Will gambling expansion really bring state $1 billion a year?

Some are skeptical of that figure after past predictions were wrong

  • Sports wagering is major component to a massive overhaul of the state's gambling laws that was passed by both chambers of the Illinois legislature over the weekend and awaits Gov. J.B. Pritzker's signature.

    Sports wagering is major component to a massive overhaul of the state's gambling laws that was passed by both chambers of the Illinois legislature over the weekend and awaits Gov. J.B. Pritzker's signature. Associated Press File Photo/2018

 
 

A wide array of expanded gambling options would increase gambling revenue by 70% in Illinois after years of relative stagnation, say supporters of the bill that passed during the weekend's overtime legislative session.

"Within the next six years, this is expected to generate an additional $1 billion a year," said state Sen. Terry Link of Indian Creek, a longtime backer of gambling growth.

But some government finance watchdogs are skeptical.

"This historic expansion of gambling received very limited vetting, and when considered in the context of past underperformance of such revenues, raises real questions about whether projected revenues will pan out," said Laurence Msall, president of the nonpartisan government research organization the Civic Federation.

Gambling revenue has fallen short of estimates in the past. For instance, the state had hoped privatizing the Illinois Lottery in 2010 would increase revenue, but the extra money never materialized and the state terminated a partnership with Northstar Lottery Group in 2015 due to "poor performance," according to an Illinois Commission of Government Forecasting and Accountability report.

Estimates for video gambling revenue also fell short of initial goals because some towns were slow to welcome it or never did allow it at all, including Chicago.

The commission originally estimated $345 million to $641 million in annual revenue from video gambling. Actual revenue hit $347 million in 2018, five years after the first terminals were installed.

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Illinois Department of Revenue and Illinois Gaming Board officials are still poring over the new 861-page bill to try to understand its effects on the state's financial and gambling landscape. Neither agency has released any statement regarding the changes and directed inquiries about it to the legislature.

Last year the state reported nearly $1.4 billion in gambling revenue from lottery sales, horse racing, casinos and video gambling. That's up 3.5% from 2017 but is less than what the state pulled in at its high water mark in 2006, when there was no video gambling and one fewer casino in the state.

The bill passed Sunday bill allows for sports betting, puts three more casinos in the Chicago area, grants slot machines for both O'Hare and Midway airports, adds slots and table games to horse-racing tracks like Arlington Park, and increases the number of video gambling machines allowed at bars and restaurants. A number of other nuanced changes to the state's gambling laws are expected to increase revenue for the state as well.

Arguably the biggest change to the state's gambling laws is allowing sports betting at casinos, horse-racing tracks and larger sporting venues with major league teams or professional car races. That means the United Center, Soldier Field, Wrigley Field, Guaranteed Rate Park, Chicagoland Speedway and World Wide Technology Raceway near St. Louis would all be eligible to open sportsbooks.

                                                                                                                                                                                                                       
 

The initial cost of a license is $10 million, with renewal every four years for $1 million. The state would also take 15% of revenue collected after winnings paid to wagerers. That rate is 17% for sportsbooks in Cook County, with the extra 2% going toward Cook County circuit court, state's attorney and public defender costs, said a spokesman for Cook County President Toni Preckwinkle.

Sports betting licenses for casinos and horse-race tracks would not exceed $10 million, but they could be lower depending on the size of the operation, according to the bill. The state would also issue sports betting licenses for three online operators, but those licenses would cost $20 million and would be selected from qualifying candidates by the state gaming board.

The additional three casinos authorized in the bill would be in Waukegan, Chicago and an as yet undetermined South suburb in Cook County. The legislation would allow the casinos to have 1,600 betting positions, up 400 from the state's current maximum. It would allow current casinos to increase their positions to as many as 2,000.

The bill also would allow video gambling operators to increase the number of terminals in a location to six from five, but the state would take an additional 3% cut. Another 1% would be added to the state share next year, according to the bill.

The state currently receives 25% of video gambling revenue from each terminal.

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