With Illinois sports betting thriving, lawmakers are now weighing the potential impact of a legalized online casino market.
HB 3142 would create the Internet Gaming Act, allowing the state to offer online casino games and online poker to players across Illinois. The bill had its first reading on Feb. 19 before it was referred to the Rules Committee.
During an April hearing, proponents of the bill discussed the economic impact and what a regulated market could do to protect players in the state.
Legalized Market Benefits Illinois Players
A legalized and regulated online casino market would allow a degree of protection for Illinois online casino players that currently do not exist. Offshore websites and other illegal online casino sites can take advantage of their customers without experiencing any repercussions, in addition to the lost revenue that goes elsewhere instead of to the state.
“There is a major problem with illegal and unregulated gambling websites that are operating in Illinois,” Rep. Daniel Didech said. “These websites are located overseas with little to no oversight over their operations. Money deposited into accounts on these illegal websites is not safe. It is not uncommon for there to be significant delays in the ability for consumers to cash out their money, and sometimes people never receive their money at all.”
Didech also brought up how problem gamblers can be at the mercy of these illegal websites, which don’t offer player limits or self-exclusion options for any individuals attempting to curtail their gambling. iGaming also has technology that is able to flag problem gambling behaviors in real-time.
“These illegal websites are highly predatory towards problem gamblers and are advertised and operated without the safety of individuals who are struggling with gambling addiction,” Didech said. “On top of that, these illegal websites do not pay taxes, create no jobs and are a significant net drain on the economy.
“This is a problem that many states are grappling with, and my submission to the committee is that Illinois should join the growing trend of states that are legalizing, regulating and taxing iGaming.”
Economic Impact
If the bill passed, Illinois would join Nevada, New Jersey, Pennsylvania, Delaware, West Virginia and Michigan to offer a form of iGaming. Nevada offers only online poker, while the rest of the states offer traditional casino games such as slots and tables in addition to poker.
Michigan is the most recent to introduce iGaming in its state and has already experienced a successful launch. Through April, the state has reported $299 million in gross receipts with $53.4 million in state tax payments. Jeff Kaplan, vice president of Strategic and Financial Planning for Penn National Gaming projects Michigan will produce $1 billion in revenue in its first year, which would be a record, and eventually generate $1.5 billion in annual revenue. For Illinois, he anticipates even bigger iGaming revenue numbers.
“Given the fact that Illinois’ adult population is 25% larger than Michigan’s and its median income is 15% larger, we expect the revenue opportunity in Illinois to be significantly higher than it is in Michigan,” he said.
If those projections come to fruition, Illinois could expect close to $250 million in tax revenue. John Pappas, who is the founder and CEO of Corridor Consulting, mentioned some forecasts are speculating that within five years, there could be $1 billion in tax revenues between taxes and licensing fees that could be delivered to Illinois.
“It creates strong consumer protections, modernizes the gaming industry and creates a competitive framework that will provide much-needed new revenues for the state,” Pappas said of iGaming.
iGaming Complements Brick-and-Mortar Casinos
One concern opponents have concerning iGaming is if it would take away some of the revenue from the brick-and-mortar casinos. Kaplan pointed out that’s not the case. Internet casinos have complemented retail facilities and served as a way to bring in a new demographic to gaming.
“We performed an analysis on our customers to determine if there was any cannibalization to our brick-and-mortar revenue, and what we found was that iGaming was almost entirely complementary to our brick-and-mortar play,” Kaplan said. “In addition, we attracted a different type of customer online as our online database averages about 10 years younger than our brick-and-mortar players.
“Due to these factors, I believe iGaming will grow the market and allow us to connect with a new type of player that we may not have attracted to our properties previously.”
Didech also reiterated what Kaplan said, noting how states such as Pennsylvania have seen an increase in revenue at brick-and-mortar casinos with legalized iGaming.
Trevor Hayes, who is head of government relations at William Hill, pointed out that Kaplan and Penn would not be in support of iGaming if they thought it would take away from their profits on the retail casino side.
“Penn and our parent company, Caesars Entertainment, are two of the largest regional operators of casinos in the country, and they’re both supportive of this,” he said. “We would not be supported of something that we thought would hurt our existing infrastructure and the large investments we made in states like Illinois.”
