State's video gambling revenues outpace casinos for first time

Video gambling is now more profitable than casino gambling for Illinois.

The state made $296 million from the machines during the 2017 fiscal year that ended June 30. Meanwhile, Illinois' 10 casinos generated just $270 million for the state, a $7 million drop from the previous fiscal year.

It's the first time video gambling revenue has outpaced casinos since the machines were allowed to begin operating in 2012.

That's according to a recently released report on gambling revenue from the state legislature's Commission on Government Forecasting and Accountability.

Only Rivers Casino in Des Plaines and Hollywood Casino in Aurora made more money in 2017 than they did in the previous fiscal year, according to the report.

“There's no doubt video gambling has had a significant impact on riverboat casinos,” said Tom Swoik, executive director of the Illinois Casino Gaming Association. “The market is oversaturated and revenues are just shifting from one spot to another.”

Admissions to the casinos, which the state also makes money from at $2 per visitor, are down nearly 6 percent this year. That drop cost the state almost $1.5 million in admission taxes.

Video gambling has been a boon for the state at the casinos' expense. The state's video gambling revenue rose by $44 million in 2017, a 17.5 percent increase over the previous year. At the same time, there was only a 12.5 percent increase in the number of video gambling terminals statewide.

Video gambling machines

When combined with receipts from the lottery and horse racing, the state's gambling revenues climbed 7.9 percent to $1.31 billion this year, according to the report.

The state's horse racing revenue was stagnant at $6 million this year, generated from just three remaining tracks in the state, including Arlington Park.

Lottery revenues remain the driver of the state's gambling receipts, accounting for more than half of all state dollars generated through wagering. The state collected $738 million from lottery-related sales this year, an 8.5 percent increase from 2016, according to the report.

But all eyes remain fixed on the growth of video gambling throughout the state.

Revenue from video gambling is split four ways among business owners, the state, local governments and the companies that actually own the machines, called terminal operators. Terminal operators and business owners each get 35 percent of all revenue, the state gets 25 percent, and the local government gets 5 percent.

While there is a limit to how many casinos operate in the state, video gambling terminals face fewer restrictions. Essentially, any business with a license to sell alcohol for on-site consumption in a town or county that allows video gambling can install up to five machines.

At the end of the 2017 fiscal year, there were 26,783 terminals in 6,124 establishments throughout the state. The most recent data from the Illinois Gaming Board - just three months later - showed there were 27,681 terminals in 6,249 businesses statewide.

Video gambling growth

Casino operators aren't the only ones concerned about the proliferation of video gambling.

“It's especially dangerous for those who are having problems with gambling, and it's very difficult for them to resist the temptation because it is so prevalent,” said Anita Bedell, executive director of the Illinois Church Action on Alcohol & Addiction Problems. “People who might have only gambled when they went to Las Vegas, all they have to do now is walk down the street.”

While the state gaming board fought a losing battle to keep the machines to just bars, service clubs or veterans halls, video gambling terminals are now in family restaurants and some grocery stores.

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