Illinois Considers Legalizing Online Casinos Amid Budget Deficit

As Illinois faces a $3 billion budget deficit heading into the 2025 legislative session, Governor J.B. Pritzker has reignited discussions around the legalization of online casinos, calling the issue “worthy of consideration.” While Illinois, with its large population and established gambling industry, has been a prime candidate for online casino legalization in recent years, previous efforts have failed to gain significant traction. However, with the state’s fiscal challenges looming, the financial benefits of online gaming are now garnering renewed attention.

The push for online casinos, or iGaming, in Illinois comes as supporters point to the substantial tax revenue potential—up to $450 million annually at its peak, and potentially up to $800 million once the industry matures. This revenue could provide a much-needed cushion as the state seeks ways to bolster its finances and address the looming deficit. But despite the promise of significant tax dollars, opposition from certain factions, including unions and video gaming terminal (VGT) operators, has hindered progress in the past.

 

A Fiscal Solution for Illinois’ Budget Woes

Supporters of iGaming in Illinois, such as Sen. Cristina Castro, argue that online casinos are a vital tool in addressing the state’s budget shortfall. “In a tough budget year, you’re looking at ways to increase revenue. This is one tool for that. And it’s something that could be more palatable to constituents,” Castro said in a recent interview with the Chicago Sun-Times. Castro, who sponsored the 2023 Internet Gaming Act, points out that iGaming could attract a new market of gamblers currently turning to unregulated, illegal online gambling sites. Legalizing and regulating iGaming, she believes, would both capture this market and reduce the impact of black-market gambling.

The tax revenue from iGaming would provide a crucial financial boost for Illinois, a state that has long been home to a mature gambling industry. Illinois casinos, while experiencing growth—especially with the opening of new facilities such as the Hard Rock Casino in Rockford—have struggled to maintain consistent revenue. In November 2023, Illinois casinos generated $152.9 million, a number that falls short of the revenue seen in other states with legal iGaming. In comparison, states like Pennsylvania, Michigan, and New Jersey are generating upwards of $200 million in monthly iGaming revenue. Legalizing online casinos could help Illinois close that gap and provide a steady stream of tax income.

 

Opposition from VGT Operators and Unions

Despite the potential financial benefits, Illinois’ progress on iGaming has stalled in recent years due to opposition from various stakeholders. The state’s extensive network of video gaming terminals, which number over 45,000—the most of any state—has become one of the largest hurdles to online casino legalization. VGTs, which operate similarly to slot machines, are legal in locations like truck stops and veteran organizations. They generate significant revenue, with the terminals contributing $848 million in tax revenue in Fiscal Year 2024—more than five times the tax revenue from the state’s retail casinos.

VGT operators fear that legalizing online casinos could cannibalize their market, potentially reducing their earnings as more people turn to online gambling platforms. Labor unions representing casino workers have raised additional concerns, arguing that the expansion of iGaming could lead to job losses and a decline in revenue for brick-and-mortar casinos. Keith Wetherell, executive director of the Illinois Licensed Beverage Association, has warned that businesses could see a 40% drop in revenue from online casinos, creating friction among key industry players.

Despite the opposition, proponents of iGaming remain optimistic that 2025 could be the year Illinois moves closer to online casino legalization. With the state’s budget deficit weighing heavily on lawmakers, the promise of substantial tax revenue from iGaming is increasingly hard to ignore. However, getting the necessary support in the legislature will require overcoming resistance from both the VGT industry and labor unions, as well as securing alignment from key political figures.

Rep. John Cabello, a Republican from Illinois, has voiced concerns that iGaming revenue might simply shift funds away from other forms of gambling, rather than generating new revenue. However, supporters like Castro believe that a well-regulated iGaming market can bring in new revenue while addressing the concerns of illegal gambling. By focusing on closing black-market sites, proponents argue that online casinos will not only generate tax revenue but will also strengthen the integrity of the state’s gambling landscape.

 

In a tough budget year, you’re looking at ways to increase revenue. This is one tool for that.

 

Conclusion

The renewed push to legalize online casinos in Illinois marks a pivotal moment for the state’s gambling industry. With the financial pressures of a $3 billion deficit and the potential for significant tax revenue, the case for iGaming is growing stronger. However, overcoming opposition from powerful interests such as VGT operators and labor unions will be key to passing any legislation. As Illinois moves into the 2025 legislative session, the question of whether online casinos will become a reality remains uncertain, but the financial incentives may prove too compelling to ignore. If passed, Illinois could soon join the growing list of states embracing iGaming, potentially transforming its gambling landscape in the process.