Tuesday, March 10th, 2020

Developments Around “Penny Per Push” Video Gaming Tax

The Village of Oak Lawn made recent headlines with a new concept to generate tax revenue from video gaming. Oak Lawn implemented a “penny per push” amusement tax which, as the name suggests, taxes a video game user one cent for every spin on a video gaming terminal. Oak Lawn, reported to have the 10th highest income from video gaming activity in the State, anticipates $500,000 in additional revenue from the penny per push tax in the first year.

Oak Lawn’s penny per push tax is written to be assessed to the player. However, the establishment bears the burden of collecting and remitting the tax on a monthly basis. The practical effect is that establishments do not need to charge the patrons directly for the penny per push tax, nor does the patron necessarily understand that the tax is in effect; rather, the establishment can just pay the monthly amount out of its video gaming income.

To date, no legal challenge has been made to Oak Lawn’s ordinance, although it must be noted that Oak Lawn did invoke its home rule power in passing the penny per push tax. There is a potential challenge to non home rule authority to implement a separate amusement tax on video gaming, because taxes for video gaming revenue are arguably already statutorily prescribed.

A new bill has been proposed that would:

  • preempt home rule authority on the subject of video gaming
  • prohibit any additional tax, such as the penny per push tax
  • limit annual terminal licensing fees to $100 for home rule communities, keeping non home rule terminal licensing fees at $25 per year, maximum.

The prevalent opinion is that the penny per push amusement tax is currently a valid exercise of home rule authority. Municipalities should consider the full consequences of implementing a similar penny per push tax in terms of financial impact, as well as potential unintended consequences on local businesses. Municipalities who wish to view the potential financial impact of the penny per push tax can reference the Illinois Gaming Board’s website and search engine to see historic wagering activity.

Brad Stewart

Author: Brad Stewart