IGB Meeting Update: January 2021

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.

Happy New Year! Before discussing the monthly Illinois Gaming Board (IGB) meeting, we would like to remind all video gaming terminal operators and licensed locations that, while gambling activities have resumed and sports wagering is legal in Illinois, it is still illegal for locations to permit illegal gambling activities on their premises, including activities related to the Super Bowl. Please see below for details on permitted/legal Super Bowl wagers.

The IGB held its webinar-based monthly meeting on January 27. Members present included Member Ramirez, Member Hayden, Member Garcia and Chairman Schmadeke. The meeting began with the approval of the last month’s meeting minutes and the Chairman wishing everyone continued health and prosperity as gaming activity in the State of Illinois resumes.

The meeting then continued with the Administrator’s comments which covered gaming resumption/COVID, sports wagering including the Super Bowl, video gaming operations, the pending new inducement rule, minimal standards of use agreements, new casino applications, and the Request for Proposal (RFP) for an investment banking firm to assist in the analysis of casino applications for the South Suburbs and Waukegan.

Administrator Fruchter said he was pleased to inform everyone of the resumption of statewide gaming activities subject to local rules and guidelines outlined by the Illinois Department of Public Health and the Center for Disease Control. 

The Administrator then stated that while online Sports Wagering remains live, the reporting of data has been delayed due to the closure of the casinos. As a result, the IGB will post data from November later today on its website for public viewing. He did mention that November 2020 yielded approximately $6M in tax revenue for the State.

Next the Administrator gave a brief overview of Super Bowl proposition bets or “prop bets” that comply or do not comply with the Illinois Gambling Act. Those that are permitted include actions performed by individuals who are regulated by the National Football League (NFL) (such as players, referees and coaches) in the course of events approved by the NFL. Examples of permitted prop bets include referee conduct such as the coin toss, any objective player statistic or in-game statistic such as yards rushed, or even the color of Gatorade used to shower the winning coach. Examples of prop bets that are not permitted include actions by performers (such as the length of the national anthem or content of the halftime show), content related to commercials, or player or coach personal statements (such as mentioning Disney or thanking certain individuals). Further details can be found in Section 1900.1140 of the Sports Wagering Act which can be found here:

The Administrator then briefly mentioned that there are 37,796 live video gaming terminals (VGTs) in 7,439 licensed locations, including the approximately 3,700 locations that have either six or 10 VGTs (as applicable) permitted by the expansion law. He added that 29,590 of those VGTs are operating with the updated $4 max bet software. The Administrator also took a moment to thank the individuals, including Scientific Gaming, who have been instrumental in ensuring the industry’s compliance with the COVID-19, particularly the repeated turning off and on machines in accordance with the State issued mandates.

The Administrator also spoke briefly about video gaming Rules 350 and 320(a)(8). In regard to the pending Inducement Rule, Rule 350, the Administrator did not provide any new information but rather stated that they have been working diligently with industry leaders. The goal is for this new rule to bring stability and accountability to the industry, which is difficult to accomplish because the statute does not provide helpful guidance regarding defining what does or does not constitute an inducement. Attached here is the revised Rule 350 that the IGB is sending to JCAR. As you know, we have participated in the discussions with the IGB staff on the content of this rule. Based on our discussions and our written comments, staff revised the draft rule. We have not yet reviewed this version but we will do so and send out a separate email with our comments.

In regard to Rule 320(a)(8), Minimum Standards for Use Agreement in which a use agreement cannot exceed eight (8) years, the Administrator spoke only briefly to state that eight (8) years means eight (8) years and it is not exclusive of locations being closed by a pandemic.

Finally, the Administrator discussed the new casino applications and the RFP for investment banking firms to assist in the bid process. In a previous meeting, the Administrator stated that he thought it would take approximately six months after the engagement of an investment banking firm to reach decisions on the casino applications in the South Suburbs and Waukegan. Unfortunately, the RFP closed on January 8, 2020, and the Administrator reported that no bids were received! As such, IGB will issue a revised RFP and start the process again.

PUBLIC COMMENT

The only speaker during the public comment section was Anita Bedell, Executive Director of the Illinois Church Action on Alcohol and Additional Problems. Ms. Bedell inquired whether a company could partner with various casinos and tracks to take advantage of their master sports wagering licenses and whether or not the IGB will limit the number of “partnerships” one entity is allowed to hold. She also expressed her continued to concern with the targeting of children by the sports wagering industry and the accessibility of sports wagering. She requested information on how the Board intends to prevent underage accessibility to sports wagering.

ADMINISTRATIVE MATTERS

The Board approved to the dissemination of the closed session minutes of January 30, 2020.

The Board then voted to delegate additional authority to the Administrator. The prior delegation resolution was amended to include approvals of ownership transfers between licensed Terminal Operators (TO) under Rule 340(a). The rule states that ownership transfers must be made within 90 days of full disclosure to the IGB. If such approval was left up to a Board action, the 90-day deadline might be missed due to the IGB meeting schedule. This amendment would prevent that from happening and increase the IGB’s effectiveness and responsiveness. The Administrator continued to say that this delegation only applies to approvals, and that a denial of an ownership transfer would still require Board action.

CASINO

Before hearing the presentation from 815 Entertainment, LLC d/b/a Hard Rock Casino Rockford (815 Entertainment), an applicant for the Rockford Casino site, the Administrator provided a brief history of the gaming expansion law and the process IGB will follow for all of the casino expansion licenses. In accordance with Rule 230(c), an applicant must first present to the Board the reasons why it is suitable for licensure. The criteria listed in the Act and Rules guide the Board in its decision. After the presentation, the Board shall determine whether to find the applicant preliminarily suitable for licensing. After a finding of preliminary suitability, the Board will continue its investigation and review, approve additional key persons and analyze and assess the casino’s operations. If appropriate, the Board will authorize a final practice dry run of the casino operations. If the final practice is successfully completed, the Board will issue a temporary operating permit allowing gaming operations to begin. If the Board finds the applicant and its operations to be suitable it will issue a casino owner’s license.

The Administrator stated that there will be no Board action taken at the meeting where presentations are made, rather they will take matters under review and issue its determination at a later meeting. In the case of 815 Entertainment, the Administrator reiterated this procedure and said that the Board will not take an action at this meeting. Rather, there will be a closed session meeting on February 4 where the matter will be discussed, followed by an open session meeting that same day at 3:00 p.m.

Thereafter, 815 Entertainment made its presentation for consideration and discussed the project specifics. Mr. Fischer, a principal of the company stated that the project will be a $310 million development. They will have temporary casino that would be in place for 18-24 months while the permanent casino project is being built. Mr. Fischer stated that the project will have 40% women and minority ownership. He also said there is a “host community agreement” that will promote the hiring of women and minorities and have a goal of utilizing local and state vendors. Mr. Lucas, COO of Hard Rock International also made a presentation. Mr. Lucas highlighted the history of Hard Rock in the casino industry, its projects in other jurisdictions, it commitment to the communities in which it operates and its social responsibility and diversity programs.

The Administrator followed up with a number of questions concerning ownership and employment opportunities for minority, female, veterans, and/or persons with disabilities.

The Board, with no discussion, next approved the Request to amend the owner’s license application of Full House Resorts, Inc.

Southern Illinois Riverboat/Casino cruises, LLC d/b/a Harrah’s Metropolis Casino requested renewal of its owner’s license. The request will be up for final action at a subsequent Board meeting.

The Administrator approved seven Level 2 and five Level 3 occupational licensees, and the renewal of the occupational licensees that that were up for renewal this month and who provided updated information to the IGB, timely paid their renewal fees, and complied with all other requirements.

SPORTS WAGERING

The Sports Wagering session began with the Administrator approving the Level 1 occupational license of David Eric Schmidt for his role as the Sportsbook Manager of Elgin Riverboat Resort d/b/a Grand Victoria Casino.

Next, the Administrator approved fourteen Level 2 occupational licensees, and the renewal of the occupational licensees that that were up for renewal this month and who provided updated information to the IGB, timely paid their renewal fees and complied with all other requirements.

VIDEO GAMING

The Video Gaming session began with the Administrator approving the new terminal operator license of Lucky Lady, LLC and renewal of the following Manufacturer, Distributor, Supplier and Terminal Operator licenses:

• AGS, LLC
• Admira, LLC
• Andy’s Video Gaming Co.
• Heck Gaming, LLC
• Illinois Gaming Systems, LLC
• Illinois Gold Rush, Inc.
• Illinois Video Slot Management Corp.
• J&J Ventures Gaming, LLC
• JHey Enterprises, LLC
• Midwest SRO, LLC
• Quad Gaming, Inc.
• Sparrow Gaming, Inc.
• WG-Illinois, LLC

Next, the terminal hander, technician and location licensees which were up for renewal and provided updated information to the IGB, timely paid their renewal fees and complied with all other requirements were renewed and two locations were issued notices of non-renewal: Desperado Bar and Grill LLC d/b/a Desperado Bar and Grill LLC and Jexal’s Inc. d/b/a Jexal’s Wingzeria.

The meeting continued with initial licenses being issued to two terminal technician, 17 terminal handlers and 63 video gaming locations and the denial and the following 22 locations, which includes denials for “statutory ineligibility:”

• Cachas Tacos, Inc .d/b/a Cachas Tacos, Inc.
• G&J-2018, LLC d/b/a Addison and Clar’s Bar & Grill
• Grinner’s Place LLC d/b/a Grinner’s Place
• Guacamole Taqueria, LLC d/b/a Guacamole Taqueria
• VPI Food and Liquor
• La Ola Del Mar, Inc. d/b/a La Ola Del Mar
• Las Fuentes No. 2, Inc. d/b/a Las Fuentes
• MGNT Enterprises, LLC d/b/a Taylor’s on Toft
• MJ Hospitality, LLC d/b/a Lulu’s
• Minit Mart, LLC d/b/a Minit Mart (Gardner)
• Minit Mart, LLC d/b/a Minit Mart (Clinton)
• Nando Corporation d/b/a Pepe’s Mexican Restaurant
• O & S Alkabsh Enterprises, Inc. d/b/a Krispy Krunchy Chicken
• RTS of Elk Grove Village LLC d/b/a Real Time Sports Bar
• Babe’s LLC d/b/a Babe’s Lounge
• Cathy Rea McQueen d/b/a 2nd Time Around
• Charlotte’s Slots LLC d/b/a Charlotte’s Slots
• Evie’s, Inc. d/b/a Evie’s Slots
• Kilt of Schaumburg Inc. d/b/a Tilted Kilt Pub
• Krish Ashvi LLC d/b/a Party Hut
• Sita Raam Inc. d/b/a 351 Mini Mart
• Vincer Enterprises Inc. d/b/a Vince’s The Pizza People

The Board received three requests for a hearing this month from the following establishments:

• Hiram Lewis d/b/a Hiram’s
• Twisted Spoke Saloon Corporation d/b/a Twisted Spoke Saloon
• N.K.N., Incorporated d/b/a Kozy Nook Restaurant

The Administrator rescinded the denial, granted a license and denied the hearing request as moot for Twisted Spoke Saloon Corporation d/b/a Twisted Spoke Saloon. The hearing requests for Hiram Lewis d/b/a Hiram’s and N.K.N., Incorporated d/b/a Kozy Nook Restaurant, however, were denied.

LITIGATION

The meeting concluded with the Board reviewing and accepting Administrative Law Judge’s (ALJ) recommendations in a case involving an occupational licensee in which the licensee ceased communicating and responding the IGB.

Before concluding the meeting, the Board moved to go into closed session meeting on February 4 at 9:30 a.m.

As always, if you have any questions regarding what happened at this month’s meeting or any pending rules/regulations, please reach out to us by phone or email.