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TO: Mayor Richard C. Irvin
FROM: Wendy McCambridge, City Clerk
DATE: August 30, 2017
SUBJECT:
An ordinance establishing a temporary moratorium on the issuance on establish a moratorium on the issuance of video gaming terminal licenses for a period of six (6) months.
PURPOSE:
To obtain City Council's approval to place a temporary moratorium on the issuance of video gaming terminal licenses.
BACKGROUND:
The Illinois Video Gaming Act (230 ILCS 40/1) enacted in 2010 enabled video gaming terminals to be allowed in bars and restaurants on their premises as an accessory use. In 2012 the City of Aurora adopted an ordinance establishing that a license is required for video gaming terminals and adopted the Illinois Video Gaming Act in its entirety. An annual fee and application process was established and mirrored the requirements in the Illinois Video Gaming Act. The Act establishes that a business is allowed to operate up to five machines per licensed establishment. The statute defines a licensed establishment as “…any licensed retail establishment where alcoholic liquor is drawn, poured, mixed or otherwise served for consumption on the premises, whether the establishment operates on a nonprofit or for-profit bases (230 ILCS40/5).” The City of Aurora has not adopted or imposed any further regulations or restrictions and the City currently does not regulate video gaming separately from its regulation of alcohol through issuing of liquor licenses.
DISCUSSION:
The purpose of the recommended moratorium is to address the regulation of video gaming machines within the City of Aurora. Based upon City regulations within the liquor code the current license categories currently have active video gaming terminals:
• Class A - Tavern license is primarily used for bars. There are currently ten (10) establishments in this class. Five (5) currently have active video gaming terminals.
• Class B - Fraternal society or club license are members only clubs. There are currently thirteen (13) clubs with eight (8) of the clubs with video gaming terminals. .
• Class D-2- Theatrical arts facility license for performances and events. There is one licensed in this class. This local has recently been approved by the Illinois Gaming Board for new video gaming terminals.
• Class E and E-1- restaurants with full alcohol license. This class allows for a lounge area where the counterparty of a Class F with beer and wine does not allow for a lounge. There are a total of forty-seven (47) licensees in this class with seventeen (17) establishments having video gaming terminals.
The total current establishments with video gaming terminals is thirty-one (31) with one hundred forty-one (141) operational video gaming terminals throughout Aurora. There has also been an allowance made to one establishment that underwent reclassification into a class that did not allow for video gaming terminals to be able to retain the ability to have video gaming terminals onsite. Based upon the figures above there is a potential for the following in the classes identified:
• Number of Eligible Establishments: 74
• Maximum Number of Terminals: 5
• Total Potential Number of Terminals: 370
These figures do not include any new or potential businesses opening within the City of Aurora during this calendar year that may be desiring video gaming terminals. Also, these figures do not include other license classes not listed here that may be deemed eligible in the future by the State of Illinois Gaming Board for approval for video gaming terminals.
Since the beginning of 2017 there have been seven (7) businesses who have applied for liquor licenses with the plan to install video gaming terminals at the establishment. This has been the largest number of applications since 2014. Also, based on recent inquiries from potential business owners it is anticipated that there may be as many as five (5) new establishments to apply for liquor licenses with video gaming terminals before the end of the calendar year.
An initial study has shown that while there has been an increase in video gaming terminal revenue annually, the increase is not sufficient enough to bridge the gap of the decline in the revenue received by the City from Hollywood Casino in Aurora. Also, the formula for the amount of the municipal share of the revenue through video gaming is significantly lower than the share realized by the casino revenue.
Therefore, it is being recommended that a six (6) month moratorium on the issuance of video gaming terminal licenses be established. This moratorium would afford staff the opportunity to research the laws in other communities, as well as best practices and any related legal matters, so that we may come up with language to appropriately address the above mentioned issues. We anticipate we should be able to bring before the Council the needed revisions to the ordinance language within one hundred and twenty (120) days, after which time the moratorium will expire.
RECOMMENDATIONS:
I hereby recommend that the City Council approve the attached proposed ordinance that will declare a temporary moratorium on the issuance of video gaming terminal licenses in the City of Aurora.
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance Establishing a Moratorium on the Issuance of Video Gaming Terminal Licenses in the City of Aurora for a Period of Six (6) Months.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, there has been a proliferation of video gaming terminals in the City; and
WHEREAS, the City deems it necessary and desirable to establish a moratorium on the issuance of video gaming terminal licenses for a period of six (6) months, during which time the City shall study and consider whether additional regulations of video gaming in the City are desirable in order to protect the health, safety, welfare and morals of the public.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
SECTION 1: That for a period of six (6) months from the effective date of this Ordinance, a moratorium on the issuance of new licenses for the operation of video gaming terminals, under Chapter 8, Article IV, Division 5, Section 8-130 of the Code of Ordinances of the City of Aurora, is hereby established. During the term of this moratorium, no new licenses for the operation of video gaming terminals shall be issued by the City, and no applications for the issuance of such licenses shall be processed.
SECTION 2: All other provisions of the Code of Ordinances of the City of Aurora applicable to video gaming shall remain in full force and effect during the term of the moratorium established by this Ordinance.
PASSED AND APPROVED on ______________.
AYES ____ NAYS ____ NOT VOTING ____ ABSENT ____
ATTEST:
____________________________ __________________________
City Clerk Mayor