5 Things Illinois Could Do With Proceeds Of Online Casinos
Play Illinois projected last week that legalizing online casinos could potentially garner an extra $105.6 million in annual tax revenue for Illinois. How could this additional income be used to enhance the lives of Illinois residents? Here are some ideas we propose.
We determined that Illinois residents annually wager approximately $1.65 billion on illegal online casino sites, according to data from The Innovation Group given to the American Gaming Association.
Naturally, regulating and taxing existing activities is a superior approach for protecting our citizens. Moreover, the revenue gained from permitting online casinos could be employed for beneficial purposes, without necessitating a tax increase.
What Illinois could do with revenue from online casinos
Maybe the optimal perspective on what Illinois could do with an extra $105 million annually is to concentrate on the economic priorities outlined by Illinois governor JB Pritzker for his second term. He won re-election in November 2022.
They include:
1. Decreasing Illinois’ massive pension debt of $140 billion
Yes, an extra tax revenue of $105 million would be insignificant for an Illinois state pension debt that stood at nearly $140 billion as of December 2022. This information was provided by the Commission on Government Forecasting and Accountability of the Illinois General Assembly.
Still, measures must be taken to address this enormous pension issue.
It’s evident that this is a priority for Pritzker, given that the state allocated an extra $500 million to the state’s pension program in the 2023 fiscal year. However, there is still a significant need for more funding.
According to Illinoispolicy.org, the state has underfunded the pension funds by $58.5 billion since the establishment of the current funding schedule in the fiscal year 1996.
Ouch.
2. Increasing funding for child care
Pritzker aims to lead Illinois to be the top state in the US for child care access. He expressed to Chalkbeat Chicago his intention to prioritize child care through increased funding for child care centers and their workers.
“At a press conference on Jan 4, Pritzker stated, “We can do so much more to simplify the process for young families to access quality child care and early childhood education.”
Pritzker indeed signaled his desire for both free preschool and free child care in Illinois when he announced his 2021 re-election campaign.
That requires a significant amount of money.
3. Providing free in-state college education for lower income families
At his swearing-in ceremony for his second term on Jan. 9, Pritzker declared that his primary focus for the next four years would be education. This encompasses preschool and early childcare. However, the governor is also continuing to explore the notion of offering free in-state college tuition to all families with a median or lower income – an idea he initially proposed in 2021.
Considering the high cost of post-secondary education, a substantial funding source will be needed.
4. Continuing down the path of fiscal prudence
In the fiscal year 2023, Pritzker has achieved Illinois’ first budget surplus in 22 years. We’ll come back to that shortly. However, the administration, which takes pride in maintaining balanced books, is facing potential economic turbulence.
Thus, it is crucial to have another significant source of annual revenue.
5. Attracting big employers to Illinois
Currently serving as a politician in the United States, Pritzker, an heir to the Hyatt Hotel fortune, holds the title of the wealthiest person in office. Before his governorship, he and his brother Anthony managed Pritzker Group, a private equity firm. With a reported net worth of $3.2 billion, Pritzker is reputed to be the richest politician currently in office in the US.
Therefore, it is logical that business is a top priority. The Madison-St. Clair Record recently reported that the Illinois General Assembly approved $400 million for a new Large Business Attraction Fund on January 8.
This could imply that you may need to remove this from the list of potential beneficiaries of Illinois’ online casino revenue. However, bear in mind that in the latest election, Pritzker proposed a $1 billion fund to draw major employers to Illinois. Thus, there’s a possibility that online casinos could contribute towards inflating this fund to reach a seven-figure amount.
Why not invest in infrastructure?
Similar to many other states, Illinois also has some deteriorating infrastructure. So, why not put funds into enhancements? This is something Pritzker has already addressed during his first term.
In 2019, he put his signature on the Rebuild Illinois infrastructure bill, worth $45 billion. This was the most extensive infrastructure enhancement plan ever seen in Illinois history, with plans to renovate roads, bridges, railways, universities, early childhood centers, and state facilities.
Certainly, infrastructure is a continual necessity. However, it’s not a financial priority, especially so soon after the signing of Rebuild Illinois.
Does Illinois need the money from online casinos?
Is Illinois in desperate need of the revenue that would be brought in by online casinos?
Desperately? Currently? No.
Currently, Illinois is in a surprisingly strong financial condition, an unusual state for it. The state has spent the majority of its recent history struggling with debt.
The Governor’s Office of Management and Budget in Illinois unveiled the Illinois Economic and Fiscal Policy Report on November 14, 2022. The report projected a surplus of approximately $1.689 billion for the state by the end of the 2023 fiscal year on June 30. Furthermore, there was a $1.473 billion increase in the revenue forecast from April to November 2022.
The report indicated that there has been significant advancement in state finances. This is highlighted by the fact that the structural deficit was around $3.2 billion annually when Governor Pritzker assumed office. The substantial reduction of the structural deficit demonstrates the dedication of the Governor and the General Assembly to ensure Illinois’s fiscal health for the foreseeable future.
This resulted in approximately $1.8 billion in tax savings for the residents of Illinois. Furthermore, Illinois allocated about $1 billion to its Budget Stabilization Fund, often referred to as its Rainy Day Fund. This action has elevated the fund to the highest level ever recorded in Illinois history. As of October 31, 2022, the fund contained $1.045 billion.
Additionally, Illinois completely repaid its federal pandemic loan of $3.2 billion two years ahead of schedule in the first half of FY2023, resulting in an interest savings of $82 million.
Sounds great, right?
This will be the first time in 22 years that Illinois has balanced its budget.
Illinois budget deficits forecast ahead
The world economy is on the verge of a recession. The recent wave of layoffs in the tech industry is alarming. Currently, the GOMB predicts a budget surplus of approximately $279 million for Illinois in FY2024. However, it forecasts deficits for each subsequent fiscal year as follows:
- Deficit of $464 million in Fiscal Year 2025
- Deficit of $707 million in FY 2026
- Deficit of $620 million in FY 2027
- Deficit of $792 million in Fiscal Year 2028
Simultaneously, GOMB is forecasting the revenue Illinois will generate from gaming and lottery to be:
- For the Fiscal Year 2023, the gaming sector is projected to yield $157 million, while the lottery sector is expected to bring in $665 million.
- In fiscal year 2024, $200 million out of $678 million.
- In fiscal year 2025, $230 million out of $692 million.
- Fiscal Year 2026 – $255 million out of $706 million
- In fiscal year 2027, $270 million out of $720 million.
- In the fiscal year 2028, $270 million out of $734 million.
Undoubtedly, the potential for an additional $105 million in tax revenue from the legalization and regulation of online casinos in Illinois will aid in balancing the budget. It is evident that this is a priority for the Pritzker administration.
In addition, the legalization of online casinos in Illinois could also contribute to pension funding, enhance child care services, provide lower-income families with access to free in-state college tuition, and draw major employers to The Prairie State.
While safeguarding Illinois consumers from the dangers of an activity they are already participating in — illegal gambling.
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