2021-46 Ordinance Amending City Code Chapter 54.1-Video Gaming License, Sections 1, 8, 9, 10, 11

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CITY COUNCIL MEMORANDUM NO. 2021- September 2,2021 TO: Honorable Mayor Moore Wolfe and City Council FROM: Scot Wrighton, City ManagAe Amy Waks,Assistant Corporation Counsel SUBJECT: Amendment to Chapter 54.1 —VIDEO GAMING LICENSE RECOMMENDATION: Staff has been asked to draft an ordinance to establish an amusement push tax on specific amusement devices,namely video gaming terminals. An amusement push tax is a tax imposed upon the player of the amusement, but responsibility for collection of the tax falls to the terminal operators. The Illinois Municipal League believes that this a new potential revenue source for home rule municipalities, but the legal window for adopting an ordinance may be short, as explained below. The Illinois Municipal Code grants the City authority to tax amusements. However,on June 1,2021, the Illinois House of Representatives passed legislation that prohibits municipalities from adopting a push tax on video gaming terminals, unless the home rule municipality has adopted an ordinance imposing such tax on or before a specified date(the legislation currently states that this date is June 1, 2021);but the municipality may not increase,expand or extend the tax(essentially grandfathering the tax). This legislation is still pending and has only passed one house, so the Illinois Municipal League believes that the deadline for adoption of an ordinance by home rule cities will be changed. Currently, three municipalities have adopted an amusement push tax. The Village of Oak Lawn adopted a push tax ordinance on November 26,2019. Since then,one operator filed a timely return in January 2020, and the Village has since been sued by the Illinois Gaming Machine Operators, and several other operators, all challenging the ordinance. The City Waukegan has also adopted a push tax ordinance similar to Oak Lawn's and, like Oak Lawn,they have also been sued by the operators. The Village of Tinley Park has also adopted a similar push tax ordinance,but that ordinance does not take effect until 2022. The assumption is that upon the effective date, a lawsuit will be filed against Tinley Park by the terminal operators as well. The proposed Decatur ordinance amendment attempts to lesson criticisms from the gaming industry. However,the nature of the push tax is that while the tax is imposed upon the player of the amusement, the obligation to collect is on the terminal operator. Many fees,from sales taxes,motor fuel taxes and various license fees are imposed on an individual user but are collected by an intermediary company. Nonetheless, it is expected that enactment of this ordinance will also lead to a lawsuit being filed against the City.However,if the pending legislation passes both houses of the General Assembly,and becomes law, it could have the effect of clearing aside legal objections to the video gaming push tax.