Illinois residents who fancy a gamble can pick from a broad range of activities, from in-person wagering on thoroughbred horses at Fairmount Park and commercial gaming at the Harrah’s Joliet to online sports betting, lotteries, and social gaming. All these activities are legal and regulated in the Prairie State.
The gambling opportunities here are not as abundant as those in states like Nevada, but this hardly impedes the growth of the local industry. Data released by the Illinois Gaming Board reveals the state generated over $1.7 billion in commercial gambling revenue in 2021 alone. The Prairie State is home to various gaming vendors and commercial casino operators that provide employment to over 15,300 residents.
The state government rakes in more than $923 million in tax revenue from authorized gambling businesses each year. Gambling-related tax money is crucial for the funding of the local public school system and its infrastructure. Ten or so commercial gaming venues are strewn across the state at the moment of writing. Riverboat casinos are also legal here but have started to phase out in favor of landbased operation.
A full-fledged online gaming industry is the only thing Illinois is currently lacking. The state legislature gave the thumbs up to online sports betting back in 2019, paving the way for the arrival of major sportsbooks like FanDuel and DraftKings. Locals also have access to daily fantasy sports and online lotteries, but online casino games remain illegal for the time being.
Gambling Laws in Illinois
Various gambling products are legal in Illinois but only on condition the operators have obtained licenses from the respective regulator. Running a gambling business without proper authorization is considered a criminal offense in Illinois. All forms of illegal gambling and the corresponding sanctions are outlined in the Illinois Criminal Code.
Licenses Required for Commercial Gambling
The Illinois Gambling Act allows for the issuance of several types of licenses related to commercial gambling. Interested landbased operators must apply for Owners licenses, while racinos require Organization Gaming licenses. Supplier permits are necessary for the manufacturing, sale, and distribution of gaming machines. The IGB has the remit to issue no more than sixteen permits for casino gambling operations and ten of those have already been granted.
Gambling Taxes in Illinois
Several types of gambling taxes are in place under the provisions of the Illinois Gambling Act. To start with, new candidates for commercial gaming licenses must pay application fees of $250,000 plus $50,000 to cover the cost of the investigation. If the cost of the background checks exceeds $50,000, the candidates will have to cover the difference as well.
2License Costs and Gaming Position Fees
New commercial casinos are subject to $15 million reconciliation charges along with a $250,000 fee for license issuance. As licenses are valid for a four-year period, the same amount is due upon renewal. Approved riverboat casinos seeking to transfer their operations on land must only pay the $250,000 license fee.
Licensed VGTs operators must renew their permits every year. Each terminal requires a license which costs $100. Supplier licenses cost $5,000 and are initially valid for one year but the IGB can extend their duration to four years after the first renewal.
Newly approved commercial casinos and racinos must contribute additional reconciliation fees after three years of operation. Said fees are equal to 75% of the adjusted gross receipts (AGR) for the most profitable year of the casinos’ operations.
Additional fees are due for each gaming position on the premises. New commercial operators based in Cook County must pay $30,000 per gaming position, while those based in other regions contribute $17,500 per gaming position.
3Progressive Taxes on GGR
Authorized commercial gambling operators pay annual progressive taxes that vary depending on their gross gaming revenue and adjusted gross receipts. The rates adjust based on the amount that is subject to taxation. The tax for table games revenue of up to $25 million is 15% but increases to 20% for profits exceeding this amount.
Other gambling games incur the taxes outlined in the table below. Each commercial casino must also pay admission taxes of $3 ($2 for Casino Rock Island) for every patron it admits to its premises. VGTs operators are subject to 34% taxes and split their remaining profits with the owners of the licensed venues housing the machines.
|Illinois Taxes on Gambling Games (Bar Table Games)|
|Adjusted Gross Receipts (AGR)||Tax Percentage|
|Up to $25 million||15.00%|
|$25 million to $50 million||22.50%|
|$50 million to $75 million||27.50%|
|$75 million to $100 million||32.50%|
|$100 million to $150 million||37.50%|
|$150 million to $200 million||45.00%|
|Over $200 million||50.00%|
4Gambling Taxes Allocation
As is the case in most states with regulated gambling, the taxes collected from licensed operators in Illinois go toward improving the school infrastructure and developing the local horse racing industry. Some of the money is used to fund various programs for gambling addiction treatment and prevention.
The host towns, counties, and municipalities also receive a portion of the tax proceeds. As for the admission fees, $1 of every admission charge goes to the host communities, while the remainder is added to the school infrastructure fund. We outline the allocation of the tax money in the table below.
|Allocation of Commercial Gambling Taxes in Illinois|
|Horse Racing Equity Fund||$23 million|
|School Infrastructure Fund||$158.36 million per year|
|Chicago State University Improvement Fund||$1.6 million|
|Gambling Operation and Enforcement||Not specified, appropriated by the Illinois General Assembly|
|Local Government||5% of the AGR|
|Hosting Cities, Counties, and Municipalities||2% to 5% of the racinos’ AGR|
|Cook County Municipality||$5 million after the launch of newly approved casinos|
|Home Rule Counties with Population over 3 Million for Improvement of the Criminal Justice System||2% of the Rivers Casino AGR|
|Problem Gambling Treatment and Prevention||Remaining tax money from commercial casinos|
|Capital Project Fund||Remaining tax money from racinos|
Gamblers themselves are subject to income withholding taxes imposed on lottery winnings over $1,000 and casino or sports betting winnings over $5,000. The threshold for keno winnings is $1,500, while that for slots and bingo winnings is lower at $1,200.
Player Protection Measures and Responsible Gambling
Players must be at least 21 years old or older to enter the commercial casinos and racinos in Illinois. Lottery participation is possible for persons aged 18 years and above. Gambling venues cannot operate in the proximity of universities, schools, churches, and other places of worship. The Illinois Liquor Control Commission disallows giving away free alcoholic beverages inside casinos.
Other than that, local players who cannot keep their gambling activities in check can voluntarily add themselves to the state self-exclusion program. Exclusion is possible for a minimum of five years, after which period the rehabilitated gambler can request his or her removal.
It is at the operators’ discretion whether to continue servicing gamblers after their removal from the list. If the venue is part of a larger casino chain, the operator has the right to prohibit the excluded gambler from entering any of the affiliated establishments.
A separate registry is available to persons looking to exclude themselves from playing video gaming terminals outside casinos or racinos. Players who add themselves to the VGT registry get regular emails with advice and links to various prevention or treatment programs in the state. Unlike regular casino gamblers, problem VGT players can remove themselves from the exclusion registry at will. Also, the registry is available to both Illinoisans and problem players from other states.
Licensed operators must put up signs with information about receiving help for problem gambling at the exits and entrances of their venues. The Prairie State lacks any specific limitations on the marketing of gambling products and services.
Sports Betting Regulation in Illinois
Illinois was among the first states that jumped on the sports betting bandwagon after the 2018 repeal of the nationwide ban under PASPA. The State Legislature approved the Sports Wagering Act one year later in June 2019. The legislation paved the way for a gambling expansion in the state, allowing for in-person, online, and mobile wagering on professional sports, motorsports, and collegiate events.
Legal Status of Online Casino Gambling
As we warned earlier, legal online casino gambling is yet to arrive in the Prairie State. Locals have no access to online slots or table games like blackjack, roulette, and baccarat. The only available forms of online gaming in Illinois are sports betting and the state-sanctioned lotteries.
Daily fantasy sports are another legal alternative for Illinoisans who can enjoy them at first-rate websites like DraftKings and FanDuel. Betting on live horse racing events is also possible at locally authorized racebooks.
Given the limited range of options, it is unsurprising some Illinoisans choose to satiate their appetites for interactive gambling at offshore online casinos. Such players have no legal recourse in cases of refused or delayed payments, though. To our knowledge, the Illinois authorities neither block the access to such unauthorized sites, nor prosecute locals for using their services.
Illinois Gambling Regulator
Before we wrap things up, here are a few words about the local regulatory body, the Illinois Gaming Board (IGB). Created by the passage of the Illinois Gambling Act, the IGB takes on oversight and licensing responsibilities, regulating the operations of commercial casinos, racinos, and sportsbooks. It supervises them both in online and landbased form.
The IGB also carries out routine audits that aim to preserve the integrity of the local gaming industry. The Board consists of five members selected by the Illinois Governor with the approval of the Illinois Senate.
All key persons employed in the IGB are prohibited from gambling participation at local casinos. Only residents of the Prairie State can become board members of the IGB. Board members serve a three-year term and only three of them can have the same political party affiliation.
Illinois legislation ensures a properly regulated gambling environment for locals looking to have a flutter on lotteries, landbased casino games, poker, bingo, and sports events. Several legal online sportsbooks have already gone live in the Prairie State.
Residents also have the option to purchase tickets for the state-sanctioned lottery over the internet but online casino games remain illegal for the time being. Given how lucrative these activities could be from a tax perspective, perhaps state lawmakers would change their rigid stance and introduce legislation to regulate them in the future.