One of the state’s major video game machine suppliers, Accel Entertainment Gaming, LLC, recently lost a challenge to the Village of Elmwood Park’s video gaming ordinance. Accel made several challenges to the ordinance; of particular note was the $1,000 annual licensing fee charged per machine and whether the fee was an unlawful occupation tax or a valid exercise of the Village’s home rule authority.
The Cook County Circuit Court ruled in favor of the Village and held that licensing fees that are reasonably related to the cost of municipal regulation are permitted. Significantly, however, the court noted that the burden was on Accel to prove that the fee was not reasonably related to the cost of regulation, and that Accel did not allege that the fee was not reasonable.
While the ruling favors municipal regulation of a licensing fee as high as $1,000 per machine, many questions remain to be answered by the appellate court system about municipal regulation of video gaming. One question is at what dollar amount might a licensing fee become an unlawful tax? Keeping in mind that Accel failed to allege the fee was unreasonably related to the cost of regulation; proper allegations and facts establishing a minimal overhead expense of regulation in a different case may yield a different outcome.
Another issue raised in the Elmwood Park case is whether a municipality may limit the number of video gaming licenses issued. The Video Gaming Act’s language is also unclear as to whether or not a municipality may prohibit one type of establishment from having video gaming (i.e. truck stops) while allowing other types of establishment to have video gaming (e.g. bars/restaurants). We will continue to monitor this case and others as they work their way through the court system.
Author: Brad Stewart