Legalizing online casinos in Illinois is one way the state could help eliminate projected budget deficits after pandemic-era rescue funds run out.
Though bills to make Illinois online casinos legal failed in the legislative session that just ended in Springfield, lawmakers may want to try again in 2024. As it stands, without the revenue from online casinos, Illinois is projected to post a $384 million deficit in 2025 that is expected to grow to $708 million by 2028. That’s according to Illinois Policy.
Without additional revenue, projections show Illinois will post a cumulative budget deficit of $2.3 billion from 2025 to 2028.
Propped up by American Rescue Plan Act, plus higher-than-expected revenue, Illinois is poised to post a budget surplus of $3.55 billion in 2023. In the fiscal year 2024, the emergency money will stop flowing and the total federal funds received by the state will decrease by $1.2 billion. Still, projections call for a budget surplus of $357 million in 2024.
After that, balancing the books will be more difficult without other revenue sources.
The same is true for a number of other states that will soon need additional revenue to make up for the loss of emergency pandemic funding, as covered by our colleague Heather Fletcher at Bonus.com.
Raising taxes isn’t the answer, Illinois already has the highest taxes in the nation
Illinois already has the highest combined state and local taxes in the United States, according to Illinois Policy. Those taxes alone amount to more than 15% of household income annually. Raising taxes further is not a great option.
But capturing a share of billions of dollars now being lost to illegal online gambling sites could help.
Illinois residents bet some $1.65 billion on illegal sites, money not captured by the state
PlayIllinois has estimated that residents of Illinois bet some $1.65 billion annually on illegal online casino sites. That amounts to about $660 million in lost revenue in Illinois alone.
Based on current taxation levels for Illinois sportsbooks of 16% of revenue, legalizing online casinos could net the state an additional $105.6 million in tax revenue annually.
Beyond helping fill the broader budget shortfall to come, PlayIllinois also previously made suggestions about how that money could be used to fund Governor J.B. Pritzker’s economic prioirties. These include:
- Decreasing Illinois’ massive pension debt of $140 billion.
- Increasing funding for child care.
- Providing free in-state college education for lower income families.
- Continuing down the path of fiscal prudence.
- Attracting big employers to Illinois.
Legalization best way to protect Illinoisans, increase responsible gambling
At the same time, the state would be better protecting its residents from being scammed by black market operators.
And, some of that money could be put toward enhanced problem gambling programs. As it stands now, all that money bet on illegal sites is being sucked out of Illinois.
Bottom line: regulating and taxing an activity that is already happening and can’t be easily stopped is always the better option. And the money could go toward improving life in Illinois.
Illinois budget deficits forecast ahead
In November of 2022, the Governor’s Office of Management and Budget released the Illinois Economic and Fiscal Policy Report. It projected the following:
- FY 2025 — $464 million deficit
- FY 2026 — $707 million deficit
- FY 2027 — $620 million deficit
- FY 2028 — $792 million deficit
At the same time, GOMB is projecting the money Illinois will earn from gaming and lottery is:
- FY 2023 — $157 million gaming / $665 million lottery
- FY 2024 — $200 million / $678 million
- FY 2025 — $230 million / $692 million
- FY 2026 — $255 million / $706 million
- FY 2027 — $270 million / $720 million
- FY 2028 — $270 million / $734 million
Clearly, legal online casinos in Illinois could help boost revenue and decrease deficits.
Further, regulated Illinois online casinos could help fund pensions, improve child care, help give lower income families access to free in-state college tuition and attract major employers to The Prairie State.
All while protecting Illinois consumers from the perils of an activity we know they are already engaged in en masse — illegal gambling.