Cook County, home rule municipalities can tax slot machines, video gaming terminals, appeals panel says

By Dana Herra | Dec 17, 2015

In a pair of decisions, a state appeals panel again upheld the ability of Cook County and other home rule units of local government in Illinois to tax slot and video gaming machines.

Both cases, docketed in court records as Case No. 13-L-050995 and Case No. 14-CH-7357, named Lemont-based Accel Entertainment among the plaintiffs, and both were decided by the same panel of three judges. In both cases, Illinois First District Appellate Court Justice Robert E. Gordon delivered the judgment of the court, and justices Jesse Reyes and Margaret McBride concurred in the decisions.

Case No. 13-L-050995 was filed by Accel, Gaming and Entertainment Management-Illinois and the Illinois Coin Machine Operators Association against Cook County, claiming the Cook County Gambling Machine Tax Ordinance was illegal, because it is preempted by the state Riverboat Gambling Act, does not pertain to county government or affairs, and is an impermissible occupation tax and impermissible license for revenue. The trial court granted summary judgment in favor of the county, which the appeals court upheld.

In Case No. 14-CH-7357, Accel, as the sole plaintiff, brought the same allegations against the Village of Elmwood Park and its officials, making the same claims about the village’s Video Gaming Ordinance, which also taxes such gaming machines.

Both ordinances require operators of video gaming terminals to register for a license and affix a registration tag to each terminal. The Elmwood ordinance charges an annual $1,000 fee per registration tag; the county ordinance charges $1,000 per gambling device, such as slot machines, and $200 per video gaming terminal.

In 2013, the Illinois Coin Machine Operators Association, a professional association that claims 12 of its members operate more than 900 video gaming terminals in Cook County, filed suit along with gaming companies Accel and Gaming and Entertainment Management-Illinois against the county. While that litigation was pending, Accel filed its almost identical suit against Elmwood Park, disputing its local gaming ordinance.

The county filed a motion to dismiss, which was denied; in November 2014, both the plaintiffs and defendant filed a motion for summary judgment. In January, the county’s motion was granted; Elmwood Park had been granted summary judgment about two months earlier. Both decisions were upheld on appeal.

In upholding the trial courts’ decisions on whether the local ordinance is preempted by state law, the justices noted that the Riverboat Gambling Act does, as the plaintiffs claim, say that “political subdivisions” of the state, such as counties and municipalities, cannot charge additional taxes on licensees. However, the court found that section does not apply because it does not mention restricting the authority of home rule units. The state constitution allows home rule units to license and tax unless the General Assembly specifically prohibits it. Both Elmwood Park and Cook County are home rule units.

The plaintiffs also argued that taxing gaming machines does not pertain to the village’s or county’s government and affairs, and is outside the scope of home rule. The court disagreed, saying the fact the tax is imposed on the owners of machines displayed for play and operation in the village or county is sufficient. The court also said the tax is not an occupation tax, as the plaintiffs claimed - but even if it was, such a tax is permissible under the state constitution.

The justices said the plaintiffs’ argument that the tax is an impermissible license for revenue does not hold water, either – “as noted, the phrase ‘to license for revenue’ describes those situations in which a governmental unit that did not have the power to tax attempted to raise revenue by the exercise of its police power. Here, the county did have the power to tax and did so through the Tax Ordinance,” Gordon wrote in the county decision.

The decision marked the second time this year the First District court has upheld the legality of the Cook County gaming machine tax. In August, the appeals court tossed a challenge brought against the tax by the company that operates Rivers Casino in Des Plaines.

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