Illinois House Fails to Act on iGaming Bill During Special Session

One month after the state Senate in Illinois voted overwhelmingly to approve a dual daily fantasy sports (DFS) and online gambling bill, the House failed to hold a vote on the matter before Friday’s legislative session deadline.

On May 31, the Senate voted 42-10 to approve House Bill 479 – which was originally drafted as a measure to revise the Illinois state seal before a comprehensive DFS and iGaming amendment was added at the last minute. At the time, iGaming industry experts and political watchdogs widely believed that Illinois would join Nevada, New Jersey, and Delaware as the fourth state to legalize and regulate online casino and poker games.

But that momentum was halted in the House, as lawmakers proved unable or unwilling to reach consensus on iGaming ahead of June 30 – when the most current legislative session elapsed.

A special House hearing to finalize its iGaming legislation had been scheduled for June 27, with stakeholders like Poker Players Alliance executive director John Pappas invited to attend. That hearing was delayed, however, and its eventual cancellation effectively ended the idea of Illinois passing its iGaming bill anytime soon.

Speaking with veteran poker reporter Jen Newell of LegalUSPokerSites, Pappas offered his take on the issues dividing legislators during the most recent iGaming discussions:

“The problem is that there are differences of opinion with regard to online gaming and daily fantasy sports in Illinois.
Some want to proceed with DFS only, others believe it should be done comprehensively, and we fall into the latter category. Some lawmakers just aren’t comfortable doing that.

We don’t have a problem with DFS, but we know multiple bites at the apple are unlikely. If there’s a chance to include online gaming in a budget package, the House should do it, just like the Senate did when it passed their bill.”

While the H-479 bill approved by the Senate would allow for DFS along with online casino and poker, a competing bill known as S-1531 limits the scope to DFS only.

And as Pappas explained, legislators in the House have been split in their support for the opposing online gambling bills.

As stated within the text of H-479, many lawmakers in Illinois are interested in regulating iGaming for two primary reasons, with protecting consumers and taxing operators at the forefront of their agenda:

“Illinois residents participate in illegal online gambling on unregulated Internet websites operated by offshore operators who are not subject to regulation or taxation in the United States.

Neither federal nor Illinois laws provide sufficient consumer protections for Illinois residents who play games of chance or skill on these illegal websites, nor does the State realize any benefits from the revenues generated nor jobs created by illegal online gaming.”

To rectify the consumer protection concern, H-479 was designed to establish the Division of Internet Gaming, a new agency under the purview of the Illinois Gaming Board which would supervise licensing and enforce regulations.

The taxation issue would have been solved by levying a 10 percent tax on the first $100 million of annual revenue generated by licensed iGaming operators, and a 15 percent tax on revenues in excess of $100 million. As for DFS operators, the tax rates would be variable based on annual revenue, ranging from 5 percent on the first $1 million to 15 percent on anything over $8 million.

Despite the state suffering through several years without a budget bill being passed, proponents of H-479 like Pappas view the dual DFS / iGaming model as a natural solution. As he told Newell, Pappas believes regulated iGaming will generate vastly more income for Illinois’ coffers than a DFS-only model:

“(The) revenue is not even comparable. Online gaming, over the next three years, will produce somewhere around $300 million in new revenue for Illinois, whereas it’s unclear whether regulated DFS will produce anything more than $5 million in that same time period.

If we’re talking about this in terms of the state budget, it’s a total head-scratcher to think they’d move forward with only DFS and not address online gaming at the same time.”

Members of the House extended their special session into Saturday, July 1 in hopes of addressing the budget crisis, but neither of the gaming bills is expected to be taken up.

That decision punts the DFS / iGaming debate into later this month at best, and next year at worst.