How Online Sports Betting Led To Online Casino Legalization–Again

If bettors look at all the states’ gambling laws–like normal people do on the weekend–they’ll see a pattern. States with online casinos have online sportsbooks. This is true in every state with online casinos except one. (Delaware’s PASPA exemption and current gambling laws have created a legal loophole that makes it the only state with online casinos, but no online sportsbooks, despite the legislature’s gambling-friendly attitude.) There’s connective tissue between online sportsbooks and online casinos. It’s likely because online sportsbooks are a state’s first foray into online gaming.

Sports betting is less accessible to most bettors than online casinos. Picking lines is more intimidating than pulling a digital slot machine. It doesn’t quite stop lawmakers from raising concerns about underage gambling. But it does make online sports betting more likely to pass than online casinos. It also teaches gamblers that they enjoy gambling online instead of driving all the way to one of a handful of casinos.

On February 19, Illinois introduced a bill that would legalize online casinos. This comes less than two years after Illinois’ first sportsbooks opened in March 2020. Clearly, sports betting has been a hit. Illinois residents wagered almost $1.9 billion from March 2020 to January 2021, over 95% of which was online. Lawmakers seem to think expanding online gaming by offering casinos is the next logical step.

Online Casinos Are Moneymakers

Sports bettors wager a lot of money, but sportsbooks don’t keep all of it. Whatever’s leftover after sportsbooks pay winnings and subtract promotional credits is their revenue. But online casinos tend to generate more revenue for themselves–and therefore pay more taxes–than sportsbooks.

Pennsylvania is a great example of how online casinos can drive profit. In the 2019/2020 fiscal year, Pennsylvania’s sportsbooks made $113.7 million in revenue. During that same period, online casinos made $240.8 million in revenue, even though they were only open for six months. Pennsylvania’s online casinos made over twice the revenue in half the time as Pennsylvania’s sportsbooks.

Online casinos’ success in other states probably didn’t escape Illinois’ attention. It’s yet another untapped source of revenue for a state that’s likely eyeing ways to recover economically after the pandemic. (Of course, which states aren’t trying to do that?) In fact, the pandemic could become the primary driver of online casino bills in other gambling-friendly states in 2021 and 2022. That’ll be a trend to watch for.

What Else Is Impacting Illinois’ Online Casino Bill?

While each state’s political atmosphere is unique, they each notice other states’ activities.  Indiana has also introduced a sports betting bill, putting pressure on Illinois’ gaming industry. If bettors want to play casino games real quick, it may be easier for them to cross the border to gamble online than drive to an Illinois casino. States get mad when neighboring states siphon gambling revenue from them. Currently, New York is trying to legalize online gaming to get bettors back from New Jersey. Illinois lawmakers would probably like to avoid losing gaming revenue to its neighboring states.

However, internal pressures push on lawmakers at the same time. Large sportsbook brands like FanDuel and BetRivers also offer online casinos. When online casinos become legal, these sportsbook companies can generate more revenue. That can also come down the line to increase the taxes sportsbook companies owe. (We don’t know of any accounting tricks that would eliminate that increased tax bill.) Combined with bettors who prefer online sports betting in normal times, too, online casino bills can gain traction quickly.

Asking Whether The Bill Could Pass Is The Wrong Question

Although several factors make Illinois’ online casino bill seem like a slam dunk, it’s not on the Governor’s desk or the ballot yet. It’s only just gone to committee, and major casinos still haven’t taken public positions on the bill. Once the bill is out of committee and resembles the final version more closely, all the stakeholders will probably weigh in. However, the bill doesn’t have any details that have encouraged large groups to speak out yet.

Illinois is also friendly to gaming, so the online casino bill can’t be ruled out yet. It’s not like Texas, whose anti-gambling stances all but guarantee any gambling bill’s death. That’s an easy prediction to make. (Strong grassroots support could undermine that prediction, but I’ve beaten that issue to death.) But the details of Illinois’ online casino bill could leave online casino operators unsatisfied. We’ll know more when the bill gets its next reading.

Illinois’ Online Casino Bill

Illinois’ online casino bill is a natural outgrowth of online sports betting’s success. Online sports betting was Illinois’ first foray into online gaming. (The online lottery isn’t contentious enough to acclimate lawmakers to the idea of sports betting or online casinos.) Its success seems to have opened the door to online casinos in Illinois. Although Illinois has proved to be a gaming-friendly state, it’s too early to call the bill a sure thing. However, it’s not easy to write off as a lost cause, either.

But its passage may be influenced by the other online casino bills nearby. Michigan already allows online casinos and Indiana introduced a bill to do the same. Interstate competition could become the nudge Illinois needs to make whatever changes are necessary to pass this bill. The pressure to generate post-pandemic revenue will likely influence Illinois the same as everywhere else.

We’re cautiously optimistic about Illinois’ online casino bill’s fate. While there’s room for failure, recent successes in Illinois’ gambling industry bode well for online casinos.

About the Author
Christopher Gerlacher

Christopher Gerlacher

Senior Writer
Christopher Gerlacher is a senior writer and contributor for Gaming Today. He is a versatile and experienced industry expert with an impressive portfolio who has range from political and legislative pieces to sports and sports betting. He's a devout Broncos fan, for better or for worse, living in the foothills of Arvada, Colorado.

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