The chances of passing an Illinois online gambling bill look bleak for the moment. Hearings set for Tuesday were postponed indefinitely as opposition to iGaming hardened.
Earlier this month, the Illinois Senate passed an omnibus gaming bill which included online gambling and daily fantasy sports. The Illinois House of Representatives planned hearings to discuss a similar bill, but canceled the hearings after a one-day delay.
While Illinois legislators in the House appear to support the broad idea of gaming expansion, two factions have formed. One group want only daily fantasy sports legalized, while the other group wants a more comprehensive gambling bill passed. The difference in the two plans represent $300 million a year.
Illinois Online Poker Bill Delayed
John Pappas, President of the Poker Players Alliance, recounted the week’s events in Illinois politics. He described the kind of institutional chaos which has caused Illinois Gov. Bruce Rauner so much public consternation these past few months.
On the PPA’s Twitter feed, John Pappas posted, “Wheels have come off in IL for #iGaming & #DFS bill. Folks are regrouping and may try this again in a few weeks. -jp”
John Pappas traveled to Springfield to testify in the Illinois House Executive Committee’s hearings on the gaming bill scheduled for June 27, giving some poker players hope Illinois was serious about passing a bill. House members canceled the meeting with little warning, prompting Pappas to say, “It was a complete waste of time.”
Lawmakers first told the PPA’s president that the June 27 hearing had been rescheduled for the next morning. He stayed overnight and waited in the capitol building for an hour past the scheduled hearing time, only to be told the hearing was canceled.
Late-July Online Gambling Hearing Predicted
When asked when the Illinois House might reschedule the hearings, John Pappas predicted late-July: “It’s likely that I’ll be out there again at the end of July. Hopefully, that time, I’ll actually get to testify.”
Illinois Budget Crisis
Unlike New York State, Illinois’s legislature has sessions later in the year. Also, Illinois is facing a budget crisis unlike any a US state has ever seen. Illinois is facing a $15 billion deficit, representing about 40% of the annual budget. The deficit amount led CNN Money to speculate that Illinois could become the first US state to acquire a “junk credit rating”.
The media is not the only one talking about a credit crunch. On June 1, S&P Global Ratings announced, “Illinois is now at risk of entering a negative credit spiral.”
Credit Rating Downgrade a Possibility
Those who followed Atlantic City’s struggles with a bad credit rating over the past 2 to 3 years know how that can affect governance. Bond issues would be worthless, while the state would have trouble borrowing money at sound interest rates. The same might happen to Illinois on a grand scale, except there would be no entity to bail out Illinois, the way New Jersey did for Atlantic City.
Already, Illinois’s property taxes are so high that residents and businesses are starting to move out of state. With high taxes and a budget crunch, it is not wonder that Illinois’ lawmakers are looking for non-tax revenues from gambling.
Bruce Rauner Urges Lawmakers to Act
Governor Bruce Rauner urged lawmakers to compromise on a bill, so he could sign into law a plan to “bring real changes to our broken system.”
In a tweet this past Tuesday, Gov. Rauner told his colleagues, “Time is running out.”
John Pappas says the current delays come from a rift between lawmakers. Pappas said, “The problem is that there are differences of opinion with regard to online gaming and daily fantasy sports in Illinois.”
Omnibus Illinois Gambling Bill
Some lawmakers want an all-inclusive gambling bill, while others want a DFS-only gaming bill. The leader of the PPA said that some House members are not comfortable with a major overhaul of Illinois’ land-based gambling laws. He noted that all but one of the state’s brick-and-mortar gambling facilities want online poker, but that fact has not swayed Illinois politicians to date.
Pappas said, “If they decide to go with DFS only, I’ll still want to testify to explain how it makes no sense from a consumer standpoint. We have an unregulated marketplace for online gaming where consumers are vulnerable, and to simply address a very small segment of that with DFS leaves a whole host of other online gaming enthusiasts at risk.”
Legislators seem more comfortable with daily fantasy sports, because it is considered by many to be a “game of skill” — and thus politicians can argue it is not gambling. With Illinois’ massive budget issues, licensed and regulated daily fantasy sports revenues would make almost no impact on the budget.
Online Gambling Revenues Compared to DFS
The PPA president said, “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.”
Thus, Illinois online gambling would produce 60x the revenue that daily fantasy sports would. While neither is going to wipe out Illinois’ budget deficit, one would have a significant and material impact on the Illinois budget deliberations. DFS-alone simply would not.
Pivotal Time for Illinois iGaming
John Pappas warned that online gambling proponents have a rare opportunity to pass legislation, but that chance could evaporate in a relatively little time frame. Anyone who wants to pass legislation needs to contact their Illinois state politicians to urge them to take action.
The head of the Poker Players Alliance said the PPA is not wanting to undermine DraftKings’ and FanDuel’s attempt to pass DFS legislation, but he wants online gambling to get the same consideration. He added, “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.”
