Illinois Pushes for Online Casino Legalization

Illinois lawmakers have introduced new bills to legalize online casino gaming, joining the growing list of states considering iGaming legislation. The proposed measures include key changes from previous attempts.

Key Takeaways:

• Illinois legislators file companion bills to legalize online casino gaming
• Proposed tax rate increased from 15% to 25% compared to previous bills
• Bills allow up to 3 branded iGaming skins per license holder

Illinois has once again entered the arena of online casino legalization as Senator Cristina Castro and Representative Edgar Gonzalez filed companion bills in the state's General Assembly on February 7. This marks the second consecutive session where these lawmakers have pushed for iGaming legislation, following unsuccessful attempts in the 2023-24 general assembly.

The Illinois market presents unique challenges for online casino expansion. In recent years, the state has added six new brick-and-mortar casinos, including four permanent and two temporary locations. Additionally, Illinois boasts the most extensive legal video gaming terminal (VGT) network in the United States, with nearly 8,700 licensees operating over 48,700 terminals.

One of the most significant changes in the new bills (SB 1963 and HB 3080) is the proposed tax rate increase from 15% to 25%. Both Castro and Gonzalez have maintained language allowing licensees to operate up to 'three individually branded Internet gaming skins,' differing from the single-skin limitation for sports wagering licensees.

The bills also include a provision preventing the Illinois Gaming Board from issuing an internet gaming license to operators that have reduced their workforce by 25% or more since February 28, 2020. This clause could potentially face opposition, particularly from VGT proponents, as the definition of 'workforce' for a licensee remains unspecified.

Illinois' gambling landscape is diverse, with VGTs generating the largest share of gaming tax revenue. In the 2024 calendar year, VGTs contributed $884.2 million in state receipts and an additional $152.4 million for local municipalities. The state's 16 casinos generated $345.2 million in state tax revenue, while sports betting receipts totaled $244.2 million through November.

As the second-largest sports betting market in the country, Illinois recently implemented a progressive tax structure for sports wagering. Starting July 1, 2025, the tax will range from 20% to 40%, replacing the current flat 15% rate.

The introduction of these bills signals Illinois' continued interest in expanding its online gambling offerings. However, the path to legalization remains complex, given the state's existing gambling infrastructure and the potential impact on various stakeholders in the industry.