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State does about-face on video gambling at retirement home

Saying they messed up, state regulators have revoked a video gaming license from a catering company that planned to open a mini-casino in a low-income retirement home in Dolton.

The Illinois Gaming Board had awarded Giovanni’s Catering Inc. a license in April but revisited that decision after the Better Government Association, in a Public Eye column, raised questions about how that license was vetted and the presence of a child day care in the Dorchester Senior Center complex.

The Dorchester, owned by the Village of Dolton, was to be the first “supportive living facility” in Illinois with video gaming terminals. Supportive living facilities provide housing for low-income residents in exchange for government subsidies.

Giovanni’s hosts parties, dances and other events in the Dorchester’s banquet hall. The catering firm planned to build a separate lounge, open to residents and the public, with alcohol, food and video gaming terminals — which offer electronic poker, slots and the like, cost money to play and pay out winnings.

RELATED: Dolton betting on mini-casino for low-income retirement home

But that plan hit a snag because Giovanni’s, according to its municipal liquor license, can serve alcohol only during “organized functions for which planned attendance is 20 or more persons.”

The gaming board now says that alcohol restriction means Giovanni’s is unable to comply with a state law that requires alcohol to be available whenever gaming machines are in operation, according to interviews and records.

Giovanni’s told regulators it planned to offer alcohol and gaming seven days a week — but that isn’t possible with its current special event liquor license.

Gaming Board Chairman Aaron Jaffe acknowledges his agency should have figured all this out before a gaming license was approved this past spring. But Jaffe said a scarcity of resources, coupled with the statewide explosion of video gaming, is complicating the vetting process.

“I wish I could tell you we catch every discrepancy that comes down the line,” Jaffe says. But “we haven’t been properly staffed since this began.”

The agency’s headcount is 286 — it’s been approved for 350, officials say.

“The state is always in a financial crunch,” Jaffe says. “But our budget comes from gambling [revenues]. For some reason we haven’t gotten the authority” to hire more people.

There are currently no pending hiring requests from the gaming board that are awaiting the governor’s approval, says Abdon Pallasch, a spokesman for the Governor’s Office of Management and Budget. “If and when they come, we will act on them promptly,” he says.

Gov.-elect Bruce Rauner said in recent days that the state’s budget problems are worse than he had expected, so it’s unclear if under the new administration more cash will flow the gaming board’s way. A Rauner spokesman said he has “nothing to add” on this subject.

Video gaming has exploded since state law changed in 2009 to allow gaming terminals in bars, restaurants, trucks stops and other spots where liquor is served. Before gaming machines can go live, individual municipalities and the gaming board must give the OK.

The first machines in Illinois went live in October 2012 – there are now 18,800 statewide (at more than 4,600 locations) and more are on the way, though apparently not at the Dorchester.

The gaming board issued Giovanni’s a “complaint for revocation” in late November. The caterer has 21 days to respond but even then its gaming license can still be revoked.

Giovanni’s hadn’t yet installed video gaming machines, even though it had the license, because it needed to pass a final site inspection. Regulators visited the Dorchester in October and discovered problems with the caterer’s liquor license, officials said.

Loren Robinson, Giovanni’s owner, says he isn’t giving up.

“I’m going to see if I can get [the village] to give me a different kind of liquor license,” he says.

Dolton village officials, though, indicated that’s unlikely.

Hard Times

Only 39 beds, or 31 percent of the Dorchester’s 126 beds, are occupied. In recent years, annual losses to the village have ranged from $400,000 to $800,000. This year that figure may reach $1 million, village officials say.

“We should not be in this business,” Trustee Cathy Bendell says.

The village board rejected an offer earlier this year to sell the Dorchester for at least $3 million. Instead, trustees had hoped that tax revenues from video gaming would help the Dorchester bounce back.

But our earlier Public Eye item questioned if the village was taking advantage of poor people. Of the 40 or so Dorchester residents, roughly half are on public aid – with take-home monthly incomes as low as $90 each, officials said.

After that item Jaffe said the gaming board would revisit Giovanni’s license.

Cook County Sheriff Tom Dart also began investigating the no-bid contract that Dolton awarded Giovanni’s to operate the mini-casino. Dart is also Dolton’s inspector general.

In October, the sheriff’s office recommended Dolton revoke Giovanni’s liquor license because of concerns that allowing the public to drink and gamble at the development could jeopardize the safety of the residents of the retirement home and the children at the day care.

This column was written and reported by the Better Government Association’s Andrew Schroedter. He can be reached at (312) 821-9035 or aschroedter@bettergov.org.