Illinois Online Casino Legalization Inching Closer To Reality

Legislation that could legalize online casinos in Illinois is making progress. There is still a chance that the measure could be passed before the Illinois General Assembly concludes on May 19.

Representative Edgar Rodriguez introduced the Illinois Internet Gaming Act, HB2239, in the House on Feb. 8. On Tuesday, it moved into its second committee, the House Gaming Committee, where it is considered with 10 other bills. However, the bill has only undergone one of the necessary three readings.

The Internet Gaming Act, in its Senate version, is presently at a standstill. Senator Cristina Castro introduced SB1655 on Feb. 8 and it has since remained in the Senate Executive Committee, where Castro is the chairwoman.

Additionally, another Internet Gaming Act bill, HB2320, submitted by Representative Jonathan Carroll, has also seen no progress. Its initial filing was on February 14.

Illinois one of three states with active online casino legislation

Nevertheless, Illinois is among only three states that currently have active legislation that could potentially legalize online casinos in 2023.

Specifically, active bills that could legalize iGaming in 2023 are still present in New York and New Hampshire.

At present, six states provide legal online casinos:

• Connecticut
• Delaware
• Michigan
• New Jersey
• Pennsylvania
• West Virginia

In addition, Ontario, across the Canadian border, legalized online casinos and sportsbooks in 2022. Presently, there are 46 live gaming operators in the province.

Responsible gambling clearly on Illinois lawmaker’s minds

The Illinois bills will gain traction with the inclusion of a strong responsible gambling component.

Carroll’s bill is noteworthy as it contains a clause stating that $10 million from the tax revenue, collected in the State Gaming Fund under this Act, will be allocated annually to the Department of Human Services. This funding is intended for the administration of programs addressing problem gambling.

An extra $10 million per year would undoubtedly be beneficial. In the fiscal year 2021, Illinois was the 11th highest state in the US regarding per capita public funding for services addressing problem gambling. It allocated $6.8 million, roughly 0.5% of its $1.358 billion tax revenue, towards responsible gambling practices.

A different bill in the Illinois Senate, SB1508, proposed by Senator Bill Cunningham, seeks to modify the Sports Wagering Act. The amendment would mandate that an online sports wagering licensee display a pop-up message directing the individual to websites for gambling addiction assistance after every ten bets placed online by a single person.

Additionally, the Internet Gaming Act outlines several other initiatives for responsible gambling at Illinois online casinos, such as:

• The Illinois Gaming Board is required to develop responsible gaming measures, which includes establishing a statewide gaming database of individuals who are prohibited from gambling.
• Methods to confirm that gambling customers are at least 21 years old.
• Every gaming site must show the phrase, “If you or someone you know has a gambling problem, help is available. Call (toll-free telephone number)” or similar wording approved by IGB.
• Every gaming app must incorporate features for temporary and permanent self-exclusion.

Illinois online casinos bill calls for a license fee of $250,000, taxed at 15%

Both the Senate and House bills permit online casino operators in Illinois to provide up to three distinct Internet gaming brands. These operators must pay a licensing fee of $250,000, with a renewal cost of $100,000 every four years. The tax rate specified in both bills is set at 15%.

In particular, the tax revenue will be funneled into the State Gaming Fund. This fund aids in the operations of the Illinois Gaming Board and contributes to the general funds intended for education expenditure.

Significantly, the entrance fee for the market is much lower than the current cost of a sports betting license in Illinois.

Any new casino or track must pay a minimum of $5 million for a sportsbook license. Operating a sportsbook at a professional sports facility requires a license that costs $10 million. There are also three online-only sportsbook licenses available, which cost $20 million each, and these do not require association with a retail casino.

Illinois is currently losing more than $100 million a year to the black market

Play Illinois estimated in January that Illinois could miss out on $105 million a year in tax revenue by failing to legalize online casinos.

This is specifically based on a study by The Innovation Group, commissioned by the American Gaming Association. The research found that the US loses over $4 billion in taxes annually due to individuals placing bets on illegal online casino sites in the black market.

Illinois requires extra revenue. Based on the economic priorities stated by Illinois Governor JB Pritzker, Play Illinois proposed five possible allocations for online casino revenue.

They are:

1. Reducing Illinois’ enormous pension debt which stands at $140 billion
2. Increasing the budget for child care
3. Offering complimentary in-state college education for families with lower income
4. Persisting on the journey of financial responsibility
5. Drawing large employers to Illinois

Opposition likely to come from VGT advocates

Moreover, the fact that Illinois has the most profitable video gaming terminal market in the entire country makes the legalization of online casinos in the state more complex.

To be precise, Illinois houses around 44,000 VGT units across approximately 8,200 locations. The annual tax revenue generated from VGTs is rapidly nearing $1 billion and has surpassed retail casinos, making it the highest revenue-generating gaming format in Illinois.

Moreover, the numerous small businesses across the state relying on VGT revenue will not surrender this business to online casinos without a battle or significant compensation.

Keep an eye on Play Illinois as we track all the Internet Gaming Act bills in the Illinois legislature.