The Problem For The Illinois Sports Betting And Casino Bill: The Casinos Hate It

If Illinois passes a comprehensive gambling expansion bill this week, it likely will be against opposition from its existing casino industry.

Tom Swoik, executive director of the Illinois Casino Gaming Association, tells Legal Sports Report that his organization, which represents nine of the 10 casinos in the state, almost certainly would not support the full gambling expansion bill being pushed by Illinois lawmakers in the final days of the legislative session.

“I can’t imagine we would be agreeable to a large gaming expansion bill, as we haven’t been in the past,” Swoik said. “We would have to look at it, but right now I’d say a large expansion is still out of the picture for us.”

Swoik contended that the casinos would be more agreeable to a standalone Illinois sports betting bill if improvements are made on previous proposals.

“If it was sports wagering only and the bill was drafted in such a way that it’s more reasonable in some aspects, I think we would be on board,” Swoik said. “As an association, our major issues are the tax rate, cost of license and how many venues there are.”

Illinois sports betting vehicle is clear

Now entering the final two days of the legislative session, there is not much clear in Illinois. There remains no language for sports wagering or the larger bill of which it is expected to be a part.

One aspect made completely clear Wednesday is that S 516 is the legislation to watch for sports betting. The bill previously used for sports wagering amendments, H 1260, died in the House without so much as a committee vote.

Even though it was stripped to a shell bill, S 516 has an open procedural path to passage. Since it already passed the Senate in April, the legislation doesn't need to be read five combined times in each chamber over three days.

It just needs to pass the House and head over to the Senate for concurrence, which could happen all in one day.

Historical Context of Illinois Casino Legislation

For over a decade, Illinois has grappled with gambling legislation, with historical bills often stalling in the legislative process. Attempts like Senate Bill 7 faced vigorous opposition, echoing past resistance from local casinos wary of expanded gaming. Each iteration aimed to boost state revenue while navigating complex political landscapes, reflecting a persistent push for comprehensive changes.

Though progress met roadblocks, the ongoing debates highlight shifting attitudes towards sports betting as a viable economic driver.

There's a reason gambling expansion failed previously

While Sen. Terry Link and Rep. Bob Rita are pushing for a sweeping gambling expansion that would add six casinos and authorize racetracks to have slot machines, Swoik attested that he has heard there could be one large expansion bill or two separate amendments, one with the overall expansion and the other with sports betting.

Link and Rita have stated that the language will be similar to previous efforts. Casino expansion efforts have been a topic in Illinois for more than a decade, and the existing casino industry has opposed them the whole way. Last year, The Illinois Casino Gaming Association opposed and helped defeat S 7.

Rita expressed hope that sports betting is an issue that everyone can get behind, which will push the gaming expansion bill over the top this year.

Swoik contends that, if this is anything like past bills, it would double the number of gaming positions that currently exist in the state and that can’t be made up by sports betting.

“I’m pretty sure we’re going to be against it this year because all the past large expansion bills have ended up costing casinos more revenue in cannibalization than can be made up by sports betting’s 5% hold,” Swoik said.

Economic Impact on Local Communities

Expanded gambling could significantly impact Illinois communities, promising job creation and increased tax revenue. States with similar expansions, like Pennsylvania, have seen notable boosts in local economies.

Illinois anticipates generating substantial funds through license fees and taxes, supporting educational and infrastructure projects. However, these benefits hinge on smooth implementation and managing potential social costs.

The balance between economic gain and responsible gaming remains important for stakeholder support.

All sorts of problems with the proposed sports betting language

Swoik, who testified at two House subcommittee hearings this session, indicated that his membership wants sports betting, but not if a bill looks like the last floated proposal from Rep. Mike Zalewski.

His problems with that language include:

• While the association's membership is split on the “penalty box” issue, Swoik attested that an 18-month mobile delay is “crazy” and that a “penalty box” would really be akin to a ban because there wouldn't be any licenses left available after three years.
• An initial license fee equal to 5% of a casino's previous year's earnings would be all over the board, creating a range of $2.3 million to $22 million for the state's casinos.
• Add in a tax rate of 20% to go with the federal excise tax of 0.25% and a casino's projected hold is down to 3.75%. “Think about how much has to be generated at 3.75% to equal $22 million for a license.”
• Casinos should be allowed to enter into individual agreements for official league data rather than having such agreements legislatively mandated.
• Lottery participation at up to 2,500 retailers makes sports wagering too widespread.

Comparison with Other States

Illinois can look to New Jersey for a roadmap, where sports betting flourished post-legalization. New Jersey's approach to regulatory frameworks and tax structures provides insights on mitigating industry pushback.

Despite differences in market size and demographics, Illinois may find valuable lessons in how New Jersey navigated early challenges, ultimately creating a thriving gaming environment. Adoption of best practices could ease transitions and align stakeholder interests.

A new hope: Sports betting bill author steps back

That Zalewski works on the side as a lawyer for a firm that represents clients with interests in gambling caused tensions in negotiations with stakeholders.

As a result, Zalewski tweeted that he removed himself from the negotiations to allow Rita to take the lead.

“In the last week, it became clear some people thought I was the problem in the room, so I stepped back and let our gaming negotiator try to land the plane,” he wrote.

I have never worked on an issue as hard as I worked on sports betting. We’ve spent hours on amendments, meeting with staff, stakeholders, members, the Govs office. I gave it everything I had.

— Michael J. Zalewski (@mjzalewski) May 29, 2019

With language for the gambling amendment expected to be introduced Thursday, there's hope that the change could lead to better parameters for sports betting. However, Rita worked closely with Zalewski throughout the process of forming the previous proposals.

Stakeholder Positions and Influence

Stakeholders hold varied views on the bill, reflecting different priorities. Casino operators express concerns over potential revenue erosion from market saturation.

Meanwhile, lawmakers push for tax structures that maximize state income. Community groups emphasize responsible gaming measures to protect consumers.

While consensus remains elusive, each voice contributes to shaping legislation, underscoring the importance of fostering cooperative dialogue for successful outcomes.

Gambling expansion could pass despite industry opposition

Lawmakers usually find it difficult to pass a bill when the industry it affects isn't on board. That's not always the case in Illinois.

Asked if the bill could pass without support from the casinos, Swoik responded: “Oh yeah, they've done it before.”

In both 2012 and 2013, the legislature passed a similar casino expansion only to have it vetoed both times by then-Gov. Pat Quinn.

This time, there seems to be political will from all four legislative caucuses and Gov. J.B. Pritzker to pass a comprehensive gambling expansion bill with sports betting in order to help fund a $41.5 billion capital improvement plan.

“Parts of this were the governor's idea, included in his budget,” Swoik said. “It's a different year.”

Challenges in Legislative Process

Navigating the legislative hurdles involves addressing procedural rules and political skepticism. Fractured support within legislative bodies complicates consensus-building, often resulting in amendments and delays.

Attempts to reconcile competing interests can stall progress, as evidenced in prior sessions where similar bills faltered. Understanding these dynamics is important, as past experiences guide ongoing efforts towards a well-crafted resolution that aligns with state and industry goals.

The post The Problem For The Illinois Sports Betting And Casino Bill: The Casinos Hate It appeared first on Legal Sports Report.

Original source: https://www.legalsportsreport.com/33085/33085-illinois-sports-betting-gambling-bill-opposition/

Relevant news