In Illinois, a possible conflict is brewing between tavern and restaurant owners who operate video game terminals and casinos and racinos pushing for legislation that would allow them to offer online gambling.
At a recent hearing of the General Assembly’s Executive Committee, chaired by state Rep. Bob Rita, sponsor of the iGaming legislation, state Rep. Daniel Didech said legal online gaming would counteract illegal offshore betting operators who “pay no taxes, create no jobs and are a significant drain on the Illinois economy. Legal iGaming would allow the state to regulate game integrity and crowd out predatory companies” by creating a safe environment for players and helping problem gamblers.
Didech added legal online gambling would produce an estimated $100 million in annual tax revenue to support the “many priority initiatives of members of the General Assembly.”
Penn National Gaming Vice President of Strategic Financial Planning Jeff Kaplan addressed concerns that online gambling might cannibalize revenue from brick-and-mortar casinos. He stated, “Prior to the pandemic, we performed an analysis of our customers to determine if there was any cannibalization to our brick-and-mortar revenue and what we found was iGaming was almost entirely complementary to our brick-and-mortar play. In addition, we attracted a different type of customer online as our online database averages 10 years younger than our brick-and-mortar players. Due to these factors, we believe iGaming will grow the gaming marketplace and allow us to connect to a new type of player that we may not have previously attracted to our properties,” including three of Illinois’s 10 land-based casinos—Hollywood Aurora, Hollywood Joliet and Argosy Alton.
Kaplan noted online players are attracted “back to the casino” since they’re in the company’s database and earn rewards points for their play that they can redeem for food and other services at the brick-and-mortar venues.
At a separate panel that addressed VGT issues, state Rep. Tim Butler pointed out how the statewide growth in VGTs over the past decade benefited “mom and pop businesses that are not casinos and that depend on revenue from VGTs.” He added the current partnership that provides tax revenue to local communities is a “unique combination.”
Also speaking against online gambling, Illinois Licensed Beverage Association Executive Director Dan Klossner suggested internet gaming could deter customers from returning to bars, restaurants and taverns where VGTs are located, as more of the public are getting vaccinated. He called the situation “FOGO,” or “fear of going out.”
The Video Gaming Act was signed in 2009; the expanded gambling bill of 2019 also allowed bars, restaurants and taverns to install a sixth game, and permitted truck stops to offer more machines. Today about 39,000 VGTs are in operation throughout the state; since March 2020, when sports betting launched at casinos, VGTs have generated nearly $455 million in tax revenue, including $388 million to the state, from more than $1.3 billion in operator revenue−including four months of shutdowns due to Covid-19. In comparison, casinos have generated $577.2 million in revenue, including more than $103 million to the state; sports betting raised an additional $31 million from $208.8 million.
