Illinois and its neighbors are set to be transformed By Ken Adams, CDC Gaming Reports June 12, 2019 at 8:00 pm On Sunday, June 2nd, at the last possible moment, the Illinois legislature passed a massive gambling expansion bill. Adding more gaming is a perennial issue for Illinois lawmakers, politicians and would-be operators. Each year, the governor, mayor of Chicago, racetrack, casino and VLT operators have a wish list for the legislature. Each list is usually different from the others. However, not since the Video Gaming Act passed in 2009 has any gaming bill made it to the finish line until this year. The bill that finally passed in June is pretty much a duplicate of the one that was introduced last year but failed to make it out of committee. This year’s bill has not been signed yet by the Governor J. B. Pritzker. But Pritzker has said he is eager to sign the bill as expanded gaming was one of the keys of his revenue plan when he ran for governor last year. The governor has big plans for spending in the coming year and he needs money. His 2019-2020 budget is $40 billion dollars. To fund the budget, legislature authorized new gaming options, raised the tax on cigarettes and gasoline, increased income taxes and adopted a tax on legal recreational marijuana. The governor called the legislative session the most transformative session in recent history. Whether the entire of state of Illinois is transformed or not, gaming is certainly set to be changed dramatically.The 800-page gambling act calls for new casinos and racetracks and allows riverboat casinos to build land-based locations and to add gaming positions. (A gaming position is a slot machine or seat at a table game.) It also allows sports betting in bricks and mortar locations and online and more VLTs. Specifically, the legislation calls for six new casinos in the state, including one in Chicago. Each casino will be allowed 2,000 gaming positions, except Chicago where the casino can have 4,000 positions. The city of Chicago will receive 30 percent of the tax revenue from the casino. O’Hare and Midway airports are authorized slot machines as part of the casino concession. In typical Illinois fashion, the location and the operator of the Chicago casino is left up the mayor. Aldermen from varying wards are lining up to fight for the right to house the prize.The legislation provides for land-based casinos in the cities of Waukegan, Rockford, Danville, Williamson County and the south suburbs of Chicago. Each casino will be entitled to 2,000 gaming positions and sport betting. The mayors of Waukegan, Rockford and Danville have been very enthusiastic in their support for a casino. They are each studying the details of the bill before determining how to begin the process of selecting an operator and a site. All of the communities are eager to get started in the casino business and to begin collecting the tax revenues. Danville has an extra incentive to move as quickly as possible since it is 60 miles from Terre Haute, Indiana where recent legislation has authorized a casino for that city. Now the two cities are in a race to be the first to open and gain a spot in the hearts of the region’s gamblers. The state’s existing three racetracks are authorized 1,200 gaming positions. Tracks will also be able to offer sports wagering. Two new racetracks with gaming will be allowed. With table games, slot machines and sports betting, the tracks will be very much like casinos; which means the total legal casino locations will go from the current 10 to a potential 21 in Illinois. The existing VLT locations can add one game for a total of six VLTs per location, increase the maximum wager from $2 to $4 and have progressive jackpots. The VLT tax was increased from 30 percent to 34 percent over a two-year period. Truck stops which sell 50,000 gallons of fuel can have 10 VLTs. Sports betting licenses are permitted to casinos, racetracks and sports facilities that seat more than 17,000 people; online sports wagering is allowed in connection with an authorized gaming operator. After 18 months, online operators will be able to purchase an independent license. The lottery is allowed 2,500 sports betting locations in the first year. It is a complicated jumble of ideas, taxes, conditions and requirements. Each segment of the expansion has different regulations, fees and taxes. And there are no clear timelines, except the lottery operating 2,500 betting kiosks within a year. It is too early to predict just when a casino might open in Chicago. The racetracks will add slot machines, or the existing casinos will move onto land and add capacity. In fact, there are no guarantees that some of the increases will ever happen. Casino revenue in Illinois has been falling steadily since 2011 when the first VLTs hit the market. Few of the existing casinos are even using the full 1,200 gambling positions authorized, the average is 1,000 positions per property. Those properties are unlikely to pay for extra gaming positions when most will be losing even more revenue under the new conditions. It also seems highly unlikely that anyone will be willing to build two additional racetracks. The casinos in Chicago and several cities will probably get built, but the process of choosing a location and operator and building a facility will take two to three years at a minimum. The quickest and most certain portion of the legislation to be implemented will be the additional VLTs. There are 31,000 VLTs located in 7,000 establishments around the state. Adding one game to the existing VLT locations is easy to implement. That alone would add 7,000 VLTs. The number of VLTs has grown by about 10 percent a month for the last year, that number is certain to jump up in the short-term. Everything else in the legislation will have to be negotiated, financed and constructed before the state sees any tax money. The dramatic changes in Illinois will influence the actions of the all casinos in the region. This is going be a transformative time for the gaming industry in the Midwest.