What Does A Post-Pandemic Future Look Like For Illinois Casinos?

Posted on April 23, 2020

The coronavirus outbreak could not have come at a worse time for Illinois casinos, which were already struggling.

The outbreak coincided with the state’s launch of its nascent sports gambling industry, a development eagerly anticipated by casinos – seen in the money they invested in preparation of its kickoff – and residents across the state.

State officials, meanwhile, were looking forward to the millions in tax revenue expected to be generated by new sportsbooks. One firm, Global Market Advisors, had said the state could generate nearly as much in sports wagers as Nevada by 2023, roughly $5.2 billion.

 

COVID-19 puts plans on hold

Unfortunately, COVID-19 put a hold on those forecasts, stopping a long-awaited industry in its tracks and stamping out what was likely to be a fast start for casinos relying heavily on March Madness (canceled) and the NBA playoffs (delayed, at least).

But there’s more than sports gambling to the post-pandemic future of Illinois casinos, a group already juggling a cohort of existing challenges.

 

Even before virus, casinos in need of boost

Illinois had its own share of casino-related concerns even before the coronavirus turned the entire gaming industry on its head.

The Chicago Sun-Times reported in February that total revenue from Illinois’ 10 casinos dropped in 2019, for the seventh consecutive year. For every revenue dip, the state collects less in tax dollars.

The paper noted that in 2019 casinos generated $1.35 billion in revenue. While the total marked only a modest 1.5% decline from 2018, the downward trend has led to a severe drop of more than 17 percent since the last year casinos generated revenue growth, in 2012.

Despite that, the state – led by Gov. J.B. Pritzker – and gambling expansion legislation he signed into law last year, will likely add six new casinos to the state along with slot machines and table games at what will become known as “racinos.”

The plan has been met with skepticism, including from a state commission that says the state could see the problem of falling revenues “exacerbated” in coming years, especially in a market expected to become increasingly saturated.

“It is expected that cannibalization at existing Illinois casinos is inevitable, especially those in the Chicago metropolitan area where the majority of the gaming expansion will take place,” noted the bipartisan Commission on Government Forecasting and Accountability in 2019.

“The extent that revenues from these locations will suffer remains in question. Some would argue that many portions of this metro area are already near saturation, even without gaming expansion.”

It’s an issue that in many ways could help define a post-pandemic Illinois and its gambling industry. A continued decline in revenues will portend bad news for a state in need of a strong economic bounceback, while a thriving casino base would mean residents have returned to their pre-virus lives with gusto.

 

Video gaming will be at center of future

Despite the overall casino issues, continuous increase in the playing of video gambling machines generated more than $500 million in taxes, something the governor and his allies have pointed to with optimism when discussing his enormous gambling expansion package.

That package, noted the Chicago Sun-Times, also bumps the allowed amount of video gaming terminals in each casino from five to six.

Still, the commission report noted that “a major contributing factor to this falloff is the increased competition resulting from the growth of video gaming.”

Experts, then, have cited the growth of video gaming as one reason why Chicago officials have continued the fight to open a casino within city limits. Video gaming, notably, is illegal in Chicago.

“Regardless of the recent trends, a viable Chicago casino will pave the way to new dedicated revenues that we previously didn’t have allowing us to direct much needed resources toward the city’s underfunded police and fire pensions and the state’s vertical capital plan,” Lauren Huffman, a spokeswoman for Chicago Mayor Lori Lightfoot, said.

Even if it’s not in Chicago, though, video gambling is likely to play a large role during at least the first few phases of casino re-openings.

With a disease passed through close human contact, the option of sitting down to a machine – which can also be disinfected by casino employees – is likely to be attractive to many, including gamblers trying to avoid the virus and casinos looking to avoid becoming new epicenters.

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