Illinois Introduces Online Casino Bill

Illinois House Rep
Introduces Online Casino Bill

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Image: Soloman Leiberman/Better Government

Illinois Introduces Online Casino Bill

Illinois sports betting has been legal since November 4, 2020, and now the state is moving to legalize online casinos. Filed by State House Representative Bob Rita (D), Bill HB3142 will regulate Illinois online casinos.

Aiming for a quick launch, if passed, Illinois casinos will have the opportunity to expand their offering into the online casino market in addition to online sports betting which is already live in the state.

Illinois Current Online Gambling Status

Illinois Gov. JB Pritzker pushed for the complicated legislation, the Sports Wagering Act (SWA). An amendment to the Illinois gambling laws and made sports betting legal in June 2019.

Due to Illinois gambling law, there will be three online-only sportsbook licenses up for grabs in late 2021. Illinois casinos will have an 18-month head start within the online space. How useful that head start has been is debatable with online brands signing deals with other retail partners.

BetRivers was the first to launch its online sportsbook on June 18, 2020. It has been followed by other prominent names in the market. Such as DraftKings Sportsbook, FanDuel Sportsbook, PointsBet and others.

With the major sports now recovering after the pandemic and the Illinois sports betting coming alive, state legislators want to continue with the success and move into more online gambling spaces. Including online casino and poker.

Objections to Online Gambling in Illinois

Online Illinois gambling could be another lucrative way for the state to start recovering from the impact of COVID-19. However, some businesses and state bodies worry that the bill could have negative impacts, both economically and societally.

Whilst passing the SWA, it seemed that the Internet Gaming Act (IGA), making Illinois online casinos legal, would be passed as well.  However, complications arose with the particulars still unknown. The general opinion is that Rush Street Gaming’s dislike of the competition coming from the Daily Fantasy Sports (DFS) industry is holding the state back.

As a brick and mortar casino operator, Rush Street was unable to offer DFS products. DraftKings and FanDuel offered its DFS products in Illinois when the legality was still being discussed. Rush Street wasn’t able to risk joining the market, it believes the DFS companies have gained an unfair advantage.

Although less profit to be made in DFS, both DraftKings and FanDuel have become top competitors in the online gaming market. Both have widespread customer bases. The uses of DFS platforms helped build their renown as well as brand strength ahead of legal online gaming in Pennsylvania, West Virginia and Michigan.

The “penalty box” in the SWA was meant to delay access to online brands such as DFS companies. DraftKings however navigating around the SWA penalty box and launched Illinois sports betting in August 2020.

With the DFS companies launched and with Rush Street launching its online division, there is little point in disputing Illinois online casinos. With its support, IGA has a strong likelihood of passing.

HB3142 Bill Overview

If passed, HB3142 would form the Internet Gaming Act, finally legalizing online casinos. It will also provide various rules and regulations for the Illinois online casino market.

The bill allows online gaming operators to launch a maximum of three online casino skins. The Illinois casinos will be able to offer online casinos either through its own platform or through a partner. The partnerships will be more likely, with many casinos already partnered with online sportsbook brands. There are currently 10 retail casinos and three racetracks, allowing for 39 online casinos. It’s not likely for all of the licenses to be filled. New Jersey for example, with an overcrowded market still has less than 30.

The initial license fee is $500,000, with a $250,000 renewal every four years.

All activity will be regulated by the Illinois Gaming board, the same as with sports betting and retail properties.

Key stipulations such as “provisions for age verification, location of wagering and responsible gaming” are included in HB3142. The bill has strong provisions for responsible gaming, including self-exclusion via statewide registry and personal deposit and spending limits. Also, $10 million of the tax revenue will go to the Department of Human Services to fund problem gambling treatment.

The bill also stipulates 12% of adjusted gross gaming revenue.  This is currently lower than any other state offering online casinos. It also prohibits local government from enforcing additional taxes.

The one perceived limitation of the bill is the initial period where Illinois online casinos will have to have in-person registration.  This will only last 6 months, with online registration will be available.

A Fast Track to Casino Legislation

HB3142 stands out for one reason, the number of provisions pushing for a quick launch.

The bill directs the Illinois Gaming Board (IGB) to draw up emergency regulations immediately, setting its deadline of 90 days. To compare this to other states, Michigan who launched recently, took almost a year to finalize its regulations.

Along this thought process, the bill states that the IGB base the emergency regulations on the existing regulations for the Illinois casinos. As well as taking note of other online gambling laws and policies from other states. All of these hopes to bring a speedy resolution and launch to the state.

Not only is the focus on passing the legislation, but also on the speed of licensing. The bill in its current form mandates the IGB to supply a temporary license to all applicants who already have a license for Illinois sports betting under the SWA within 30 days. The temporary licenses will be valid for a year.

If all goes to plan, Illinois online casinos could be operating in just 4 months after the bill becomes law.

With many of the Illinois casinos already in partnership with sports betting brands, it will be likely these partnerships will expand into online casino games. DraftKings and FanDuel are just two brands with a foothold already within the state. Both offer an extensive selection of games and would be an obvious bet for launching into Illinois online casino.

Indiana Casinos Will Have to Wait

Indiana, unfortunately, wasn’t successful in getting two online casino bills passed, missing the legislative deadline to pass the committee stage.

Introduced by State Sen. Jon Ford, Senate Bill 417 intended to legalize online gaming in Indiana. Aiming to permit Indiana’s 14 casinos to offer online poker and casino games. Ford was confident the bill could gain a footing, especially following a $313 million betting handle in December.

 

“A large part of that was done online,” Ford commented. “So, I think you see with sports wagering, you can see there’s clearly a demographic out there that wants to engage in gaming through their mobile phones.”

Also introduced by Representative Alan Morrison, House Bill 1406 aimed to authorize online casino gaming in Indiana.

The introduction of online casinos in Indiana was projected by Ford to have a potential return of $65 million – $80 million tax revenue. The revenue would be paid to the state and to support the casino industry still dealing with the impact of COVID-19.

However as both bills stalled, it will have to be put on the back burner until the following year to be introduced again.

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