Gamblers' sports betting losses generate $122 million for Illinois in two years

Since Illinois sportsbooks began taking bets in March 2020, gamblers have lost more than $812 million wagering on various games, matches, tournaments and races.

But the misfortunes of those gamblers have translated into a $122 million windfall for Illinois, according to Illinois Gaming Board records from March 2020 through March 2022.

“And the casinos that have an affiliation with sports gambling as part of their business are doing well and seeing a lot of additional foot traffic,” said Tom Thanas, executive director of the Illinois Casino Gaming Association. “That obviously translates into some folks staying and enjoying table games or slot machines.”

Gov. J.B. Pritzker, who championed gambling expansion in 2019, said the state has also received $81 million in “licensing and application fees” from sportsbook operators.

Illinois has nine sportsbook operations — seven at casinos and two at horse-racing tracks. Combined, they were the second-most lucrative sports betting operations in 2021 among the more than 30 states that allow sports wagering, according to an annual report published this month by the American Gaming Association.

Illinois sportsbooks took in a combined $524.8 million in winnings in 2021, 15% of which went to the state's capital projects fund. Only New Jersey's sportsbooks collected more revenue last year, the report states.

New Jersey has 21 sportsbooks that generated an average of $35.3 million each last year. Illinois' nine sportsbooks generated an average of $58.3 million each, and some weren't even operational the entire year. The national lobbying group's report does not track tax revenue generated by sports betting in each state.

Among suburban sportsbooks, Rivers Casino in Des Plaines has handled nearly 40 million bets since it began operating. The sportsbook at Elgin's Grand Victoria Casino has taken more than 1.5 million bets. At Hollywood Casino in Aurora, nearly 12 million sports wagers have been placed since the sportsbook opened there.

Over the past 12 months, Illinois sportsbooks have averaged roughly $7 million a month in tax revenue for the state. The state's best month was November 2021 when it took in almost $12 million for sports gamblers.

Illinois' booming sportsbook operation is not a surprise to many gambling industry experts.

“If you were to fast-forward 20 years, the largest sportsbook markets in the U.S. will largely correlate with the largest states in the country,” said Chris Grove, partner emeritus at Eilers & Krejcik Gaming, a California-based gambling research and consulting firm. “And Illinois is already up there in terms of size.”

But it has also helped that neighboring states have dragged their feet adopting sports wagering laws. The two most profitable sportsbooks in Illinois are run through the Casino Queen in East St. Louis and Fairmount Park in Collinsville, both right across the Mississippi River from Missouri, where sports wagering at casinos is still illegal.

More than 68% of the more than 308 million sports wagers in Illinois since March 2020 were at those two locations, and the lion's share of those bets were made online, state gambling records show.

Illinois loosened online sports betting laws shortly after the pandemic took hold, allowing bettors to sign up from anywhere in the state instead of at the physical sportsbook. Even though gamblers couldn't make it into a casino anymore because of COVID-19, they could still place bets, which allowed the sportsbooks to make money as well as the state.

Those physical signup requirements have since been reinforced, though.

Grove said Illinois has found a “sweet spot” with its 15% tax on sportsbooks' profits.

“You've got a tax rate and license fee structure that makes operators believe they can make a profit long term,” he said.

However, state officials acknowledge the volatility of gambling revenue and warn against placing too much faith in the growth of sports wagering.

In its annual report on gambling in Illinois, the state legislature's Commission on Government Forecasting and Accountability warned of future uncertainties.

“This includes the lack or delayed participation levels of potential sports wagering establishments, the lasting effects of the COVID-19 virus, and the competitiveness of sports wagering in comparison to the abundance of gaming options that now and will exist in and around Illinois' borders,” the report stated. “As a result, any expectation of the tax revenue potential of sports betting in Illinois should be met with restraint until the numbers prove otherwise.”

And legislators don't expect to earmark the funds with any more specificity than the capital projects fund that already benefits from sports betting.

“It shouldn't be something that's depended on,” said Democratic state Rep. Stephanie Kifowit of Aurora, a member of the House Revenue and Finance Committee. “If anything, I'd like to see any surplus revenue go into the school funding formula, but it can't go into the general fund because it's not a stable source.”

Ralph Martire, executive director of the bipartisan Center for Tax and Budget Accountability, said there are other risks to state budgets when legislatures allow more gambling opportunities such as sports wagering.

“It's a highly regressive tax for one that affects the poor more, and No. 2 it tends to be a substitute to purchasing,” he said. “Money that people wager is money they're not spending on groceries or getting the car fixed.”

Sports gamblers lost money on almost every category of sports, some at much higher levels than others.

Gamblers lost just 4% of the money they bet on basketball from March 2020 to March 2022, records show. But they lost 20.1% of the money they bet on motor racing. Yet the losses on motor racing were just barely more than $2 million during that time.

Basketball is the most popular sport to bet on in Illinois sportsbooks. The losses gamblers took on basketball bets were more than $133 million.

The Illinois Gaming Board allowed some sportsbooks to take bets on international sporting events or leagues, and gamblers came in ahead in only that category, according to the state agency's report.

Illinois gamblers also love a parlay, according to gaming board records.

More than 37.3 million parlay wagers — multiple bets tied into a single wager that increases a bettor's payout — were made over the first two years of Illinois' sportsbooks' operations. Gamblers lost nearly $400 million on parlays, more than 16% of what they bet, records show.