Illinois Legislature to Hold Hearings on Gaming Expansion

The State of Illinois will be hosting a couple of hearings on gambling expansion in the coming weeks. The first will be held at the Bilandic Building in Chicago on August 22, while the second will take place at the Capitol in Springfield on October 3. These two meetings were announced by State Representative Bob Rita (D), chairman of the Illinois House of Representatives subcommittee on Gaming, who also chairs the Sales and Other Taxes subcommittee. As he subsequently explains:

“The gaming landscape has changed significantly since I took on this issue five years ago, and I want to use these hearings to understand how those changes present new opportunities for us to put the right package together as we look to meet budget needs and provide a spark for our economy.”

About the Hearings

The purpose of the hearings will be to try to establish a consensus regarding additional gambling opportunities that could be permitted in the Prairie State. No relevant bills are expected to pass before the beginning of 2019, though, as elections in November will see all seats in the state’s House of Representatives up for contention along with 39 of the 59 positions in the Illinois Senate. Governor Bruce Rauner will also be running for reelection.

It’s expected that a main focus of the hearings will be internet gaming. While online poker and casino operations have been contemplated by the state before, now with the recent Supreme Court decision in Murphy v. NCAA, sports betting could be on the menu as well. Daily fantasy sports is another form of gaming that may receive a lot of attention during these proceedings as Lisa Madigan, who has served as the state’s Attorney General since 2003, opined in 2015 that DFS contests were against state law.

Illinois already has a bustling live gambling scene, with riverboat casinos housing traditional fare, like blackjack and slots, race tracks catering to the horse betting urges of residents, while the lottery remains as popular as ever. These options may be significantly enhanced too. There’s talk of building new casinos in Chicago and other locations, permitting racetracks to install electronic gaming devices, loosening the rules for video gaming terminals and enacting other measures to grow the instate gambling industry.

Why Does Illinois Want More Gambling?

Illinois is concerned that a gambling expansion by states on its border is allowing much needed dollars to flow out of its ailing economy. According to lawmakers, Illinois residents spent around $1.5 billion last year gambling in nearby states, providing a further impetus for expanding its own gambling industry. This situation is likely to be exacerbated by a brand new $400 million tribal casino that is being contemplated for just across the border in Wisconsin.

Apart from other arguments centered around the freedom of individuals and businesses to transact freely, there’s another compelling reason for allowing more gambling in Illinois. You see, the state has significant money woes, and its bonds were in fact demoted to near-junk status by major rating agencies in 2017. In fact, its unfunded liabilities are estimated to be anywhere between $100 and $250 billion, and it has also racked up unpaid bills amounting to about $15 billion.

Illinois legislators often have trouble passing annual budgets in a timely way, although, much to the surprise of onlookers, they approved a budget on time in 2018. The amount of extra revenue that could be raised through taxes on gambling will obviously depend on the details of whatever arrangements are worked out, but some believe that it could be as high as $700 million annually, with online gaming contributing as much as $300 million per year. Moreover, if additional land-based casinos are approved, this would create jobs in the construction sector and thus higher payroll and income tax receipts.

Why Are the Hearings Necessary?

Illinois has a multifaceted gambling economy that’s worth about $3.8 billion in annual gaming hold. This total is divided up among various types of operators, like racetracks, the Illinois Lottery, riverboat casinos, and private businesses that host video gaming terminals.

The incentives motivating the state’s gambling stakeholders often contradict each other. For instance, Springfield wishes to license more organizations to conduct gambling so that it can increase tax revenue; however, existing license holders would like to limit new entrants to the market so that they can avoid competition. Online betting is welcomed by many residents and iGaming software houses, but commercial casinos may be worried about reduced brick-and-mortar gambling income if wagering over the internet becomes legalized.

In the meantime, any attempts to institute sports betting would likely require the approval of the racetrack owners who view this activity as potentially cutting into their pari-mutuel wagering profits. That said, horse tracks are more likely than most to lend their support to any reasonable type of gambling expansion. After all, the industry has fallen on hard times and seen its revenues halve from $800 million to $400 million over the past decade, resulting in the closure of two of its race tracks, while the remaining three continue to struggle.

Nevertheless, the two scheduled hearings will enable all the disparate groups to engage in the political horse-trading necessary in order to accomplish anything on the political front. We’ve already seen online gaming and sports betting legislation fail in New York earlier this year because the parties involved could not agree on a mutually acceptable deal. It’s likely that Representative Rita is endeavoring to avoid a similar outcome in Illinois when the General Assembly reconvenes next year.

Previous Attempts at Online Gambling Regulation

Bob Rita has been perhaps the greatest champion of internet casino and poker licensing in Illinois. He first introduced a bill to this effect in 2014, but it didn’t garner much traction, with the same thing happening again in 2016. In 2017, Rita’s online poker and casino bill did then manage to progress through the Senate, although it failed to come up for a vote in the House.

Undeterred, Rita tried again during the 2018 legislative session. In the wake of the May Supreme Court decision removing the federal ban on sports betting, however, many other proposals besides Rita’s were also introduced, none of which subsequently passed into law. With a whole new form of betting to take into account, it may have ultimately proved impossible for the necessary negotiations and compromises to occur in Springfield before the May 31 adjournment of the legislature.

Rita’s two gambling hearings will allow state leaders to lay the groundwork for 2019. Hopefully this time around legislators  can reach an understanding that will allow an online gaming bill to pass without controversy next year.