SB3313 103RD GENERAL ASSEMBLY

LRB103 39235 JDS 69387 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3313

Introduced 2/7/2024, by Sen. Bill Cunningham

SYNOPSIS AS INTRODUCED:

230 ILCS 40/5
230 ILCS 40/25
230 ILCS 40/30

Amends the Video Gaming Act. Prohibits a terminal operator from entering into a use agreement or other agreement that purports to control the placement or operation of video gaming terminals with the owner or operator of a video gaming location if a direct or indirect owner or person with significant interest or control of the terminal operator or any affiliated entity is an immediate family member of either (i) a direct or indirect owner of the video gaming location or any affiliated entity or (ii) a person with significant interest or control of the video gaming location or any affiliated entity. Prohibits a terminal operator from entering into a use agreement or other agreement that purports to control the placement or operation of video gaming terminals with an owner or operator of a video gaming location if any or all of the real estate upon which the video gaming location is located is owned entirely or in part by the terminal operator, an affiliated entity of the terminal operator, a person with significant interest or control of the terminal operator, or an immediate family member of any person with significant interest or control of the terminal operator. Provides that no person may solicit from a video gaming location a use agreement or other agreement that purports to control the placement or operation of video gaming terminals on behalf of a terminal operator if that person is an immediate family member of (i) a direct or indirect owner of the video gaming location or (ii) a person with significant interest or control of the video gaming location. Specifies that certain classes of people may not hold multiple classes of licenses. Defines the terms "licensed video gaming establishment", "video gaming location", and "person with significant interest or control". Effective immediately.

A BILL FOR

AN ACT concerning gaming.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Video Gaming Act is amended by changing Sections 5, 25, and 30 as follows:

(230 ILCS 40/5)

Sec. 5. Definitions. As used in this Act:

"Board" means the Illinois Gaming Board.

"Credit" means one, 5, 10, or 25 cents either won or purchased by a player.

"Distributor" means an individual, partnership, corporation, or limited liability company licensed under this Act to buy, sell, lease, or distribute video gaming terminals or major components or parts of video gaming terminals to or from terminal operators.

"Electronic card" means a card purchased from a licensed establishment, licensed fraternal establishment, licensed veterans establishment, licensed truck stop establishment, or licensed large truck stop establishment for use in that establishment as a substitute for cash in the conduct of gaming on a video gaming terminal.

"Electronic voucher" means a voucher printed by an electronic video game machine that is redeemable in the licensed establishment for which it was issued.

"In-location bonus jackpot" means one or more video gaming terminals at a single licensed establishment that allows for wagers placed on such video gaming terminals to contribute to a cumulative maximum jackpot of up to $10,000.

"Terminal operator" means an individual, partnership, corporation, or limited liability company that is licensed under this Act and that owns, services, and maintains video gaming terminals for placement in licensed establishments, licensed truck stop establishments, licensed large truck stop establishments, licensed fraternal establishments, or licensed veterans establishments.

"Licensed technician" means an individual who is licensed under this Act to repair, service, and maintain video gaming terminals.

"Licensed terminal handler" means a person, including but not limited to an employee or independent contractor working for a manufacturer, distributor, supplier, technician, or terminal operator, who is licensed under this Act to possess or control a video gaming terminal or to have access to the inner workings of a video gaming terminal. A licensed terminal handler does not include an individual, partnership, corporation, or limited liability company defined as a manufacturer, distributor, supplier, technician, or terminal operator under this Act.

"Manufacturer" means an individual, partnership, corporation, or limited liability company that is licensed under this Act and that manufactures or assembles video gaming terminals.

"Supplier" means an individual, partnership, corporation, or limited liability company that is licensed under this Act to supply major components or parts to video gaming terminals to licensed terminal operators.

"Net terminal income" means money put into a video gaming terminal minus credits paid out to players.

"Video gaming terminal" means any electronic video game machine that, upon insertion of cash, electronic cards or vouchers, or any combination thereof, is available to play or simulate the play of a video game, including but not limited to video poker, line up, and blackjack, as authorized by the Board utilizing a video display and microprocessors in which the player may receive free games or credits that can be redeemed for cash. The term does not include a machine that directly dispenses coins, cash, or tokens or is for amusement purposes only.

"Licensed establishment" means 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 basis. "Licensed establishment" includes any such establishment that has a contractual relationship with an inter-track wagering location licensee licensed under the Illinois Horse Racing Act of 1975, provided any contractual relationship shall not include any transfer or offer of revenue from the operation of video gaming under this Act to any licensee licensed under the Illinois Horse Racing Act of 1975. Provided, however, that the licensed establishment that has such a contractual relationship with an inter-track wagering location licensee may not, itself, be (i) an inter-track wagering location licensee, (ii) the corporate parent or subsidiary of any licensee licensed under the Illinois Horse Racing Act of 1975, or (iii) the corporate subsidiary of a corporation that is also the corporate parent or subsidiary of any licensee licensed under the Illinois Horse Racing Act of 1975. "Licensed establishment" does not include a facility operated by an organization licensee, an inter-track wagering licensee, or an inter-track wagering location licensee licensed under the Illinois Horse Racing Act of 1975 or a riverboat licensed under the Illinois Gambling Act, except as provided in this paragraph. The changes made to this definition by Public Act 98-587 are declarative of existing law.

"Licensed fraternal establishment" means the location where a qualified fraternal organization that derives its charter from a national fraternal organization regularly meets.

"Licensed veterans establishment" means the location where a qualified veterans organization that derives its charter from a national veterans organization regularly meets.

"Licensed truck stop establishment" means a facility (i) that is at least a 3-acre facility with a convenience store, (ii) with separate diesel islands for fueling commercial motor vehicles, (iii) that sells at retail more than 10,000 gallons of diesel or biodiesel fuel per month, and (iv) with parking spaces for commercial motor vehicles. "Commercial motor vehicles" has the same meaning as defined in Section 18b-101 of the Illinois Vehicle Code. The requirement of item (iii) of this paragraph may be met by showing that estimated future sales or past sales average at least 10,000 gallons per month.

"Licensed large truck stop establishment" means a facility located within 3 road miles from a freeway interchange, as measured in accordance with the Department of Transportation's rules regarding the criteria for the installation of business signs: (i) that is at least a 3-acre facility with a convenience store, (ii) with separate diesel islands for fueling commercial motor vehicles, (iii) that sells at retail more than 50,000 gallons of diesel or biodiesel fuel per month, and (iv) with parking spaces for commercial motor vehicles. "Commercial motor vehicles" has the same meaning as defined in Section 18b-101 of the Illinois Vehicle Code. The requirement of item (iii) of this paragraph may be met by showing that estimated future sales or past sales average at least 50,000 gallons per month.

"Sales agent and broker" means an individual, partnership, corporation, limited liability company, or other business entity engaged in the solicitation or receipt of business from current or potential licensed establishments, licensed fraternal establishments, licensed veterans establishments, licensed truck stop establishments, or licensed large truck stop establishments either on an employment or contractual basis.

"Licensed video gaming establishment" means a licensed establishment, a licensed fraternal establishment, a licensed veterans establishment, a licensed truck stop establishment, or a licensed large truck stop establishment.

"Video gaming location" means a licensed video gaming establishment, a location for which a person has applied for a license under the Act, or a location that is reasonably believed by a terminal operator or sales agent and broker to be a location for which a person will apply for a license under the Act.

"Person with significant interest or control" includes, but is not limited to, the following:

(1) a person in whose name a liquor license is maintained for a licensed video gaming location;

(2) a person who directly owns a video gaming location;

(3) a person who holds at least a 5% indirect ownership interest in a video gaming location;

(4) a person who, in the opinion of the Board, has the ability to influence or control the activities of the owner or operator of a video gaming location or to elect a majority of its board of directors, other than a bank or other licensed lending institution that holds a mortgage or other lien, or any other source of funds, acquired in the ordinary course of business;

(5) a person having the power to exercise significant influence or control over decisions concerning any part of a video gaming operation;

(6) a person or business entity receiving any net terminal income under a contractual agreement;

(7) a person or business entity holding an option agreement to acquire an equity stake in a terminal operator;

(8) a person employed or designated by a terminal operator as a progressive jackpot coordinator; or

(9) a person that has entered into a franchise agreement, a licensing agreement, an intellectual property agreement, or an other substantially similar agreement with the owner or operator of a video gaming location or its parent as a franchisor or equivalent if the video gaming location obtains more than 50% of the video gaming location's revenue from net terminal income.

(Source: P.A. 101-31, eff. 6-28-19; 102-689, eff. 12-17-21.)

(230 ILCS 40/25)

Sec. 25. Restriction of licensees.

(a) Manufacturer. A person may not be licensed as a manufacturer of a video gaming terminal in Illinois unless the person has a valid manufacturer's license issued under this Act. A manufacturer may only sell video gaming terminals for use in Illinois to persons having a valid distributor's license.

(b) Distributor. A person may not sell, distribute, or lease or market a video gaming terminal in Illinois unless the person has a valid distributor's license issued under this Act. A distributor may only sell video gaming terminals for use in Illinois to persons having a valid distributor's or terminal operator's license.

(c) Terminal operator. A person may not own, maintain, or place a video gaming terminal unless he has a valid terminal operator's license issued under this Act. A terminal operator may only place video gaming terminals for use in Illinois in licensed establishments, licensed truck stop establishments, licensed large truck stop establishments, licensed fraternal establishments, and licensed veterans establishments. No terminal operator may give anything of value, including but not limited to a loan or financing arrangement, to a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment as any incentive or inducement to locate video terminals in that establishment. Of the after-tax profits from a video gaming terminal, 50% shall be paid to the terminal operator and 50% shall be paid to the licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment, notwithstanding any agreement to the contrary. A video terminal operator that violates one or more requirements of this subsection is guilty of a Class 4 felony and is subject to termination of his or her license by the Board.

(d) Licensed technician. A person may not service, maintain, or repair a video gaming terminal in this State unless he or she (1) has a valid technician's license issued under this Act, (2) is a terminal operator, or (3) is employed by a terminal operator, distributor, or manufacturer.

(d-5) Licensed terminal handler. No person, including, but not limited to, an employee or independent contractor working for a manufacturer, distributor, supplier, technician, or terminal operator licensed pursuant to this Act, shall have possession or control of a video gaming terminal, or access to the inner workings of a video gaming terminal, unless that person possesses a valid terminal handler's license issued under this Act.

(d-10) Solicitation of use agreements. A person may not solicit the signing of a use agreement on behalf of a terminal operator or enter into a use agreement as agent of a terminal operator unless that person either has a valid sales agent and broker license issued under this Act or owns, manages, or significantly influences or controls the terminal operator.

(d-15) Use agreement restrictions. No terminal operator may enter into a use agreement or other agreement that purports to control the placement or operation of video gaming terminals with the owner or operator of a video gaming location if a direct or indirect owner or person with significant interest or control of the terminal operator or any affiliated entity is an immediate family member of either (i) a direct or indirect owner of the video gaming location or any affiliated entity or (ii) a person with significant interest or control of the video gaming location or any affiliated entity. No terminal operator may enter into a use agreement or other agreement that purports to control the placement or operation of video gaming terminals with an owner or operator of a video gaming location if any or all of the real estate upon which the video gaming location is located is owned entirely or in part by the terminal operator, an affiliated entity of the terminal operator, a person with significant interest or control of the terminal operator, or an immediate family member of any person with significant interest or control of the terminal operator. No person may solicit from a video gaming location a use agreement or other agreement that purports to control the placement or operation of video gaming terminals on behalf of a terminal operator if that person is an immediate family member of (i) a direct or indirect owner of the video gaming location or (ii) a person with significant interest or control of the video gaming location. The prohibitions in this subsection (d-15) apply to all use agreements entered into on or after the effective date of this amendatory Act of the 103rd General Assembly. Beginning one year after the effective date of this amendatory Act of the 103rd General Assembly, any use agreement that was entered into before the effective date of the amendatory Act that would otherwise be prohibited by this subsection (d-15) is void.

(e) Licensed establishment. No video gaming terminal may be placed in any licensed establishment, licensed veterans establishment, licensed truck stop establishment, licensed large truck stop establishment, or licensed fraternal establishment unless the owner or agent of the owner of the licensed establishment, licensed veterans establishment, licensed truck stop establishment, licensed large truck stop establishment, or licensed fraternal establishment has entered into a written use agreement with the terminal operator for placement of the terminals. A copy of the use agreement shall be on file in the terminal operator's place of business and available for inspection by individuals authorized by the Board. A licensed establishment, licensed truck stop establishment, licensed veterans establishment, or licensed fraternal establishment may operate up to 6 video gaming terminals on its premises at any time. A licensed large truck stop establishment may operate up to 10 video gaming terminals on its premises at any time.

(f) (Blank).

(g) Financial interest restrictions. As used in this Act, "substantial interest" in a partnership, a corporation, an organization, an association, a business, or a limited liability company means:

(A) When, with respect to a sole proprietorship, an individual or his or her spouse owns, operates, manages, or conducts, directly or indirectly, the organization, association, or business, or any part thereof; or

(B) When, with respect to a partnership, the individual or his or her spouse shares in any of the profits, or potential profits, of the partnership activities; or

(C) When, with respect to a corporation, an individual or his or her spouse is an officer or director, or the individual or his or her spouse is a holder, directly or beneficially, of 5% or more of any class of stock of the corporation; or

(D) When, with respect to an organization not covered in (A), (B) or (C) above, an individual or his or her spouse is an officer or manages the business affairs, or the individual or his or her spouse is the owner of or otherwise controls 10% or more of the assets of the organization; or

(E) When an individual or his or her spouse furnishes 5% or more of the capital, whether in cash, goods, or services, for the operation of any business, association, or organization during any calendar year; or

(F) When, with respect to a limited liability company, an individual or his or her spouse is a member, or the individual or his or her spouse is a holder, directly or beneficially, of 5% or more of the membership interest of the limited liability company.

For purposes of this subsection (g), "individual" includes all individuals or their spouses whose combined interest would qualify as a substantial interest under this subsection (g) and whose activities with respect to an organization, association, or business are so closely aligned or coordinated as to constitute the activities of a single entity.

(h) Location restriction. A licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment that is (i) located within 1,000 feet of a facility operated by an organization licensee licensed under the Illinois Horse Racing Act of 1975 or the home dock of a riverboat licensed under the Illinois Gambling Act or (ii) located within 100 feet of a school or a place of worship under the Religious Corporation Act, is ineligible to operate a video gaming terminal. The location restrictions in this subsection (h) do not apply if (A) a facility operated by an organization licensee, a school, or a place of worship moves to or is established within the restricted area after a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment becomes licensed under this Act or (B) a school or place of worship moves to or is established within the restricted area after a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment obtains its original liquor license. For the purpose of this subsection, "school" means an elementary or secondary public school, or an elementary or secondary private school registered with or recognized by the State Board of Education.

Notwithstanding the provisions of this subsection (h), the Board may waive the requirement that a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment not be located within 1,000 feet from a facility operated by an organization licensee licensed under the Illinois Horse Racing Act of 1975 or the home dock of a riverboat licensed under the Illinois Gambling Act. The Board shall not grant such waiver if there is any common ownership or control, shared business activity, or contractual arrangement of any type between the establishment and the organization licensee or owners licensee of a riverboat. The Board shall adopt rules to implement the provisions of this paragraph.

(h-5) Restrictions on licenses in malls. The Board shall not grant an application to become a licensed video gaming location if the Board determines that granting the application would more likely than not cause a terminal operator, individually or in combination with other terminal operators, licensed video gaming location, or other person or entity, to operate the video gaming terminals in 2 or more licensed video gaming locations as a single video gaming operation.

(1) In making determinations under this subsection (h-5), factors to be considered by the Board shall include, but not be limited to, the following:

(A) the physical aspects of the location;

(B) the ownership, control, or management of the location;

(C) any arrangements, understandings, or agreements, written or otherwise, among or involving any persons or entities that involve the conducting of any video gaming business or the sharing of costs or revenues; and

(D) the manner in which any terminal operator or other related entity markets, advertises, or otherwise describes any location or locations to any other person or entity or to the public.

(2) The Board shall presume, subject to rebuttal, that the granting of an application to become a licensed video gaming location within a mall will cause a terminal operator, individually or in combination with other persons or entities, to operate the video gaming terminals in 2 or more licensed video gaming locations as a single video gaming operation if the Board determines that granting the license would create a local concentration of licensed video gaming locations.

For the purposes of this subsection (h-5):

"Mall" means a building, or adjoining or connected buildings, containing 4 or more separate locations.

"Video gaming operation" means the conducting of video gaming and all related activities.

"Location" means a space within a mall containing a separate business, a place for a separate business, or a place subject to a separate leasing arrangement by the mall owner.

"Licensed video gaming location" means a licensed establishment, licensed fraternal establishment, licensed veterans establishment, licensed truck stop establishment, or licensed large truck stop.

"Local concentration of licensed video gaming locations" means that the combined number of licensed video gaming locations within a mall exceed half of the separate locations within the mall.

(i) Undue economic concentration. In addition to considering all other requirements under this Act, in deciding whether to approve the operation of video gaming terminals by a terminal operator in a location, the Board shall consider the impact of any economic concentration of such operation of video gaming terminals. The Board shall not allow a terminal operator to operate video gaming terminals if the Board determines such operation will result in undue economic concentration. For purposes of this Section, "undue economic concentration" means that a terminal operator would have such actual or potential influence over video gaming terminals in Illinois as to:

(1) substantially impede or suppress competition among terminal operators;

(2) adversely impact the economic stability of the video gaming industry in Illinois; or

(3) negatively impact the purposes of the Video Gaming Act.

The Board shall adopt rules concerning undue economic concentration with respect to the operation of video gaming terminals in Illinois. The rules shall include, but not be limited to, (i) limitations on the number of video gaming terminals operated by any terminal operator within a defined geographic radius and (ii) guidelines on the discontinuation of operation of any such video gaming terminals the Board determines will cause undue economic concentration.

(j) The provisions of the Illinois Antitrust Act are fully and equally applicable to the activities of any licensee under this Act.

(Source: P.A. 101-31, eff. 6-28-19; 102-689, eff. 12-17-21.)

(230 ILCS 40/30)

Sec. 30. Multiple types of licenses prohibited.

(a) A video gaming terminal manufacturer may not be licensed as a video gaming terminal operator or own, manage, or control a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment, and shall be licensed to sell only to persons having a valid distributor's license or, if the manufacturer also holds a valid distributor's license, to sell, distribute, lease, or market to persons having a valid terminal operator's license.

(b) A video gaming terminal distributor may not be licensed as a video gaming terminal operator or own, manage, or control a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment, and shall only contract with a licensed terminal operator.

(c) A video gaming terminal operator, a direct or indirect owner of a terminal operator, a person with significant interest or control of a terminal operator, or any person who is employed by or otherwise receives fees for service from a terminal operator shall may not:

(1) hold direct or indirect ownership of a video gaming location;

(2) hold direct or indirect ownership of an affiliated entity of a video gaming location;

(3) be a person with significant interest or control of a video gaming location;

(4) be employed by or otherwise receive fees for service from a video gaming location;

(5) be employed by or own or operate an affiliated entity of a video gaming location; or

(6) be licensed as a video gaming terminal manufacturer or distributor or own, manage, or control a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment, and shall be licensed only to contract with licensed distributors and licensed establishments, licensed truck stop establishments, licensed large truck stop establishments, licensed fraternal establishments, and licensed veterans establishments.

(d) A video gaming location operator, a direct or indirect owner of a video gaming location, a person with significant interest or control of a video gaming location, or a person who is employed by or otherwise receives fees for service from a video gaming location shall contract with a licensed operator only to place and service equipment and shall not: An owner or manager of a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment may not

(1) be a licensed terminal handler, a licensed technician, or a licensed sales agent and broker;

(2) be licensed as a video gaming terminal manufacturer, distributor, or operator,

(3) hold direct or indirect ownership of a terminal operator or a sales agent and broker;

(4) hold direct or indirect ownership of an affiliated entity of either a terminal operator or a sales agent and broker;

(5) be a person with significant interest or control of either a terminal operator or a sales agent and broker;

(6) be employed by or otherwise receive fees for service from either a terminal operator or a sales agent and broker; or

(7) be employed by or own or operate an affiliated entity of either a terminal operator or a sales agent and broker. and shall only contract with a licensed operator to place and service this equipment.

(e) A licensed terminal handler, licensed technician, or sales agent and broker shall may not:

(1) hold direct or indirect ownership of a video gaming location;

(2) hold direct or indirect ownership of an affiliated entity of a video gaming location;

(3) be a person with significant interest or control of a video gaming location;

(4) be employed by or otherwise receive fees for service from a video gaming location;

(5) be employed by or own or operate an affiliated entity of a video gaming location; or

(6) be licensed as a manufacturer, distributor, or supplier, licensed establishment, licensed fraternal establishment, licensed veterans establishment, licensed truck stop establishment, or licensed large truck stop establishment.

(f) No person shall be issued a license under this Act after the effective date of this amendatory Act of the 103rd General Assembly if the issuance of the license would cause a violation of this Section. Beginning one year after the effective date of this amendatory Act of the 103rd General Assembly, a license that has been issued under this Act and that would cause a violation of this Section shall not be renewed and may be revoked.

(Source: P.A. 101-31, eff. 6-28-19; 102-689, eff. 12-17-21.)

Section 99. Effective date. This Act takes effect upon becoming law.