By: Mark Glennon*
On the surface, things look great for state revenue from gaming and betting in Illinois. For the fiscal year that ended in June, the state’s share of tax revenues on it reached $1.4 billion, a 3.5% increase from 2017 levels. Video gambling led the way, increasing by 15% increase to $347 million.
But look closer and you’ll see a lesson about expectations for new gaming revenue for the state.
Aside from video gaming, state revenue from every other form of legal gambling in Illinois — the lottery, horse racing and riverboats — was flat or down. That’s been pretty much true for years. Total state gaming revenue hasn’t even caught up to its peak in 2006. Except for small and inconsistent gains in lottery income, video gaming has been the only bright spot. Horse racing has been particularly devastated, where state revenue has dropped to just $6 million. The 2015 closings of Maywood Park and Balmoral Park leave only three tracks operating in Illinois.
It’s all detailed in a recent report by COGFA, Illinois’ Commission on Government Finance and Accountability. Here’s the key chart:
Clearly, more gambling in one form means less gambling in another. Saturation comes at some point. Maybe Illinois isn’t fully saturated; perhaps certain pockets remain to be picked. Chicago, for example, has not yet allowed video gaming at all and has no casinos. Other factors like competition from nearby states and the economy are important, too, but the COGFA report says expressly that expansion of video gaming hurt the other revenue sources.
The lesson here is about solutions for Illinois’ fiscal crisis. More gambling almost certainly will be authorized by the state next year. Potential new sources include sports betting, fantasy sports betting and internet gambling, although detailed proposals haven’t crystallized yet. Revenue estimates will come for those new sources.
Don’t take those revenue estimates at face value. The full result may be just like we’ve seen with video gaming. Ask whether those new forms of gambling revenue will cannibalize other sources.
Marijuana legalization, along with expanded gaming, is widely expected to be the first source of revenue the new General Assembly and Governor-elect Pritzker look to. Maybe there’s logic to linking them. Bummed about how much money they lose gambling, maybe grass will chill them out. Then, stoned out of their minds, they won’t care about losing still more.
*Mark Glennon is founder and executive editor of Wirepoints.