Jim Dey: Gambling expansion in Illinois: How much is too much?
May 2—Legal gambling — everything from the lottery and sports to video machines and horse racing — is a multibillion-dollar business in Illinois.
But as the state embarks on a massive expansion, there are questions that can only be answered in the fullness of time.
Is there a viable market for thousands more gambling opportunities that will be available when new casinos are opened in smaller communities, like Danville, and the major city of Chicago?
If the market proves itself limited, which venues will come out on top or fall to the bottom of the cutthroat competition that's been unleashed?
"After years of ... speculating on these types of questions, the wagering data collected over the next several years should finally lead to an answer," analysts wrote in a study titled "Wagering in Illinois" released late last year.
The report, prepared by the Legislature's Commission on Government Forecasting and Accountability, is intended to advise state House and Senate members about the present and future impact of legalized gambling.
Video gambling, reflected by the machines located on what seem to be every street corner, appears to be the big dog in the fight for gambling dollars.
By June 30, 2022, the number of machines statewide had reached 43,000, generating $2.6 billion in "net terminal income" and roughly $900 million in tax revenue.
The presence of all those convenient locations "has had an adverse impact on the casino industry," the report states. But analysts said the combined revenue from video gambling and casinos remains a winner for the tax man.
Combined, they generated $3.9 billion in total revenue and $1.2 billion in tax revenue for the 2021-22 fiscal year. That's well over double the receipts and tax revenues of 10 years ago.
While the glitz and excitement of casinos and sports books draw much public attention, the report said the "largest contributor of state (gambling) revenues continues to come from the Illinois Lottery."
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Started in 1974 as a revenue-raising operation, the lottery remains the big dog. Total sales in FY 2022 were $3.4 billion, which generated $820 million in tax revenue.
Horse racing continues to be slow out of the gate.
Once the state's only form of legal gambling, horse racing "continues to tread water," the commission stated. There are just two racetracks in Illinois — Fairmount in Collinsville and Hawthorne in Chicago.
A huge gambling-expansion bill passed in 2019 allows the tracks to expand their gambling choices with on-site casinos and sports gambling.
But state officials are not optimistic that the fortunes of the tracks will improve, because "data from other states with racinos shows that improvement in horse-racing figures should not be expected."
The new gambling degenerate on the block is sports wagering. Cash is pouring in, increasing from $380 million in total revenue to $610 million from the first year to the second. The state takes a flat 15 percent cut, a levy that generated $92 million in Year 2.
The commission predicted that "expansion of additional sports books to sports arenas and brand news casinos" will generate further revenue growth.
The next big gambling step involves casinos. In addition to Danville and Chicago, new casinos are planned for Waukegan, Williamson County and the Chicago suburbs.
"The 4,000-position Chicago casino, once developed, is anticipated to be the largest generator of (gambling) revenues yet for the state of Illinois," the report stated.
Legislators' unquenchable thirst for more revenue to finance new social spending programs is driving the expansion. That's one reason why video gambling was able to intrude on the gambling status quo in 2009.
Existing venues mostly fought off casino expansion for years before gambling-expansion lobbies and revenue-hungry legislators were able to build a strong-enough coalition to pass the current expansion.
