newsletter. You can also find official IGB meeting minutes on the IGB website. The minutes of each IGB meeting are typically posted following the next scheduled meeting of the Board.

The IGB held its virtual monthly meeting on Thursday, April 28, 2022. Board members present at the April meeting included Chairman Schmadeke, Member Hayden and Member Bell.

The meeting began with the approval of the Regular Board Meeting Minutes from March 10, 2022 and continued with the Administrator’s report. There were no board member comments.

The Administrator began by discussing a staff reorganization. Agostino Lorenzini, the current General Counsel, will now be a Senior Special Advisor. Daniel Gerber, currently Deputy General Counsel, will be the new General Counsel. Rick Harlovic was promoted to Deputy General Counsel/Ethics Officer. Finally, Sean Brannon will become the Deputy Administrator of Investigations while maintaining his position as Head of Enforcement.

Additionally, the IGB will be creating a new department, Gaming Controls & Technology, that will be spearheaded by Jared Smith as Deputy Administrator. The responsibilities of this new department are four-fold:

1. Maintain and improve internal controls systems
2. Oversee technology and technology improvements, such as testing of gaming equipment
3. Responsible gambling (such as monitoring the self-exclusion list and problem gambling)
4. Coordination of all gaming divisions and licensing compliance

We want to take a moment to thank these individuals for the work they have done in their previous roles and congratulate them on their new positions. We look forward to working with these, and all IGB staff, in this new structure.

Administrator Fruchter next congratulated a key IGB fixture and contributor, Scott Deubel, on his retirement after 42 years of service to the residents of Illinois. Scott spent 30 years with the IGB and played a key role through many challenging phases of the industry’s development including his most recent role as Deputy Administrator of Licensing through this historic gaming expansion. We personally would like to thank Scott for his contributions and wish him well in his new endeavors. We will miss you Scott!

The Administrator next turned to Video Gaming Rules 250(p) and 270(f). As a reminder, at the January, 2022 meeting, the Administrator stated there would be a new emphasis on enforcement of these rules which state that video gaming terminals (VGTs) that are inoperable or deactivated must be removed within 72 hours. In his comments at the April meeting, the Administrator stated that approximately 75% of the inoperable VGTs in the industry had been brought into compliance within the allotted time frame and he was encouraged by this success.

The Administrator next provided his revenue report. He stated that currently there are 42,696 live VGTs in 7,925 licensed locations across the state. He also provided his monthly summary of taxable revenue generated by the gaming industry. In total, February gaming activities generated approximately $151.5M in tax revenue for the state and $31.5 million in taxes for local host communities. Below is a more detailed breakdown by industry.

The Administrator then stated that the next IGB meeting is scheduled for June 16, 2022. Presently, the location for this meeting is unknown but the Administrator will provide details as they become available. Could this be the first in-person meeting since 2019?!?

The Chairman spoke briefly to echo Administrator Fruchter’s sentiments regarding Scott Deubel’s departure, wishing him well and thanking him for his service. He also thanked IGB staff members for their hard work and congratulated them on their new titles. He stated he is looking forward to working with them in their new roles.

The meeting then continued with the Casino session as there were no public comments, nor were there any administrative matters to report.

Casino

The Board began the casino portion of the meeting with the approvals of the Level 1 occupational licenses of 1) Geno Iafrate for his role as President of 815 Entertainment, LLC d/b/a Hard Rock Casino Rockford and 2) Eric Jokisch for his role as Regional Internal Audit Director of 815 Entertainment, LLC d/b/a Hard Rock Casino Rockford.

The Administrator then issued renewals to those occupational licensees that were up for renewal and had provided updated information, timely paid their renewal fees and complied with all other requirements.

Sports Wagering

The Sports Wagering section of the meeting began with the public disclosure of Master Sports Wagering Online Only License applicants and the identification of winning bidders. In his comments, the Administrator provided a brief history of the bidding process. If you would like to listen to the complete synopsis, we encourage you to visit the IGB’s publication of the April meeting here: Illinois Gaming Board - Board Meetings And Documents. For your convenience, though, we have provided a summary.

The Sports Wagering Act states that there are only three Master Wagering Online Only Licensees available and outlines requirements for the competitive selection process, including a set application period which closed December 3, 2021. According to the Administrator, three applicants timely submitted application materials while one applicant filed its materials late and was disqualified from consideration.

Thereafter, the IGB was to determine if the three timely submitted applicants met all minimum qualifications outlined in the Sports Wagering Act. During the review process, one of the applicants requested leave to withdraw its application, which was approved by the Administrator, leaving two remaining applicants: Tekkorp Digital Acquisition Corp., LLC d/b/a Caliente Interactive (Caliente Interactive) and Fubo Gaming Inc. (Fubo).

At this meeting, the IGB stated that Caliente Interactive meets the outlined qualifications, but Fubo does not. It should be noted that this determination is not a finding of suitability, nor is it a granting of licensure. It means that Caliente will now go through the investigative process and IGB will determine if it is suitable for licensure.

As for the two remaining bids, Rule 630 permits for a supplemental selection process. The Administrator stated that the IGB will provide updated information regarding this supplemental selection process when it is appropriate to do so.

The Administrator approved 103 Level 2 occupational licensees, and granted renewals to the Level 1, 2 and 3 licensees that were up for renewal, had provided updated information to the IGB, timely paid their renewal fees and complied with all other requirements.

Video Gaming

The Administrator began the Video Gaming session by reiterating that the licenses for establishments, handlers and technicians now have a term of two years, while suppliers, distributors, manufacturers and terminal operator licenses now have a term of four years and that though new license terms would begin today, annual fees are still due. He also reminded licensees that, due to technical difficulties involving auto-generated notices and programming and system enhancements, licensees may receive letters or notices with one-year expiration dates, adding that IGB will be providing updates on the Sci Games portal and to please make notes of any discrepancies.

Following his comments, the Administrator renewed the respective manufacturer, supplier, supplier or terminal operator licenses of the following entities for a period of four years:

• Entropy Cabinet Solutions
• Da Route LLC
• Gaming & Entertainment Management – Illinois LLC
• Great Lakes Vending, Corporation
• Lucky Day LLC
• Midwest Electronics Gaming, LLC
• Sinbad’s Castle Arcade, Ltd.
• Top Notch Entertainment, LLC
• T’s Gaming, LLC 
• Velasquez Gaming, LLC

Next, the Administrator renewed the terminal hander, technician, and location licensees which were up for renewal and had provided updated information to the IGB, timely paid their renewal fees and complied with all other requirements.

The meeting continued with initial licenses being issued to 26 terminal handlers, one terminal technician and 104 video gaming locations.

The Board next denied the applications of two handlers/technicians and the following six locations, including one that was denied for statutory ineligibility:

• 4Manfront LLC d/b/a Jazzy One Five Nine
• American 1 Distillery, LLC d/b/a American 1 Distillery LLC
• Debra Wells d/b/a Deb’s Red Rose
• Dundee Sports Bar, Inc. d/b/a Dundee Sports Bar
• Mirage Restaurant, Inc. d/b/a Mirage Restaurant
• Orchard Stop, LLC d/b/a Orchard Stop Citgo

Notably, there were no notices of non-renewal, requests for a hearing or requests to reapply at this meeting.

The Board next discussed the following seven (7) Rule 320 Petitions:

• 17 UP 001
• 18 UP 003
• 18 UP 005
• 18 UP 010
• 18 UP 020
• 18 UP 020a
• 19 UP 034

In two cases (17 UP 001 and 18 UP 003), the petitioner requested leave to withdraw the petition and both requests were granted. The remaining petitions were dismissed because the locations no longer hold valid establishment licenses. The final Board orders in Rule 320 Petitions will be available on the IGB’s website, Illinois Gaming Board - Video Rule 320 Petitions.

Litigation

The meeting concluded with the Board adopting the Administrative Law Judge’s (ALJ) recommendations as final Board Orders in the matters of In Re: Denial of Terrance Patrick Maloney (20 GB 0001) and In Re: Denial of MJ Hospitality, LLC (21 GB 009).

In Re: Denial of Terrance Patrick Maloney (20 GB 0001), the ALJ concluded that the Board properly denied the application for a handler license, while In Re: Denial of MJ Hospitality, LLC the ALJ recommended issuing an establishment license to MJ Hospitality, LLC.