PEORIA — The state's video gaming system has proved to be a boon for businesses and municipalities that never benefited from riverboat gambling revenue before the first legal video terminals switched on more than four years ago.

More than 23,000 video gambling terminals have come online in Illinois bars, restaurants, convenience stores and cafes since the state-monitored system became operational in fall 2012. In fiscal year 2016, revenue from the machines surpassed $1 billion for the first time.

 

That rise in video gaming-related income for the state, however, has come at a cost of diminished riverboat gambling tax revenue that has put communities such as Peoria and East Peoria in an unusual position.

Prior to the legalization and regulation of video gambling in Illinois, Peoria was one of the few municipalities to benefit from riverboat gambling taxes through a revenue sharing agreement with the Par-A-Dice Riverboat Casino's host city, East Peoria.

The cities split the municipal share of Par-A-Dice's riverboar gaming tax revenue, with each municipality dedicating 10 percent of the take to riverfront improvements.

While the growth of video gaming tax revenue has outpaced riverboat gambling tax losses statewide, the situation is reversed in Peoria and East Peoria.

 

"On our end, we've lost more in riverboat gaming than we've gained in video gaming," said Jeff Becker, East Peoria finance director. "We expected to see the decrease."

In Peoria, video gaming tax revenue for the city grew to nearly $500,000 in 2016, but the city's riverboat gaming tax income declined more than $1 million in 2016 when compared the last year before the first video terminals became operational.

East Peoria's video gaming income has not grown at the same pace as Peoria, with just less than $175,000 in tax revenue generated in fiscal year 2016, giving East Peoria an even larger gap.

"The big impact here is people from around the area aren't coming to a centralized place to gamble any more," said Jim Scroggins, Peoria's finance director.

People who formerly traveled from throughout central Illinois to visit the Par-A-Dice and generated gambling taxes paid to the city of Peoria no longer have to travel as far to gamble — and the taxes paid on video gaming terminals closer to their homes go to municipalities where those terminals are located.

The phenomenon has resulted in fewer gaming tax dollars flowing into Peoria's capital expenditure fund for equipment purchases.

"We've always maintained these in the capital fund because we didn't want to become dependent on them for the operational side," Scroggins said.

Measurable gaming tax losses in the cities straddling the Illinois River, however, have an intangible offset: increased business and bottom lines at the establishments that host the video gaming terminals.

For establishments such as the Fieldhouse sports bar and restaurant in Peoria's Campustown complex, video gaming revenue has provided a significant boost to overall sales figures.

Ryan Hunt, general manager at the restaurant, said about 30 to 40 patrons regularly visit the five consoles at the establishment, and other gamblers intermittently use the machines.

"Half of those people were not regular customers before the (video) gaming became available. ... It's definitely helped the revenue," Hunt said. "Restaurants run on a small margin as is, and that (gaming) revenue has helped us exponentially."

Patrons fed more than $700,000 into the five machines at the Fieldhouse in 2016 and withdrew more than $530,000, according to figures available from the Illinois Gaming Board. Gamblers fed more than $40 million into video gaming terminals in the city of Peoria in 2016 overall.

And the system is still growing. A report by the Commission on Government Forecasting and Accountability predicts the number of video gaming terminals in the state will continue to grow and will "easily surpass" 25,000 before beginning to level off.

Matt Buedel can be reached at 686-3154 or mbuedel@pjstar.com. Follow him on Twitter @JournoBuedel.