One version of the bill would include land-based Chicago area casinos alongside online gambling and sports betting.
Illinois state lawmakers may legalize online gambling and sports betting in 2019. State Rep. Lou Lang (D-Skokie) has taken the lead among Illinois lawmakers who back gambling expansion in the state.
Draft legislation is in its early stages. Lou Lang said a number of options are being considering, including an expansion of video slots, horse racing, and casinos in the Chicago metropolitan area.
Fantasy sports legalization, including daily fantasy sports, is on the table.
Rep. Lang said that the latest gaming technologies have to be studied, while state legislators have to consider whether a form of gambling is legal under federal law.
Possible inadvertant violations of the Wire Act have to be considered, said Lang.
Lou Lang on Federal Wire Act
The Wire Act bans interstate sports betting, though in-state sports bets are legal. As the NSA email monitoring story underscored, telecommunications often travels from one state to the next — or even out of the country — due to the nature of the Worldwide Web.
Lang said Illinois, if it allows online casinos, poker sites, and sportsbooks, must assure it has the technological capability to wall off its betting. He added, “You cannot transmit the types of info that involves sports betting across state lines over a wire.”
The longtime lawmaker, who has served as a state representative since 1987, looked forward to a time when the ban on interstate sports betting is repealed. If it ever happens, speculated Lang, Illinois could become a hub for sports betting.
Jim Pala on Unregulated Illinois Online Casinos
At a recent legislative meeting in Springfield, Pala Interactive CEO Jim Ryan said he had logged in to an illegal online casino the night before the hearing. To make a point, Mr. Ryan said he had made an illegal bet at the unlicensed offshore online casino.
Jim Ryan said, after doing so, he realized that he had no assurances his credit card information and personal details were secure. Ryan wanted to underscore that unregulated online gambling does not have consumer protections or responsible gaming measures, though well-designed regulated gaming markets do.
The Pala Interactive executive showed those in attendance the stark difference in a regulated and unregulated market. Regulated gaming protects the citizens of Illinois, while unregulated gaming leave them operating in a shadow economy.
Lou Lang on Online Gambling Legislation
Rep. Lou Lang attended the same hearing in Springfield. Lang said that the state should keep taxes on new forms of gaming low. He also called for proper deliberations on the draft legislation.
Lang said flawed legislation with unfair rules “will drive people out of the market and it will hurt the bottom line for the state”.
The state rep estimated that legal online gambling would generate $50 million to $300 million a year in tax revenues, depending on the types of gambling allowed and the tax rates. Rep. Lang did not state what he thought the tax revenues should be used to fund, but he did say the state could use the extra funding.
Raising Tax Revenue without Property Tax Increases
One reason departing Gov. Bruce Rauner (R) won election to the office in 2014 was the high tax rate on Illinois property taxes. Gov. Rauner’s budgets led to several funding showdowns with the Democrat-controlled legislature. Those showdowns included three years without a budget agreement, which led to a debt crisis and threats of a credit rating downgrade for the state government.
Gov. Rauner lost his reelection bid to J.B. Pritzker (D) in part because of his inability to solve the state’s budget crisis without raising taxes. Governor-elect Pritzker will face the same problem, as the Illinois electorate has signaled in recent years it does not want higher taxes.
Expanded gambling could help solve the budget shortfall, as it did in Pennsylvania last year. While the $300 million figure mentioned by Lou Lang is only a fraction of the yearly budget shortfall, it is a significant fraction. In a state where raising property taxes again might be a political disaster, generating revenues from an indirect tax makes more sense.
2019 Illinois Gambling Bill
With that in mind, Illinois lawmakers could legalize a wide range of gaming types: online casinos, online poker, sports betting, daily fantasy sports, new forms of racetrack betting (virtual races), more slots or VLTs, and land-based casinos in the Chigago area. Each would contribute tax revenues to help make up the difference.
Rep. Lou Lang said a package of gaming laws might be attached to an omnibus spending bill in 2019. Lawmakers in Pennsylvania took the exact same approach to funding in 2017.
While no two states have the same challenges, Illinois officials who study the problem are likely to confer with other officials who have launched online gambling and sports betting. Thus, you’ll see Illinois lawmakers and office holders talking to the New Jersey Division of Gaming Enforcement and the Pennsylvania Gaming Control Board about their experiences rolling out online gambling.
Illinois Officials Talk with DGE, PGCB
Illinois officials also might talk to Nevada or New Jersey sportsbook operators. In some cases, of course, Illinois gaming operators have experience with online gambling. For instance, Rush Street Gaming is an Illinois-based gaming company, but it’s SugarHouse Casino has had success in the New Jersey online casino market and the Pennsylvania land-based casino niche.
