Gnashing Of Teeth Continues As U.S. iGaming Drought Persists

May 17, 2023
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After going almost two full years without adding a new state to the six already offering online casino gaming, industry executives hoping for a last-ditch effort to succeed in Illinois have become rather obsessive about ending the drought.

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After going almost two full years without adding a new state to the six already offering online casino gaming, industry executives hoping for a last-ditch effort to succeed in Illinois have become rather obsessive about ending the drought.

The outlook is bearish as Illinois is preparing to end this year’s legislative session on Friday (May 19) without moving to expand the second largest online sports-betting market in the U.S. to include more lucrative online casino games.

During last week’s SBC Summit North America in New Jersey, BetMGM CEO Adam Greenblatt was among executives who hinted there might be a last-minute lobbying offensive this week for internet gaming in Illinois.

A larger than anticipated budget shortfall may provide a window of opportunity to offer internet gaming as a revenue source.

Proponents of internet gaming also hope to mitigate cannibalization concerns emanating from Illinois’ video gaming terminal (VGT) industry by restricting iGaming to table games such as blackjack but not allowing online slot games, according to sources.

Martin Lycka of BetMGM co-owner Entain weighed in on Tuesday saying he strongly believes there is still hope for internet gaming legislation in Illinois this year.

“And if not this year, then next year,” said Lycka, who is senior vice president for American regulatory affairs and responsible gaming at Entain.

“What I would add is that the U.S. as well as other jurisdictions around the world that have retail gaming and regulated iGaming are living proof of the fact that there’s been no cannibalization.”

Instead, Lycka told VIXIO GamblingCompliance in an email that iGaming regulation typically creates new opportunities for retail operators.

However, the most pertinent assessment of the Illinois situation may have been the deafening silence coming from Ivan Fernandez, the executive director of the Illinois Gaming Machine Operators Association that represents VGT interests in the state.

Since launching in 2012, VGTs have come to dominate the Illinois gaming market, producing $2.71bn in gross revenue and $921m in tax revenue last year.

There simply is no room for internet gaming in Illinois given the impact online casino games would have on VGTs and the bars and restaurants that host them, according to Fernandez, who did not respond to requests for comment on the latest rumblings of an effort to authorize iGaming in the state.

Meanwhile, the Illinois Gaming Board (IGB), which regulates casinos, sports betting and VGTs, does not seem eager to engage in a debate about gambling online.

“We have not taken a position on internet gambling,” Beth Kaufman, director of communications, told VIXIO GamblingCompliance in an email.

“There were a couple of iGaming bills that the IGB opposed in the General Assembly due to administrative issues the agency would be tasked with to implement iGaming,” Kaufman said.

Cory Aronovitz, a gaming attorney with the Casino Law Group in Chicago, said he does not think the legislature in the state capital of Springfield is prone to doing anything to disrupt the status quo on gambling in what remains of the 2023 regular session.

“If anything comes through, it is more likely than not it will be a limited technical clean-up to specifically address an existing casino matter,” Aronovitz said.

Connecticut was the last state to legalize internet gaming in May 2021.

The other five iGaming states are Delaware, New Jersey, Pennsylvania, West Virginia and Michigan, while Nevada offers interactive gaming limited to poker games.

John Pappas, a seasoned online gaming lobbyist in Washington, D.C., said he does not think iGaming in Illinois “is realistic in the short term.”

“The rapid expansion of sports betting to almost 40 states in the last five years added pressure to expand internet gambling in a similar manner but there’s a big difference between those two verticals,” said Pappas, founder of Corridor Consulting and senior vice president of public affairs for GeoComply.

“Sports betting is easier for state lawmakers to understand than internet gambling. Once they approve sports betting, legislators tend to think of internet gambling as additive rather than complementary of the gambling product they already have.”

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