Less than a year after the launch of sports betting, Illinois lawmakers are looking to shepherd an online casino bill through the state legislature. Cole Rush analyses the proposal and its scope for progressing into law.
When I say hills and valleys, I doubt Illinois is the first state that springs to mind. The Land of Lincoln is almost excruciatingly flat from a topography perspective. But when it comes to gambling, the state is essentially a roller coaster with more peaks and dips than your average Midwesterner can handle.
Through the past few years, Illinois has endured its fair share of gambling-related ups and downs. But today it would seem the Prairie State is on a distinct upswing. On the heels of a successful first year with legal online sports betting, Illinois lawmakers have introduced a bill that would bring online casino games to millions of players statewide.
Thanks in large part to a progressive Governor and a desire to amp up revenue in a perennially indebted state, Illinois is now poised to become a midwestern gambling hub with most forms of online gaming fully regulated. But unlike nearby Michigan, which authorized online casinos, sports betting, poker and DFS in one fell swoop, Illinois took a more piecemeal approach.
Illinois has settled into somewhat of a gambling groove, with new legislation emerging every few months to advance the state’s gaming-related prospects. Most recently, the state legislature introduced House Bill 3142, the Internet Gaming Act.
Illinois’ recent spurt of gambling growth precedes the Internet Gaming Act, however. An omnibus bill set the stage for the state’s expansion, which has kicked into high gear in the past three years.
The story so far
PASPA’s 2018 downfall is essentially the stuff of legend at this point, the single event that changed the US sports betting landscape forever. The cavalcade of state-specific legislation that followed is still rolling along, and Illinois hopped on the bandwagon a few years ago.
Before sports betting became a reality in the state, Illinois legislators were caught in a deadlock over the legality of daily fantasy sports operated by the likes of DraftKings and FanDuel. The attorney general at the time declared them gambling platforms, which in theory would make them illegal. But there was no formal law barring the operators from offering their platforms in the Land of Lincoln and DFS remained live in the state.
But once PASPA was declared unconstitutional, it felt as though a door had opened, and Illinois was all too happy, legislatively speaking, to walk through it. However, the pangs of the state’s DFS argument reverberated through the early stages of sports betting legislation.
The first versions of the law that would eventually legalize Illinois sports betting proposed an 18-month waiting period for DFS operators, giving new sportsbooks an edge.
That waiting period didn’t take shape as originally drafted, though Illinois’s biggest gaming expansion bill to date did require an 18-month waiting period for online-only operators to go live. That waiting period should end later this year, opening up new opportunities for operators to make their mark in the state without a land-based tether.
The very bill that included this stipulation also happens to be a historic milestone for The Prairie State. The law dictated a number of new gambling allowances for the state in one fell swoop.
Sports betting, of course, was one of the biggest. The legislation also paved the way for six new Illinois casinos, one of which will find its home in Chicago proper. Slot machines will also find their way to O’Hare and Midway airports, two major air travel hubs, as part of the bill.
Those casinos will pop up in due course as partnerships form, regulations come through, and construction begins. The more immediate effect was the introduction of sports betting. And 2020 brought significant success to Illinois in that regard.
In 2020, Illinois raked in $1.88bn in handle. Of that total, 95% came from mobile betting. The calendar year saw the launch of five online sportsbooks (Barstool joined the fray early in 2021) that collectively brought in more than $117m in revenue.
Online casinos naturally offer a boost to the state’s revenue. Should the current bill take effect, Illinois will have some friends in high places.
Michigan, which authorized online casinos to launch on January 22, 2021, saw more than $75 million in adjusted gross receipts during February alone. And that number doesn’t include the state’s sports betting platforms.
Michigan is already giving mainstays New Jersey and Pennsylvania a run for their money. With a successful head start in sports betting and online casinos next up to bat, Illinois could prove to be another major US contender when it comes to revenue.
The next frontier: Illinois online casinos
The Internet Gaming Act, if passed, would allow Illinois’ many land-based casinos (including those yet to be built) to apply for online casino licenses and build on the success of the state’s sports betting industry. Introduced by Representatives Robert Rita and Jonathan Carroll, the bill could prove to be a natural next step for Illinois in its ongoing gambling growth.
Illinois’ bill includes various stipulations that aren’t all that surprising. Many of the proposed rules match or at the very least reflect those carried out in states like New Jersey or Michigan, where online casinos are already legal.
The primary regulations proposed in the bill include three skins per license holder and a $500,000 license fee with a $250,000 renewal. There are two other license types that would be created under the bill, covered here.
One big win included in the bill is an allowance for Illinois to enter multi-state online poker agreements. Joining up with states like New Jersey, Michigan, Nevada and Pennsylvania would give Illinois online poker a huge boost, should the bill pass.
A fairly typical bill, all things considered. But it does include one unfortunate holdover from its sports betting legislation, a clause that still inexplicably impacts bettors in the state. Illinois in-person registration requirement rears its head in this bill, too. Thankfully, HB 3142 only necessitates in-person registration for six months.
But there’s some important context here. Illinois’ sports betting legislation required in-person registration at a partnered casino or racetrack partner before bettors could get in on the action.
For those bettors – many of whom would’ve had to travel many miles to reach an eligible property and only then be registered for the specific platform aligned with that property – the pandemic curbed this requirement.
Governor J.B. Pritzker renewed the suspension of this requirement for months on end by re-upping an executive order every month since August. Only in the past few weeks did the news break that Pritzker would not renew the executive order. As of April 4, 2021, in-person registration is once again a requirement in Illinois after bettors enjoyed a long stretch without it.
A glimmer of hope, though, as Illinois will eventually open the floodgates for online-only operators. At the same time, 18 months after the initial launch, online registration will become the status quo in the state. The online casino registration requirement, a mirrored-though-truncated-relic of its cousin legislation, seems like an unnecessary step on the road to online casinos in the Prairie State.
Still, the bill sets the stage for prosperous online gambling growth in Illinois. And many of the usual suspects are likely contenders to join the fray if and when the bill becomes law.
Mind the gap
Illinois is following in the footsteps of a few other states with regard to its gambling rollout.
Indiana had a head start on its next-door neighbor, launching online sportsbooks in late 2019.
The launch preceded Illinois’ by a few months. In January 2021, Indiana State Senator Jon Ford introduced Senate Bill 417, which would legalize online casino gaming in the Hoosier State. The state’s existing sports betting licenses wouldn’t carry over, requiring operators to go through a separate application process.
In short, Illinois isn’t alone in pushing for online casino games after first testing the waters via sports betting.
Pennsylvania, now the second largest online gambling market in the US (after New Jersey), launched sports betting in the summer of 2019. Online casino followed from July 2020. Now Pennsylvania is an online gambling mainstay that serves as a legislative and strategic example for other markets looking to legalize online gambling.
Thanks to example-setting markets with strong positioning in the US market, Illinois can feel confident knowing its strategy of sports betting first, online casino second could pay off big time. As the adage goes: slow and steady wins the race.
The natural next question, then: Who will be the first to market in Illinois once online casinos are authorized?
The first set of contenders comes in the form of the state’s existing online sportsbook platforms: DraftKings, FanDuel, BetRivers, William Hill, PointsBet and Barstool.
Of those, all are likely candidates to seek an online casino license. Given the state’s strong sports betting foundation and existing roster of operators, Illinois is prime real estate for online casinos, too.
BetRivers, the Rush Street Interactive outfit, has roots in Illinois thanks to a Chicago Corporate Headquarters. Richard Schwartz, President of Rush Street Interactive, is certainly excited about the possibility of online casinos coming to Illinois:
“Similar to the results experienced in the Pennsylvania and New Jersey online gaming markets in 2020, where over 70% of the taxes generated came from online casino verses less than 30% for online sports betting, we would expect the legalization of online casinos in Illinois to more than double the existing tax revenues generated from online sports wagering,” Schwartz explained.
“The data is clear that adding online casinos would offer a far more robust online revenue source to the state than online Sports betting only, while also providing players with greater variety and enhanced consumer protections. We look forward to working with the other stakeholders in the online gaming industry to bring this tremendous opportunity to Illinois.”
Beyond the state’s existing sportsbook operators, there are a handful of other big names that could make a move to launch online casinos in Illinois.
BetMGM is likely to nab a sports betting license with Par-A-Dice casino. The property is owned by Boyd Gaming, which already has a partnership in place with BetMGM. FanDuel previously had a license via Par-A-Dice, but the company has since transferred its Illinois license.
It now holds an Illinois registration through FanDuel Sportsbook And Horse Racing, rebranded from Fairmount Park Racetrack. This leaves the Par-A-Dice license up for grabs, and BetMGM seems the most likely taker.
Also almost certain to appear in the market is Golden Nugget Online Gaming. The online casino juggernaut is no stranger to launching in newly-regulated states. In fact, Golden Nugget is already getting its ducks in a row for an Illinois go-live.
The company has a deal in place with Wilmot Gaming Illinois. Golden Nugget and Wilmot have a joint agreement to build a casino in Danville, IL, pending regulatory and licensing approvals. Once construction is complete, there’s an easy in for an online license.
There’s no shortage of prospective operators, considering the impressive roster that’s already live and those waiting in the wings thanks to market access deals. A series of legislative moves and sports betting success made this all possible for Illinois, a state that’s now on the precipice of massive growth.
For now, it’s just a matter of tracking the Internet Gaming Act as it moves through the state’s legislative process. As it stands, Illinois is on the rise.