Accel Entm't Gaming, LLC v. Vill. of Elmwood Park

• Decision Date: 11 December 2015
• Docket Number: No. 1–14–3822.,1–14–3822.
• Citation: 46 N.E.3d 1151
• Parties: ACCEL ENTERTAINMENT GAMING, LLC, an Illinois Limited Liability Company, Plaintiff–Appellant, v. The VILLAGE OF ELMWOOD PARK, an Illinois Municipal Corporation; and Angelo “Skip” Saviano, President; Paul Volpe, Manager; Alan T. Kaminski, Trustee; Jeff Sargent, Trustee; Angela Strangers, Trustee; Jonathan L. Zivojnovic, Trustee; Anthony Del Santo, Trustee; and Angelo J. Lollino, Trustee, in Their Official Capacities, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

46 N.E.3d 1151

ACCEL ENTERTAINMENT GAMING, LLC, an Illinois Limited Liability Company, Plaintiff–Appellant

v.The VILLAGE OF ELMWOOD PARK, an Illinois Municipal Corporation; and Angelo “Skip” Saviano, President; Paul Volpe, Manager; Alan T. Kaminski, Trustee; Jeff Sargent, Trustee; Angela Strangers, Trustee; Jonathan L. Zivojnovic, Trustee; Anthony Del Santo, Trustee; and Angelo J. Lollino, Trustee, in Their Official Capacities, Defendants–Appellees.

No. 1–14–3822.

Appellate Court of Illinois, First District, Fifth Division.

Dec. 11, 2015.

Michael A. Ficaro, William Bogot, and Seth A. Horvath, Nixon Peabody LLP, Chicago, for appellant.

Jane M. May and Benjamin M. Jacobi, O'Halloran Kosoff Geitner & Cook, LLC, Northbrook, for appellees.

OPINION

Justice GORDON delivered the judgment of the court, with opinion.

¶ 1 The instant appeal arises from the trial court's dismissal of the complaint of plaintiff Accel Entertainment Gaming, LLC, pursuant to section 2–615 of the Code of Civil Procedure (Code) (735 ILCS 5/2–615 (West 2012) ). Plaintiff's complaint challenged the validity of defendant Village of Elmwood Park's (Village) Video Gaming Ordinance (Ordinance) (Village of Elmwood Park Ordinance No. 2013–20 (adopted Sept. 16, 2013)) under the Illinois Constitution, alleging that (1) the Ordinance imposed an unconstitutional occupation tax, (2) the Village's power to tax under the Ordinance had been preempted by the Illinois legislature, (3) the Ordinance went beyond the scope of the Village's home rule powers because it attempted to regulate an area of State concern, and (4) the Ordinance imposed an unconstitutional license for revenue. The trial court dismissed plaintiff's claims with prejudice under section 2–615 of the Code and plaintiff appeals. For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 I. The Video Gaming Ordinance

¶ 4 On September 16, 2013, the Village enacted the Ordinance, which imposed registration, licensing, and fee requirements on “video gaming operations” within the Village. The Ordinance's language largely parroted the existing language of the Video Gaming Act (230 ILCS 40/1 et seq. (West 2012)) and its accompanying regulations (11 Ill. Adm.Code 1800).¹

¶ 5 Under the Ordinance, “Video Gaming Operation[s]” was defined as “the conducting of video gaming and all related activities.” Village of Elmwood Park Ordinance No. 2013–20, § 57–1 (adopted Sept. 16, 2013). A “Video Gaming Terminal” was defined as “[a]ny electronic video game machine that, upon insertion of cash, is available to play or simulate the play of a video game, including, but not limited to, video poker, line up, and blackjack, as authorized by the Illinois Gaming Board utilizing a video display and microprocessors in which the player may receive free games or credits that can be redeemed for cash. The term does not include a machine that directly dispenses coins, cash, or tokens or is for amusement purposes only.” Village of Elmwood Park Ordinance No. 2013–20, § 57–1 (adopted Sept. 16, 2013).

¶ 6 The Ordinance required that anyone seeking to operate a video gaming terminal in the Village was required to obtain a video gaming license from the Village's liquor commissioner. Village of Elmwood Park Ordinance No. 2013–20, § 57–15(a)(1) (adopted Sept. 16, 2013). In order to become licensed, an applicant needed to submit the Village's video gaming application, along with accompanying documentation. Village of Elmwood Park Ordinance No. 2013–20, § 57–16(a) (adopted Sept. 16, 2013). This application required the applicant to provide information concerning business ownership, taxes, criminal or civil proceedings, and outstanding contracts, among other information. It also required applicants to submit their Illinois Gaming Board disclosure forms. In considering whether to issue a license, the liquor commissioner was allowed to consider a number of factors, including whether the issuance of the license would lead to an “undue economic concentration” in a certain area of the Village. Village of Elmwood Park Ordinance No. 2013–20, § 57–10 (adopted Sept. 16, 2013).

¶ 7 Each video gaming terminal that was licensed by the Village received a Village registration tag that needed to be affixed to the video gaming terminal. Village of Elmwood Park Ordinance No. 2013–20, § 57–13(b) (adopted Sept. 16, 2013). The Ordinance gave the Village the right to seize any video gaming terminal that did not display this registration tag. Village of Elmwood Park Ordinance No. 2013–20, § 57–13(c) (adopted Sept. 16, 2013). In addition, each licensee was required to pay an annual $1,000 “license fee[ ]”² per video gaming terminal. Village of Elmwood Park Ordinance No. 2013–20, § 57–16(h) (adopted Sept. 16, 2013); Village of Elmwood Park Ordinance No. 2013–20, § 29–11(d) (adopted Sept. 16, 2013).

¶ 8 Under the Ordinance, the Village's liquor commissioner had jurisdiction and supervision over all video gaming operations within the Village, subject to the jurisdiction of the Illinois Gaming Board. Village of Elmwood Park Ordinance No. 2013–20, § 57–2 (adopted Sept. 16, 2013).

In accordance with this supervisory role, the Ordinance also provided that “[t]he liquor commissioner and the village's officers, employees and agents shall have unrestricted access to enter the premises or motor vehicles of any licensee or applicant where evidence of compliance or noncompliance with the provisions of the video gaming act, the regulations promulgated under the video gaming act or this chapter may be found.” Village of Elmwood Park Ordinance No. 2013–20, § 57–3 (adopted Sept. 16, 2013). The liquor commissioner was given the power to penalize licensees for any violation of the Video Gaming Act or the Ordinance through the “imposition of fines, suspension, revocation or restriction of license, or other disciplinary action.” Village of Elmwood Park Ordinance No. 2013–20, § 57–15(a) (adopted Sept. 16, 2013).

¶ 9 The Ordinance limited the number of licenses and video game terminals that could be operated in the Village. Village of Elmwood Park Ordinance No. 2015–01, § 57–22 (adopted Feb. 2, 2015).³ Licensed video game terminal operators were under a duty to “[n]ot install, remove or relocate any video gaming terminal in the village without notification and approval of the liquor commissioner or his or her designee.” Village of Elmwood Park Ordinance No. 2013–20, § 57–6(r) (adopted Sept. 16, 2013).

¶ 10 II. Complaint

¶ 11 On April 29, 2014, plaintiff filed a verified complaint for declaratory and injunctive relief; the complaint was amended on June 26, 2014, and it is the amended complaint that was the subject of defendants' motion to dismiss and the instant appeal. Plaintiff alleged that it was an Illinois limited liability company that was licensed and in good standing with the State's regulatory gaming authorities. On February 28, 2014, the Illinois Gaming Board approved plaintiff's request to transport three video gaming terminals to a bar in Elmwood Park. Plaintiff requested that the Village waive its requirement that plaintiff provide, as part of its application for a license from the Village, copies of its video gaming business entity disclosure form, video gaming institutional investor form, video gaming personal disclosure form, video gaming terminal operator license application, and video gaming trust disclosure form. Plaintiff informed the Village that it had already provided these forms to the Illinois Gaming Board when plaintiff received its current state gaming license.

¶ 12 On March 25, 2014, under supervision of the Illinois Gaming Board, plaintiff's three video gaming terminals were installed and activated at the bar. Plaintiff was then required to immediately deactivate the terminals, as it had not yet paid the $1,000 per terminal license fee or produced the required documents in order to obtain a license from the Village. On March 27, 2014, the Village denied plaintiff's request to waive the production of the required documents.

¶ 13 Plaintiff then filed its complaint, arguing that the Ordinance was facially unconstitutional because: (1) the $1,000 per year per terminal license fee was an impermissible “occupation tax”; (2) the Riverboat Gambling Act (230 ILCS 10/1 et seq. (West 2012)), which was incorporated into the Video Gaming Act, prohibited such a tax; (3) the Ordinance exceeded the Village's home rule authority; and (4) the yearly license fee was a “license for revenue,” prohibited by the Illinois Constitution. Plaintiff sought a declaratory judgment on all counts, as well as a “ preliminary and permanent injunction prohibiting the Village from enforcing the Ordinance against [plaintiff] and any licensed establishments where [plaintiff] operates and maintains licensed [video gaming terminals].”

¶ 14 Count I of the complaint alleged that the Ordinance imposed an impermissible occupation tax on plaintiff through its $1,000 “license fee.” Count I alleged that the Illinois Constitution prohibited a home rule unit, such as the Village, from enacting an occupation tax without express sanction from the General Assembly, and it further alleged that the Riverboat Gambling Act, which was incorporated into the Video Gaming Act, contained an express prohibition against occupation taxes. Count I sought a declaration that the Ordinance violated the Illinois Constitution by imposing an illegal occupation tax; and a preliminary and permanent injunction enjoining the imposition and enforcement of the fee against plaintiff.

¶ 15 Count II of the complaint alleged that section 21 of the Riverboat Gambling Act (230 ILCS 10/21 (West 2012) ), which was incorporated into the Video Gaming Act, prohibited the Village from imposing its license fee on terminal operators. Count II sought a declaration that the Riverboat Gambling Act and Video Gaming Act prohibited the Village from imposing the license fee; and a preliminary and permanent injunction prohibiting the Village from levying or...