Illinois legislators are considering legalizing online gambling, or iGaming, as the state faces a possible budget deficit and economic uncertainty. Since Illinois has already legalized mobile sports betting, some lawmakers see iGaming as a means of raising tax revenue and legalizing an illegal business.
As reported by Capitol News Illinois, Rep. Edgar Gonzalez is leading the way with House Bill 3080 (HB 3080). During a recent legislative hearing, he argued that legalizing iGaming would provide an economic buffer in an economic downturn and mentioned Illinois's budget shortfall due to the COVID-19 pandemic.
Gonzalez maintained that Illinois is playing with fire by holding responsibility for legalizing online gambling, especially when many citizens are already gambling online on unregulated and untaxed websites.
A 2024 report by the Sports Betting Alliance, a trade group that includes online operators FanDuel and DraftKings, projected that Illinois could expect to gain $775 million in state tax revenue over five years of running an iGaming tax rate of 25%. If the rate is increased to align with higher tax rates on sportsbooks and casinos, that revenue would increase to $1 billion annually.
James Hartmann, a FanDuel lobbyist, emphasized that iGaming already exists in Illinois, just through illegal sites. He argued that legalization would introduce consumer safeguards, hold people accountable for conducting responsible gaming procedures, and claim tax revenues forfeited to overseas sites.
Concerns on cannibalization and opposition
While the economic benefits are anticipated, critics warn that the legalization of iGaming would hurt Illinois' existing gambling establishments. In particular, the move would impact land-based casinos and VGT operators.
One of the most prominent concerns is revenue cannibalization from existing gambling facilities.
The Illinois Commission reported nine years of decreasing revenue at the state's old riverboat casinos on Government Forecasting and Accountability. Legislators are concerned that the opening of iGaming will attract even more traffic away from brick-and-mortar casinos, threatening jobs and local economies.
Jay Keller, a Penn Entertainment Inc. lobbyist whose firm has invested $600 million in Illinois casino expansion, cautioned that legalizing iGaming would undermine such investments. He argued that it would destabilize the state gaming industry, deter future investment, and lower local economic returns.
VGT owners and hospitality leaders also strongly disagree with the bill. Directors of the Illinois Gaming Machine Operators Association, Ivan Fernandez, warned that gambling on the Internet has the potential to addict more than any other form of gambling. He feared its availability, particularly for vulnerable individuals, who might be able to get carried away from a computer or their cell phone with no authority figure in control.
Likewise, the Illinois Gaming Board is skeptical about its ability to effectively regulate iGaming, citing its current difficulties with regulating existing gambling operations. The agency has not yet addressed the issue of "sweepstakes machines," which are legal loopholes akin to VGTs.
However, labor unions are divided on the bill. The International Brotherhood of Electrical Workers Local 134 supports legalizing iGaming, but not the International Union of Operating Engineers Local 150. The latter argues that iGaming would harm infrastructure funding, which is partially dependent on tax revenue derived from existing gambling operations.
The House Gaming Committee has yet to schedule a vote for the bill.
