Illinois Gaming Supplier Regulatory Overview

Introduction

Illinois became the second state to legalize riverboat gaming when it passed the Riverboat Gambling Act ("Act") in February of 1990. The Act authorizes the Illinois Gaming Board ("Board") to license up to 10 riverboat casino licenses and sets forth a basic licensing and tax scheme. The Board employs agency members and also works with the Illinois State Police to conduct background checks and investigations involving applicants and licensees. In addition to the provisions in the Act, the Board promulgates rules ("Rules") that further regulate the casino gaming industry within the state.

Each casino operator is allowed up to 1,200 gaming positions divided between up to two riverboats. All wagering on the riverboats must be cashless – patrons use tokens, chips, or electronic cards for wagering purposes.

Illinois currently has nine operating casinos and a gross casino gaming revenue of $1.43 billion. In 2009, visitor volume at Illinois casinos was approximately 14.5 million.

Potential applicants should note that the following analysis covers only information in the Act and Rules, as application materials are only available upon request by potential applicants. Accordingly, interested persons should contact the Illinois Gaming Board for further information.

Supplier Licensing Requirements

Under Illinois regulations, the following persons or entities must hold a Supplier's License:

1. Suppliers of gaming equipment and supplies, including manufacturers and distributors;
2. Suppliers of gaming equipment maintenance or repair services;
3. Suppliers of security services;
4. Lessors of riverboat and/or docking facilities;
5. Suppliers of goods or services where payment is calculated as a percentage of a Riverboat Gaming Operator's revenue;
6. Junketeers; and
7. Any other supplier as determined by the Board.¹

Any person who sells gaming equipment, devices, or supplies to a riverboat casino must first be licensed by the state as a supplier.² Individuals and businesses that are described in the above list must complete a Supplier's License Application Form and Business Entity Form or Individual Key Person Disclosure Form.³ All licenses issued by the Board are nontransferable.⁴

Duration

A Supplier's License is valid for one year from the date of issuance.⁵ After the first year of licensure, the applicant may renew the license for a term of four years.⁶

If requesting a renewal, the applicant must make a written request that acknowledges past compliance, puts forth measures taken to comply with Illinois law and regulations, and responds to any questions by the Board.⁷ Renewal information must be received at least 60 days prior to the current license's expiration date.⁸

Fees

A $10,000 application fee must be submitted with the Supplier's License application.⁹ The fee may be increased if the cost of investigating the application exceeds the application fee.¹⁰ Upon the issuance of the license, a $5,000 licensing fee is due.¹¹ The licensee must pay an annual $5,000 fee upon renewal.¹² Applicants or licensees may be required to reimburse the Board for any required testing, certification, or other installation-related expenses involving goods or services.¹³

Required Documents and Information

The Illinois Administrative Code provides that a table of organization, ownership, and control (including business entities that hold equal to or more than 5 percent of a publicly traded applicant or persons holding 10 percent or more of a publicly traded applicant) must be provided by the applicant in connection with filing a Supplier's License Application Form.¹⁴

Please note that additional information and documents will be required in order to complete the application.

Key Persons Licensing Requirements

Those persons that must be licensed as a Key Person or Business Entity include:

1. The CEO, COO, or their functional equivalents;
2. Any person or business entity which is a substantial owner of the applicant;
3. Any person or business entity which is a substantial owner of a business entity that is a substantial owner of the applicant; and
4. All other persons the Board deems to have ownership or control that would require licensure.¹⁵

Each person or entity included in the above list must complete a Business Entity Form or a Personal Disclosure Form I, as applicable.¹⁶ Each year, licensees are required to update their application with current tax documents, disclosure affidavit, personal information, and financial documents.¹⁷

Licensing Process

Interested persons or business entities must first complete the applicable licensing applications, including required supplemental documents, information, and licensing fees, and submit a completed application to the Board. After the Board receives the application, it will begin its investigation as to the suitability of the applicant.¹⁸

The investigation will examine the applicant's character, reputation, financial integrity, and experience. The Board will consider whether these characteristics will adversely affect the state of Illinois or the reputation of the state's casino gaming industry. Furthermore, the investigation will consider the ability of the applicant to provide quality products to Illinois casino operators.¹⁹

After the application has been submitted but before the Board has acted on the application, the applicant may request for leave of the Board to withdraw the application.²⁰ If the application is withdrawn, then the applicant must wait one year from the date that the Board allows the withdrawal to reapply.²¹

If the Board finds the applicant suitable for licensure, then the Board will direct the Administrator to issue a license. If the Board finds the applicant not suitable for licensure, then the Board will issue a Notice of Denial via certified mail or personal delivery.²² An applicant that is denied licensure may submit to the Board a request for a formal hearing regarding the license application.²³

Disclosure and Reporting Requirements

Before License Is Issued

Knowingly reporting a false statement on an application or report to the Board will result in a Class A misdemeanor.²⁴

After License Is Issued

Each quarter, a Supplier Licensee must provide the Board with a quarterly return listing all sales and leases to the casino operator.²⁵ Each year, the licensee must make an annual submission to the Board that includes the following information:

1. Any and all past or pending disciplinary actions taken against the licensee in any jurisdiction;
2. Any and all equipment, devices, and supplies offered for sale or lease in connection with games authorized under the Act;
3. Any and all fees received from management agreements or consulting services with Owner Licensees and the calculations of those fees;
4. Most recent year-end financial statements and SEC documents;
5. An organizational chart;
6. A list of revenues from Illinois sales or leases to licensees during the past year;
7. Disclosure of any past or present material litigation;
8. Any specific plans for changes in ownership, control, or financing; and
9. An affidavit stating that the licensee is in compliance and has paid all applicable state and federal taxes.²⁶

Each year, Key Person or Business Entity Licensees are required to update their application with current tax documents, a disclosure affidavit, personal information, and financial documents.²⁷ The licensee must promptly notify the Board of any material changes to information provided in the licensee's initial application or that may adversely affect the licensee's suitability.²⁸

If the licensee is planning to change the materials, devices, or equipment provided to a licensed operator, then notice must be given to the Board regarding these changes.²⁹ The Board may deny the changes and, if so, then the licensee has the opportunity to request a hearing regarding the denial.³⁰

Reapplying for Denied License

If an applicant is denied a license by the Board, then the applicant must wait one year before reapplying for licensure.³¹

Exemptions

The Board may waive any requirements in the rules if it determines that the waiver is in the best interest of the public.³²

---

¹86 Ill. Admin. Code § 3000.200(b).
²210 ILCS § 10/8(e).
³86 Ill. Admin. Code § 3000.220(2).
⁴86 Ill. Admin. Code § 3000.250.
⁵86 Ill. Admin. Code § 3000.240(a)(1).
⁶86 Ill. Admin. Code § 3000.241(a).
⁷Id.
⁸Id.
⁹86 Ill. Admin. Code § 3000.210(a)(2).
¹⁰Id. at § 3000.210(b).
¹¹Id. at § 3000.210(c)(2).
¹²86 Ill. Admin. Code § 3000.240(h)(1).
¹³Id. at § 3000.210(e).
¹⁴86 Ill. Admin. Code § 3000.222.
¹⁵86 Ill. Admin. Code § 3000.222(b).
¹⁶Id. at §3000.222(e).
¹⁷Id.
¹⁸86 Ill. Admin. Code § 3000.240.
¹⁹Id. at § 3000.240(c).
²⁰86 Ill. Admin. Code § 3000.220(e)(1)(B).
²¹Id. at § 3000.220(e)(2).
²²86 Ill. Admin. Code § 3000.240(e).
²³Id. at § 3000.240(f).
²⁴210 ILCS § 10/8(f).
²⁵210 ILCS § 10/8(e).
²⁶86 Ill. Admin. Code § 3000.240(h)(2).
²⁷86 Ill. Admin. Code § 3000.222(e).
²⁸Id.
²⁹86 Ill. Admin. Code § 3000.242.
³⁰Id.
³¹86 Ill' Admin. Code § 3000.240(g).
³²86 Ill. Admin. Code § 3000.260.