Earlier this year, the Illinois Gaming Board (IGB) implemented Administrative Rule 350. This new rule brings welcome definition and clarity to what constitutes an inducement in the video gaming industry. Rule 350 was approved by the Illinois Joint Committee on Adiministrative Rules (JCAR) at its February 17th, 2021 meeting, and has been in effect since. The complete text can be found on the IGB website (www.igb.illinois.gov) under Video Gaming > Applicable Law & Standards > Adopted Rules > Section 1800.350 Inducements.
An inducement as defined by the Video Gaming Act is anything of value which is offered, given or accepted in exchange for the right to locate video gaming terminals at an establishment. All licensed parties – including Terminal Operators and Licensed Establishments – can be penalized for giving and accepting inducements. This penalty can result in large fines, revocation of licenses, or both.
We have summarized the major changes to the new adopted rule below.
IGB Section B: Goods and Services
Section B provides more guidance to Terminal Operators of items that they may pay for or provide without committing an inducement. Many of the items reflect what the IGB understands to be current industry practice, and places a specific limit of $2,500 to the total cost of service and hardware that a Terminal Operator can provide to an Establishment to connect and operate the video gaming equipment.
IGB Section B6: Reimbursements/ Deductions
This section provides clarification on the process Terminal Operators must follow to have the authority to deduct certain approved expenses from an Establishment’s share of NTI. An express written agreement must be created to address the payment of a permitted shared cost. Reimbursements should not occur without an express written agreement between the Terminal Operator and Establishment. Unless permitted by local ordinance, Terminal Operators can no longer share in the cost of local VGT license fees. Terminal Operators are permitted to pay the license fees up front for a location, however the Terminal Operator must be fully reimbursed prior to an establishment receiving its share of NTI.
IGB Section B7: Promotional Items
The IGB specifies in this section that items of nominal value are defined to have an actual cost of $5.00 or less. The IGB notes that these promotional items, merchandize, and gifts must display the logo of the Terminal Operator and be solely for distribution to patrons.
IGB Section B8 and B9: Exterior and Interior Signage
This has historically been a topic of significant debate within the industry because of the widely varying opinions on the matter. The IGB has decided to limit non-permanent exterior signage at an Establishment to a maximum of FIVE (5) signs, each of which may cost no more than $300 to produce. These exterior signs should only promote video gaming and the Terminal Operator and may not contain the name, logo, or other identifying marks from, the Establishment. Permanent signage of any kind is expressly prohibited.
Terminal Operators may continue to provide interior signage required by the IGB and that otherwise promotes the security and integrity of video gaming. Terminal Operators may provide other interior signage, or display devices, but the content of this type of signage is now limited. Interior signage will now be limited to directing patrons to the gaming area or otherwise promoting video gaming.
IGB Section C: Prohibited Good and Services
In addition to IGB prohibiting paying for the cost of any construction, such as half walls and other construction intended to segregate the video gaming area, Terminal Operators are also prohibited from providing or paying for food and beverage, free play or match play, and the items used in the conduct of the non-video gaming portions of the business. These items include, among others, glassware, napkins, menus, and drink coasters.
Additionally, Terminal Operators are prohibited from providing free, reduced cost, or below fair market value goods and services. ATM fees and amusement device revenue to the Establishment cannot exceed a 50% split.
After implementing the new amendments the IGB is also requiring more record keeping. Terminal Operators are required to submit these records on a quarterly basis, and licensed locations which share in the cost of goods or services with their Terminal Operator are now required to make a “good faith” effort to retain their own records of these arrangements. Universal Gaming Group is committed to taking the correct approach when it comes to our partner locations. We believe The Right Operator is Everything and we strive to act For The Good Of Gaming.