Get Down To Brass Tacks: What’s In The Illinois Online Casino Bill

Jump to main content

Written By Joe Boozell on March 2, 2021 – Last Updated on May 27, 2022

Illinois State Rep. Bob Rita introduced an online casino bill in late February, which has now been referred to the Rules Committee.

If the bill is approved, online casino gambling has the potential to completely transform Illinois.

In-depth Analysis: Identifying the advocates and critics of the proposed online casino legislation.

The bill titled the Internet Gaming Act would permit online slots, table games, and poker to be played over the internet.

Online casinos are allowed to legally operate in New Jersey, Pennsylvania, Michigan, Delaware, and West Virginia, each with their own specific regulations, which are comparable to those in Illinois.

What are the key elements of the Illinois Internet Gaming Act? Let’s dive in and find out.

Illinois online casino bill tax rate

The legislation incorporates a 12% privilege tax on earnings that will be deposited into the State Gaming Fund.

This rate is quite low. If online casino gaming is approved, it wouldn’t be surprising if the tax rate is eventually negotiated to be higher.

In Pennsylvania, there is a 54% tax on online slot revenue and a 16% tax on online table game and poker revenue.

Michigan imposes a 28% tax on gross revenue that exceeds $12 million.

Illinois taxes sports betting revenue at a rate of 15%, which is lower than the taxes typically imposed on online casinos.

According to Tom Swoik, Executive Director of the Illinois Casino Gaming Association, the bill was created by Caesars Entertainment, which may account for the favorable tax rate for operators.

How many online casinos could come to Illinois?

Rita’s proposed legislation would allow a maximum of three skins per entity.

Excluding Arlington International, Illinois is home to 10 casinos and two horse racing tracks. The proposed bill establishes a cap of 36 skins, a limit that is not anticipated to be met in Illinois.

New Jersey, often seen as a crowded market, has fewer than 30 brands.

In this scenario, a skin is a distinct online gaming operator with its own brand. An online gaming licensee can choose to partner with up to three different skins, each with its own branding.

Swoik noted that the number of skins is a topic of debate among Illinois casinos, emphasizing the importance of closely monitoring this issue.

Is online poker included?

The bill specifically includes online poker, not to be confused with video poker. It allows for playing virtual table games against other players.

Legal online poker is also available in Delaware, Nevada, New Jersey, Pennsylvania, and Michigan.

Is there an in-person registration period?

Just like sports betting in Illinois, this bill also mandates a period for in-person registration.

Nevertheless, the six-month in-person registration period for sports betting has been implemented instead of the originally planned 18-month period, as Governor JB Pritzker has temporarily suspended the longer duration due to the COVID-19 pandemic.

In order to register for an online casino account, customers would be required to visit a physical casino or brick-and-mortar establishment.

This is likely to give Rivers Casino, as well as other casinos in urban areas, a competitive edge in the casino industry.

One of our colleagues, Matt Kredell, highlighted in his article the interesting fact that Caesars was the one who proposed the bill and included a stipulation for in-person registration.

The two Illinois casinos owned by Caesars, Harrah’s Metropolis and Harrah’s Joliet, are situated in more compact locations.

What are the fees for an online casino license?

According to this bill, an online casino license in Illinois will cost $500,000, with a renewal fee of $250,000.

This appears to be advantageous for operators once more. In contrast, a sports betting license in Illinois can be as high as $10 million.

Pennsylvania and Illinois both charge $4 million for an online casino license, reflecting their similar population sizes.

In contrast, Michigan has relatively lower fees compared to other states. The application fee is $50,000, with an additional $100,000 fee to obtain a license. After that, the annual renewal fee is $50,000.

Who will the operators be?

We currently do not have a definitive answer, but we can make an educated guess based on the operators who have shown interest in entering the Illinois market, as well as their experiences in other states with online casinos.

Expect to witness these gaming operators involved in Illinois online casinos. This is just a partial list:

Where will online casino gaming profits go?

The bill states that money earned from online casinos will be given to the Department of Human Services to oversee programs that focus on addressing problem gambling, supporting pensions, and assisting the Education Assistance Fund.

Illinois is facing a pension debt crisis. While legalizing online casinos may not completely solve the issue, it could provide the state with a reliable revenue stream.