The Illinois Senate passed a bill on Wednedsay that would approve online poker and daily fantasy sports. Illinois state senators passed the bill with a 42-10 vote, sending it to the State House of Representatives.
The gaming bill would create a Division of Internet Gaming in Illinois. Governor Bruce Rauner’s administration would be able to sign interstate poker compacts with other U.S. states in order to share player liquidity.
Interstate Poker Compact
At the moment, Nevada, New Jersey, and Delaware have legalized online poker. Nevada and Delaware have an interstate poker compact which allows other states to sign-on simply by agreeing to follow the same provisions. New Jersey, which has a population much larger than Nevada and Delaware combined, did not sign on to the compact.
If Illinois legalized online poker, it could sign the Nevada-Delaware interstate compact and begin sharing players with those states. Such an arrangement would be much more likely to gain interest from New Jersey’s Division of Gaming Enforcement, because of the large population of Illinois. That, in turn, might convince states like Pennsylvania and California to see the value in legalization and linkage to other US states.
Online Gambling Licensing Fees and Tax Rate
The bill would take online gaming revenues at a 15% rate of gross revenues. To obtain a license, the operator would need to pay a one-time $10 million licensing fee. This fee would be an advance on the 15% tax rate, so the first $10 million in taxable revenues would not be collected. Land-based casino operators and racetrack casinos could apply for an online gambling license.
The land-based poker industry in Illinois believes online poker could be a boost to their business model. Brick-and-mortar casinos in other states have sought to undermine online poker/casino legislation, for fear it would encourage people to stay home instead of using their expensive gaming floors, hotels, and amenities. In Illinois, the casino operators seem to view iGaming as a chance to boost a declining market.
Brick-and-Mortar Poker Revenues
In the first quarter of 2017, Illinois poker rooms generated $3.34 million in revenues. That is down 9% from Q1 2016, when it collected $3.68 million. With only 40 poker tables in the state, though, the poker operations are minor. Online gambling portals would reach a far larger customer base.
House Bill 479
Despite being passed in the Senate, the proposal is called House Bill 479. The Senate version of HB479 is sponsored by a bipartison group consisting of four Democrats and one Republican: Sen. Kwame Raoul (D), Sen. Dave Syverson (R), Sen. Steve Stadelman (D), Sen. Pat McGuire (D), and Sen. Napoleon Harris, III (D).
In the Illinois House of Representatives, HB479 is sponsored by eight Republicans and one Democrat: Tim Butler (R), Steven A. Andersson (R), Grant Wehrli (R), Avery Bourne (R), Nick Sauer (R), Christian L. Mitchell (R), Margo McDermed (D), Joe Sosnowski (R) and Patricia R. Bellock (R).
HB479’s Chances of Passing in the House
Despite the large group co-sponsoring the online poker bill in the House, HB479 faces a tough battle for passage. In that way, the Illinois legislative negotitiations might be similar to the ill-fated New York online poker bill of 2016. The New York bill was passed by a wide margin in the State Senate, but failed to gain traction in the New York General Assembly. New York senators once again passed a bill earlier this year and await a vote in the New York Assembly.
Last year’s defeat of a daily fantasy sports bill in Illinois’s legislature followed a similar path. The Illinois Senate passed the DFS bill, only to have it founder in the House. The bill last year had a flaw: it limited online gambling while trying to legalize daily fantasy sports.
Daily Fantasy Sports Provisions
In the wake of Illinois Attorney General Lisa Madigan’s decision to ban daily fantasy sports in the state, Illinois lawmakers felt urgency to pass the DFS parts of a bill. They left the more complicated online gambling provisions off the table, which alienated the brick-and-mortar gaming operators who might have benefitted form online poker and casinos.
The legislators this time around. HB470 is more comprehensive, so more gaming operators should support and lobby the bill. The lawmakers who devised the bill wrote “that 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.”
The Illinois House of Representatives has not given a date for a vote on HB 479. Given the Senate has passed the bill, it is likely it will be on the docket for the summer 2017 session, if its sponsors determine it has a chance of passage.
