Total gambling revenue collected by the state of Illinois set an all-time record in the fiscal year 2022 which ended June 30. Illinois gaming revenue of nearly $1.9 billion easily surpassing the previous best of some $1.4 billion recorded in the Prairie State in 2019.
The information comes from the 102-page Wagering in Illinois 2022 report produced by the state’s Commission on Government Forecasting and Accountability.
The report said 2022 revenue from taxes and licensing fees was up 38.8% over 2021 due to two main factors:
- Recovery of gaming revenues following the most challenging years of the COVID-19 pandemic.
- Gambling expansion in the state that came into law in June 2019. Most notably, it authorized Illinois sports betting, the addition of six land-based casinos in the state (including a major site in Chicago) and an increase in the number of video gaming terminals.
The report said:
“State designated tax revenues from overall gaming in Illinois fell 11.7% in FY 2020 to $1.240 billion. Although these tax revenues rebounded with a 9.5% increase to $1.358 billion in FY 2021, this total was still short of the $1.404 billion generated in FY 2019 before the pandemic.”
In FY 2022, Illinois set revenue records for:
- Lottery: $833 million
- Video gaming: $762 million
- Sports betting: $142 million
Illinois sports betting a new revenue source for the state
Illinois sportsbooks had adjusted gross receipts of some $611 million in the second full year sports betting has been legal in Illinois. Licensing fees provided additional revenue. The report said:
“The authorization of sports wagering in Illinois has created another revenue source for the State of Illinois. After generating $57 million in tax revenues in FY 2021 from its $380 million adjusted gross receipts total, sports wagering’s tax total rose to approximately $92 million in FY 2022 stemming from the 15% tax on its AGR total of a little over $610 million. Additional revenues are received from license fees. The vast majority of these tax revenues and fees are earmarked for the Capital Projects Fund and the Rebuild Illinois Projects Fund.”
Statistics on Illinois sports wagering
Statistics are by fiscal year and in millions of dollars.
|Fiscal Year||Wagers||Handle||Payout||Adjusted Gross Revenue||Tax Revenue|
The growth of IL sports betting owes much to the decision to scrap in-person sportsbook registration.
“This has allowed new bettors to enter the sports wagering foray, mostly as mobile customers through sportsbook applications.”
Apart from the 15% rate rate, state revenue from sports betting licensing fees was:
- $7.1 million in 2020
- $61.8 million in 2021 in conjunction with the growth of sports wagering across the State.
- $14.3 million in 2022.
The decline from 2021 to 2022 was expected after the initial surge of new licenses in 2021,
“However, the issuance of additional licenses, as well as renewal fees (every 4 years) should result in a steady flow of revenues from fees in the years to come.”
The state has collected over $83 million in licensing fees, total, from sports betting.
Record revenue despite lower average tax rates
Revenue records came despite lower tax rates and lower casino revenue. One of the main reasons for the revenue increase is strong growth in the areas mentioned above: lottery, video gaming and sports betting. The report said:
“In FY 2022, lottery transfers remained the largest generator of gaming tax revenues, comprising 44.2% of the revenue total. However, this percentage has steadily declined from a recent high-mark of 67.8% in FY 2013. Video gaming revenue’s composition has increased significantly over the last decade and now represents 40.4% of the revenue total. Casino transfers, which comprised over 50% of gaming related revenues just a decade ago, have fallen to 7.4% in FY 2022. In just its second full year, sports wagering has quickly increased its composition to 7.5%. Horse racing revenues continued to comprise a relatively insignificant 0.4%.”
Video gaming revenue has grown thanks to a steady increase in the number of machines. In 2019, the state allowed a terminal limit increase from 5 to 6 machines at regular establishments and from 5 to 10 terminals at qualifying truck stops. The number of machines in Illinois now exceeds 43,000. That has helped drive a 36.1% increase in net terminal income from 2021 to 2022.
But it has come at the cost of casino revenue which is down 20.3% between this year and last.
“However, when combined with video gaming totals, revenues have increased 140.2% from $1.6 billion to $3.9 billion.”
What are the tax rates?
As for the average effective tax rate on all gaming, it fell from 27.3% in 2020 to 20.1% in 2022.
“This has resulted in fewer revenues being transferred to the Education Assistance Fund ($140 million in FY 2022) than in years past. Even with the expected increase in AGR (Adjusted Gross Revenue) over the next few years from the development of new casinos, the overall value of tax revenue growth from gaming expansion will likely be modest at best when accounting for the cannibalization on existing gaming options and the adverse effect of the modified tax structure on revenues.”
Illinois sportsbooks have a tax rate of 15%.
Casinos are taxed on a graduated scale depending on whether the gaming was done at a table game or on an electronic gaming device. The rates are as follows (the Chicago casino will have different percentages):
|Adjusted Gross Receipts||Previous Rate||New Rate on Table Games||New Rate on Electronic Gaming Devices|
|Up to $25 million||15%||15%||15%|
|$25M to $50M||22.5%||20%||22.5%|
|$50M to $75M||27.5%||20%||27.5%|
|$75M to $100M||32.5%||20%||32.5%|
|$100M to $150M||37.5%||20%||37.5%|
|$150M to $200M||45%||20%||45%|
The tax on video gaming is 34% of net terminal income. That’s up from 30% prior to 2019 and 33% from 2019 through 2021 when the current rate came into effect.
“These rate increases, along with the significant growth in net terminal income, is why the State share of tax revenues (to the Capital Projects Fund) is shown to grow significantly.”
The lottery in Illinois saw total sales decline slightly in 2022 to $3.396 billion (down 1.6% from 2021). Based on “preliminary, unaudited data from the Lottery,” operating expenses — including prizes awarded to winners, commissions and bonuses paid to retailers, and general and administrative expenses — totaled $2.563 billion.
That’s how the state came out with $833 million in lottery revenue alone.
Illinois ranks 12th in the US in lottery
Not all national statistics were available by Illinois’ fiscal year-end. But, based on data from the North American Association of State and Provincial Lotteries, in both FY 2021 and 2020, Illinois had the 12th largest lottery in the U.S. based on total traditional lottery sales. Traditional lottery sales include instant and draw games but exclude electric gaming machines and table games.
The largest lottery states in the nation in 2021 by sales were:
- Florida — $9.1 billion
- California — $8.4 billion
- Texas — $8.1 billion
- New York — $7.7 billion
Illinois ranked 21st in per capita lottery sales in 2021 ($272 per person), which was 21% higher than the previous year. The highest states by per capita sales were:
- Massachusetts — $833 per person
- Georgia — $544
- Michigan — $502
Illinois residents spent some 0.41% of their personal income on lottery tickets in 2021. This was up from 0.35% in 2020. Overall, Illinois ranked 24th in this category in both 2020 and 2021.
Where the tax revenue goes
Where does all this money go? Here’s a brief breakdown:
- Lottery: Common School Fund, the Capital Projects Fund, or special cause funds after the payment of prizes, agent commissions, and administrative costs. Since its inception in 1975, lottery sales have totaled almost $80 billion and transferred over $24 billion back to the State.
- Sports betting: Capital Projects Fund and Rebuild Illinois Projects Fund.
- Video gaming: 85% to Capital Projects Fund, 15% to local governments.
- Casinos: Education Assistance Fund.