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As Illinois lawmakers resume debate over bills to legalize online casino games, the state’s gaming regulator has expressed its opposition to the latest measure, urging lawmakers to instead pass legislation targeting illegal gambling.
The Illinois Gaming Board (IGB) has recently commenced a crackdown on unlicensed online gaming operators by issuing ten cease-and-desist letters since February 3 to various offshore operators, including Bovada and BetOnline, as well as fantasy-sports operator PrizePicks.
Testifying before the Illinois House Gaming Committee last week, the IGB's director of policy said the board opposed pending legislation to authorize iGaming for three reasons.
“The IGB is opposed to House Bill 3080 for three reasons,” said Joe Miller, director of policy for the IGB.
Miller told lawmakers that the implementation of iGaming, or any significant gaming expansion, would not be possible at this time without the “canceling, pausing or delaying execution of many of key agency mandates and initiatives”.
Some of the IGB’s more pressing priorities, according to Miller, include the procurement and deployment of a comprehensive licensing, asset and case management system for casino gaming, video gaming terminals and sports betting, to replace more than 27 IT applications.
Miller also warned that House Bill 3080, which would authorize iGaming, “does not directly address illegal gambling, known as sweepstakes casinos”.
“Nor does the bill address the problem of unregulated sweepstakes machines … that copy legal, licensed slot machines and video gaming terminals,” he said.
Miller also stressed the need to focus on illegal online sweepstakes sites that mimic legal forms of gambling.
The IGB supports House Bill 2879, authored by Representative Robert Rita, a Democrat and House Deputy Majority Leader, which would amend the Illinois Criminal Code to expressly prohibit retail sweepstakes machines and online sweepstakes gambling.
“Simply legalizing iGaming in Illinois through HB 3080 without passage of HB 2879 will not eliminate deceptive and fraudulent sweepstakes operators from the Illinois gambling landscape,” Miller said at a March 12 committee hearing.
Miller also said the IGB had concerns with the proposed regulatory structure in the bill. Under HB 3080, the board would be required to adopt emergency rules within 90 days after they become law.
“They are inconsistent with established IGB regulatory protocols and standards,” he added. “They establish an enforcement regime that favors online gaming companies by limiting the IGB’s ability to effectively regulate internet gaming and protect Illinois patrons.”
Miller did not outline specific rules within HB 3080 that concerned the IGB, except to say the bill’s language could control the agency’s ability to adjust its regulations in the future.
“While our present opposition to iGaming during this session will not change, the IGB nonetheless is willing to work with (lawmakers) to explore potential solutions to our structural and regulatory concerns about HB 3080,” Miller said.
Although Illinois has become the second largest U.S. market for online sports betting, behind New York, iGaming remains illegal in the Prairie State.
Currently, there are two pieces of legislation being considered by lawmakers in Springfield. Representative Edgar González has authored HB 3080, while Senate Bill 1963 has been filed by Senator Cristina Castro. Both González and Castro are Democrats. As of Wednesday (March 19), Castro’s bill has not received a committee assignment.
Both bills are similar to previous iterations of iGaming bills filed over the last three legislative sessions. The bills would allow existing land-based casinos in Illinois to deploy up to three iGaming skins, with revenue subject to a tax rate of 25 percent.
During last week's committee hearing on HB 3080, it was apparent that stakeholders across the Illinois gaming industry are divided over iGaming.
Jay Keller, a lobbyist for Penn Entertainment, reminded lawmakers that the company has invested $600m in its three Illinois casinos in recent years with “the understanding that Illinois’ gaming landscape would remain stable.”
Keller admitted that the economic impact of iGaming was unclear, but there are potential negative consequences.
“The proliferation of online gaming could reduce in-parson casino traffic, threatening jobs, lowering economic benefits to local communities and ultimately discoursing future investment in the state,” Keller said.
Penn has been a video gaming terminal (VGT) route operator in Illinois for almost a decade after it acquired Prairie State Gaming in July 2015. The gaming company also operates retail and online sports betting, and it is redeveloping two of its three casinos in Aurora and Joliet, near Chicago.
More than 1,000 individuals registered their opposition to legal iGaming in advance of last week's committee hearing, largely representatives of bars and taverns that host VGTs.
Testifying in support were leading sports-betting operators plus casino operator Caesars.
“If you take one thing away … it should be this, whether or not you choose to pass legislation to legalize iGaming, it is already here,” said James Hartman, a lobbyist for FanDuel. “It is only untaxed and unregulated.”
Hartman estimated Illinois would generate $1bn annually in new tax revenue from legalizing iGaming. That estimate comes from a 2024 report commissioned by the Sports Betting Alliance (SBA), an industry trade association whose members include FanDuel, DraftKings, Fanatics Sportsbook and BetMGM.
“The proposed structure of HB 3080 is a tethered model, which has already been successful here for sports betting and iGaming in states like Michigan and New Jersey,” Hartman said. “All iGaming is linked to land-based casinos … table games with live dealers. This model works.”
Hartman dismissed concerns over cannibalization to brick-and-mortar casinos from iGaming, saying a “rising tide, raises all ships.” Anticipated growth for land-based operators from a legal iGaming market is $167m annually, he said.
VGTs can also expect an additional $332m over the initial five years associated with iGaming, Hartman told the House Gaming Committee.
“All land-based [gaming operators] have seen growth following the introduction of iGaming,” Hartmann added.
