The 2023 Illinois Legislative Session has come and gone. Once again, lawmakers were unable to pass legislation that would legalize online casinos in The Prairie State. While that is disappointing news to some, it does give advocates more time to create arguments for why bringing online casinos to Illinois will be a good thing. However, it also gives opponents more time to develop counter-arguments.
Legalization of online casinos is an issue that nearby Michigan is no longer dealing with. The state right across Lake Michigan made online casinos legal in January 2021. There are 15 online casino sites live in the state, and more are still to come. There are some pros and cons regarding online casinos in Michigan that lawmakers in the Prairie State can keep an eye on when the Illinois online casino conversation inevitably continues during the next Legislative Session.
Pro: Illinois online casinos would bring in much-needed revenue
At the end of the day, the question everyone really wants answered is: will online casinos in Illinois be profitable? If you use Michigan as a case study, the answer to that question would be “yes.”
The Michigan online casino market is one of the most successful and lucrative in the country. Since the January 2021 launch, Michigan’s online casino revenue, which includes the state tax revenue collected, is nearing $1 billion.
The money could be very handy for a variety of Illinois improvement projects.
And the amount online casinos are bringing in is growing in Michigan. The state’s online casinos are on pace to provide a record amount of tax revenue in 2023.
Based on the first quarter of 2023, PlayMichigan projected, “the 15 online casinos in Michigan will collectively produce nearly $368 million in tax revenue this year alone. That would be a 27% increase from last year’s number, and well ahead of what online sports betting and casinos combined to pay in 2022.”
Across the country, the tax and payment rates for internet gaming range from about 20% to 28%, depending on how much money a casino generates from online gambling. So, in the end, it would be up to state lawmakers and the Illinois Gaming Board to find a way to ensure residents are getting the most bang for their buck.
Illinois losing as much as $660 million in annual revenue from residents betting illegally
Perhaps the biggest argument for legal Illinois online casinos is the fact that residents of the Prairie State are already gambling serious money on illegal, unregulated sites.
A PlayIllinois analysis of numbers produced by the American Gaming Association suggest Illinoisans could be gambling as much as $1.65 billion annually with illegal online casinos. That amounts to some $660 million in lost revenue.
First, that is a lot of money leaving the state where, instead, it could be put to good use improving the lives of people in Illinois.
Second, gambling illegally leaves Illinoisans vulnerable to scams in a system lacking consumer protections.
Failing to legalize online casinos in Illinois does not stop the activity in the state. It just continues illegally.
That was one of Michigan’s reasons for legalization.
Con: Michigan online casinos launched at the same time as online sports betting
On the surface, tying the launch of online casinos to sportsbooks should be a positive. However, there could be more complications here because of what is currently happening within the Illinois online sports betting market.
Michigan launched both online casinos and online sports betting at the same time. This allowed operators like DraftKings and BetMGM to do everything all a once.
While the transition, on paper, should not be a problem for the operators, it may become an issue for state regulators. Supporters will not be able to look to Michigan as an example for how to add online casinos to an existing online sports betting market because they never had to worry about that process.
One thing that makes Michigan’s system work is how much the local Native American tribes are involved, which is not how things work in Illinois.
Michigan’s online casino launch was a long collaboration
According to PlayMichigan, State Lawmakers legalized online gambling, sports betting, fantasy sports and online poker in Michigan in December 2019. Operators did not launch legal gambling sites in the state until over one year later.
Michigan was one of the first states to build a framework for online gaming and sports betting that incorporates both commercial and tribal casinos. Under state law, only licensed casinos in Michigan, the 24 tribal casinos and three Detroit casinos, are allowed to offer online gaming and sports betting options.
Currently, only two casinos in Illinois have ties to Native American tribes. The Seminole Indian Tribe of Florida owns the Hard Rock Casino in Rockford. A temporary location is up and running, while the main venue is still under construction. Meanwhile, the Wind Creek Chicago Southland in the Homewood/East Hazel Crest area, expected to open in 2024, is owned by the Poarch Band of Creek Indians in Alabama. These two casinos operate as commercial casinos under Illinois laws rather than as Indian gaming casinos under federal regulation.
This can be considered a pro and a con, depending on how you view it. On the one hand, Michigan has developed a working relationship with the tribes to launch online casinos in the state. However, on the flip side, sometimes those working relationships hit snags, resulting in issues moving forward.
Other vital takeaways Illinois can learn from Michigan
Online gambling is becoming more and more popular across the country. Online casinos are likely to become legal in Illinois sooner rather than later. Michigan’s process didn’t happen overnight. So what other things can Illinois look to Michigan for as an example?
One thing is that Michigan has a comprehensive set of rules and regulations for operators and players. Legal online casinos in Michigan clearly state on their apps and websites that the Michigan Gaming Control Board regulates them. They must also partner with one of the state’s casino operators. Meanwhile, customers must submit to geolocation verification to prove they are in Michigan before they can bet.
Illinois already has some of the necessary framework within the state’s rules and regulations for online sports betting. While it is true that none of the online casino bills could pass through the Illinois Legislature, there are some positives to take away. First, online casinos were talked about by lawmakers. That means we can expect to see similar legislation again next year. Secondly, supporters can do more research and point to how well online casinos are working in other states. And Michigan will be a great example to use in that argument.