SPRINGFIELD — In the years since the COVID-19 pandemic temporarily shut down Illinois casinos, video gambling terminals, horse racing and professional sports — just days after legal sports betting went live — the state’s gambling industry has seen an explosion in growth.
Even the state lottery, which was launched 50 years ago, has experienced an expansion in recent years after a decade of stagnation. Total state tax revenues from all sources of wagering in Illinois, including the lottery, surpassed $2 billion in the last fiscal year.
Against this backdrop, some lawmakers are pushing for Illinois to join eight other states that have legalized internet gambling, also known as iGaming. It’s a tempting possibility in a year when the state is facing a possible budget deficit and uncertainty about normally solid sources of federal funding as President Donald Trump and congressional Republicans are cheering for cuts.
While Illinois already allows sports betting on mobile apps, iGaming includes online casinos and other forms of online gambling that are currently outlawed.
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State Rep. Edgar Gonzalez, D-Chicago, asked a panel of his fellow House members this week to imagine Illinois facing another financial downturn like the pandemic-recession of 2020 when Trump was finishing out his first term. That year, Illinois faced a major budget shortfall, though federal stimulus money ended up helping the state recover.
“If we had something like iGaming, we would have still had a financial fallback in spite of gross negligence by the first Trump administration,” he said Wednesday at a Capitol hearing on his proposal to legalize internet gambling. “Illinois is gambling with its financial future by delaying the adoption of iGaming.”
Proponents of Gonzalez’s House Bill 3080 point out that plenty of Illinoisans are already gambling on the internet illegally, often facilitated by overseas-based websites.
“Whether or not you choose to pass legislation legalizing iGaming, it is already here,” James Hartmann, a lobbyist for sports betting giant FanDuel, told the panel. “Right now, you can take out your phone and in five minutes, be gambling real money slot machines from the app store, unregulated and untaxed.”
Hartmann, who was heavily involved in drafting and negotiating Illinois’ legalized sports betting framework as a House Democratic staff attorney in 2019, said iGaming sites are “flooding the Illinois market” — and operating unscrupulously.
Meanwhile, FanDuel, Draft Kings and other sports betting platforms must adhere to the law’s strict requirements for age checks, problem gambling prevention notifications and other consumer protections to maintain their expensive licenses.
“And so while these bad actors profit, none of it is being captured in tax revenue for the state of Illinois,” Hartmann said.
He and others pushing the iGaming bill claim Illinois could collect an additional $1 billion annually in taxes on internet gambling. The estimate is extrapolated from a 2024 report commissioned by the Sports Betting Alliance, an industry group that represents the four biggest sportsbooks in the U.S.
Those mobile sports betting platforms, which operate in 31 states, Puerto Rico and Washington, D.C., are eager to expand their nascent iGaming business into more states. The Sports Betting Alliance has been running geotargeted social media ads urging iGaming legalization in recent weeks, not just in Illinois but also Maryland.
The analysis from the gambling industry consultancy firm Eilers & Krejcik estimated $775 million in state tax revenues after five years of legalized iGaming at a nearly 25% tax rate. The $1 billion figure would reflect a higher tax rate more in line with what larger casinos and sports books pay, especially after a hike in the state’s sports betting tax last year. Pritzker last month also floated a tax hike on casino table games to help fill the state’s budget gap.
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But opponents of legalizing iGaming — including some casinos, video gambling terminal operators and the hospitality groups that represent the bars and restaurants in which those VGTs have proliferated in the 13 years since video gambling’s launch in Illinois — warn the introduction of iGaming would prove a zero-sum game.
Indeed, the General Assembly’s fiscal forecasting arm has for years reported on the cannibalization effects that new gambling opportunities have on existing gambling outlets. In its annual study from October, the legislature’s Commission on Government Forecasting and Accountability continued to chronicle the downfall of Illinois’ once-thriving horse racing industry, in addition to noting flagging revenues from the state’s legacy riverboat casinos, the oldest of which have been in business for a little more than three decades.
While overall casino revenue in Illinois is up, that success is mainly attributable to the opening of six new casinos provided for under Illinois’ massive 2019 gambling expansion law. Additionally, Rivers Casino in Des Plaines, Illinois’ first land-based casino that opened in 2011, has also seen continued growth.
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But the state’s nine legacy riverboat casinos have seen their revenues decline “for nine consecutive years,” according to the report. Visits to casinos in East St. Louis, East Peoria and Joliet’s Harrah’s Casino have seen significant drop-off. Many of those casinos would be even worse off if it weren’t for sportsbook partnerships entered into during the thick of the pandemic, when the type of in-person betting that was provided for under the law was not allowed.
The Illinois Gaming Board opposes the bill due to the agency’s own struggles to keep up with its existing regulatory responsibilities and the General Assembly’s lack of motion on banning so-called “sweepstakes machines,” which are similar to video gambling terminals but operate in a legal gray area.
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Jay Keller, a contract lobbyist for Penn Entertainment Inc., noted the company has spent $600 million in recent years enhancing and expanding its casinos in Aurora, Joliet and Alton — an investment “made with the understanding that Illinois’ gaming landscape would remain stable,” he told lawmakers.
“The economic impact of iGaming is uncertain, but the potential negative consequences are clear: The proliferation of online gaming could reduce in-person casino traffic, threatening jobs, lowering the economic benefits to local communities and ultimately discouraging future investments in the state,” he said.
Penn also operates video gambling terminals throughout Illinois and sportsbooks at all three of its casinos, including mobile sports betting via the casino in Aurora. Keller noted that roughly half of Illinois casinos are on Penn’s side opposing iGaming, while the other half are in favor of legalizing it.
Though one major labor union, the Chicago-based International Brotherhood of Electrical Workers Local 134, supports legalizing iGaming, another influential union is opposed.
Marc Poulos, the executive director of the labor-management group for the International Union of Operating Engineers Local 150, warned against any move that might jeopardize funding for state infrastructure projects, which provide jobs for Local 150 members.
“Every study that we have looked at shows that iGaming would cannibalize existing gaming positions, mainly video gaming terminals,” he told the panel.
A study published last month, commissioned by the National Association Against iGaming, warned that if Illinois legalizes internet gambling, the state could lose $252.5 million in direct casino tax revenues and 4,733 jobs, taking into account the gambling industry’s adjacent hospitality industry.
Though the study concluded that land-based casinos underperformed expected growth in states where iGaming has been legalized, internet gambling proponents disagree.
“iGaming brings new customers to casinos,” Sports Betting Alliance President Jeremy Kudon told lawmakers, saying the threat of cannibalization has become a mythical “Loch Ness Monster.”
Another report the Sports Betting Alliance commissioned last year found that of Illinois survey respondents who participated in either illegal iGaming or placed online bets while traveling to a state where it’s legal, 23% said they visited casinos more after they began iGaming. However, 54% said the frequency of their casino visits stayed the same, while 19% said they didn’t go as much.
Additionally, Michael Pollock of the New Jersey-based consultancy firm Spectrum Gaming Group said “two immutable laws of human nature” will still attract people to casinos.
“One is that people like games of chance, and two is that people enjoy being in social settings,” he said.
Trevor Hayes, an executive with Caesars Sportsbook, which operates in partnership with Elgin’s Grand Victoria Casino, agreed, saying his company has found iGaming is “actually a marketing tool” for brick-and-mortar casinos to “find new customers – younger customers.”
But that’s exactly what some opponents worry will happen, creating a new class of problem gamblers.
A Tulchin Research survey published this week of 800 Illinois voters last month found 71% believed online gambling is more addictive than betting at casinos or other brick-and-mortar establishments. Seventy-seven percent of survey respondents agreed with the sentiment that “lawmakers should look for better ways to balance the state budget than expanding mobile gambling in Illinois.”
The October report from the legislature’s economic forecasting commission estimated that in the last five fiscal years, the per-capita amount spent on gambling and lottery tickets in Illinois has increased from $325 to $560 annually, driven primarily by the explosion of video gambling terminals in Illinois and sports betting.
Illinois’ sports betting market is now second in the nation behind New York in terms of overall sportsbook revenue, according to a report published last month by the American Gaming Association.
And Illinois’ video gambling terminal industry is far and away the largest of any state with legal VGTs; a whopping 48,176 machines were in operation at bars, restaurants, dedicated gaming cafes, truck stops and the state fairgrounds in Springfield as of the end of last fiscal year in June.
Ivan Fernandez, director of the Illinois Gaming Machine Operators Association, which represents the VGT industry, warned that, unlike video gambling and casinos, iGaming presents a more dangerous risk of addiction. He urged lawmakers to follow other states that have rejected bids for iGaming legalization in recent years.
“They declined to authorize putting online casino gambling at people’s fingertips on millions of cellphones, tablets and computers available 24 hours a day, seven days a week, when people are most vulnerable,” he said. “When they’re alone or in isolation and within the close reach of minors, without regard for local authority or any reasonable time or spending limits.”
This week’s hearing yielded no vote, as it was purely informational, but the House Gaming Committee’s chair, state Rep. Dan Didech, D-Buffalo Grove, indicated there would be a long road ahead for any iGaming legalization bid, calling opponents’ concerns “well-founded.”
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
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