An Illinois lawmaker has reintroduced legislation to legalise online casinos, reviving a proposal that stalled in committee last year and reopening a long-running debate over gambling expansion, tax policy and its impact on existing casinos. Representative Edgar Gonzalez Jr this week filed HB 4797, the Internet Gaming Act, which would allow licensed gambling operators in Illinois to offer online casino games. The bill mirrors legislation Gonzalez introduced in 2025 that failed to advance beyond its initial committee hearing.

Under the proposal, the Illinois Gaming Board would be authorised to license online casino operators, with each licence holder permitted to operate up to three online casino “skins”, or branded platforms. Online casino revenue would be taxed at a flat rate of 25%. The bill directs the gaming board to issue emergency regulations within 90 days of enactment. Temporary licences could be granted within 30 days, using existing gambling regulations where possible, allowing online casino operations to launch before permanent rules are finalised.

Gonzalez also introduced a companion measure, HB 4802, which would legalise online poker in Illinois. That bill would allow the state to enter into multi-jurisdictional agreements with other states, enabling players to compete across state lines. Six states currently participate in the Multi-State Internet Gaming Agreement, which pools online poker liquidity among member jurisdictions.

Competing interests and workforce provision

Online casino legislation has faced organised opposition nationwide, particularly from groups representing land-based casino interests. The National Association Against iGaming has argued that online casinos can cannibalise revenue from physical casinos, leading to job losses and reduced economic activity in host communities.

Gonzalez’s proposal attempts to address those concerns by restricting eligibility for online casino licences. Companies that have reduced their Illinois workforce by more than 25% since February 2020 would be barred from receiving a licence, a provision aimed at discouraging large-scale job cuts tied to digital expansion.

Industry groups that represent online operators have taken the opposite position. The Sports Betting Alliance, which includes Bet365, BetMGM, DraftKings, Fanatics and FanDuel, has expressed support for bringing casino gaming online in Illinois, arguing it would modernise the market and generate new tax revenue. Illinois lawmakers have considered online casino legislation repeatedly since at least 2021, but none of the efforts have reached a floor vote. The issue has gained renewed attention as the state continues to face fiscal pressure.

Last year, Governor JB Pritzker said online casino legalisation was “worthy of consideration” as he unveiled a proposed budget that included a projected $3 billion deficit. Supporters of iCasino legislation have argued that legalisation could generate as much as $800 million annually for the state, though revenue estimates vary widely depending on tax rates and market structure. At the National Council of Legislators from Gaming States summer conference last year, Illinois Attorney General Kwame Raoul said he expected the state would legalise online casinos “at some point,” though he did not offer a timeline.

Momentum around online casino expansion has increased nationally. Maine became the eighth state to legalise online casinos last month. Lawmakers in Indiana, New York and Virginia have also introduced iCasino bills this year, although Indiana’s effort has already stalled. An industry source told iGB that a similar proposal in Maryland is likely to be reintroduced soon.

Industry observers say rising budget gaps and limited appetite for broad-based tax increases are pushing more states to revisit online gambling as a potential revenue source.

The proposal would allow the Illinois Gaming Board to license online casino operators while taxing internet gaming revenue at 25%.

Tax context and local tensions

The proposed 25% tax rate on online casinos would align closely with Illinois’ lower-tier sports betting tax rates. When sports betting launched in the state, operators paid a flat 15% tax. In 2024, lawmakers replaced that system with a tiered structure based on operator revenue, ranging from 20% to 40%. Lawmakers later added a per-wager tax in the state budget, prompting sportsbooks to introduce new fees and other measures to offset the higher tax burden. Tax policy around gambling has also become a point of friction between state and local governments. Chicago’s 2025 budget, which took effect on 1 January after Mayor Brandon Johnson declined to sign it, included a new 10.25% local tax on sports betting.

That move triggered backlash in Springfield. Representative Dan Didech, chair of the House Gaming Committee, filed HB 4171 to prevent municipalities from imposing their own sports betting taxes. At the time, Didech said Chicago’s approach would “hurt consumers, drive vulnerable people to predatory illegal markets and reduce state tax revenue.” Whether Gonzalez’s online casino proposal gains more traction this year remains uncertain. While support for digital gambling continues to grow among operators and some policymakers, concerns about market saturation, job losses and tax stability remain significant hurdles in the General Assembly.