Gaming Expansion Law: Illinois Bets Big

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By Patrick G. Connelly

In passing and enacting a massive gaming expansion law, State leaders appear to have taken the advice of Brian Cranston’s famous character Walter White from Breaking Bad—No Half Measures. The new law makes clear that Illinois is all in when it comes to gambling and more specifically the revenue and jobs it can create. Passed in the waning hours of the 101st General assembly and signed in to law on June 28, 2019 by Gov. Pritzker, the Gaming Expansion Law will dramatically increase the types of wagers one can make and the places in which they can be made. This article focuses on Casino Expansion, Racinos, Sports Wagering and Video Gaming.

Expansion of Casino Gambling

Gone are the days for the need for a body of water, often times unseen, and riverboats to house casino operations. The Act authorizes the creations of six (6) new casinos throughout the state. In the Chicagoland area, one massive casino is slated for the City of Chicago, one in Waukegan, and one may be located in the following townships of Cook County: Bloom, Bremen, Calumet, Rich, Thornton, or Worth. Applications for the new casinos must be submitted by October 26, 2019 except for the Chicago Casino which has its own unique process. Some important provisions pertaining to the new Casinos include:

    • Local Support—Prior to issuing a new license, each applicant must come to an agreement with the host municipality on many aspects of the casino including location, zoning, and revenue sharing. The municipality must also pass a resolution of support and conduct a public hearing pertaining to the casino.
    • Number of Gaming Positions—The Chicago casino is authorized to operate up to 4,000 positions including slot machines at Midway and O’Hare airport. All other new casinos may operate 2,000 positions.
    • Temporary Casino— Each new casino can operate at a temporary facility for up to 24 months with the possibility of a 12 month extension while the actual casino is being constructed.
    • Local Taxes/Revenue Sharing— The local share of taxes will mainly come in the form of a percentage of adjusted gross revenue and a portion of a $3 admissions tax. The apportionment and percentage varies by location. For example, the new South Suburban local share will be as follows:
      • $1 for every person that enters the casino goes to the host municipality
      • 5% of adjusted gross revenue with the following distribution:
        • 2% to the host municipality
        • 3% distributed to the towns of Beecher, Blue Island, Burnham, Calumet City, Calumet Park, Chicago Heights, Country Club Hills, Crestwood, Crete, Dixmoor, Dolton, East Hazel Crest, Flossmoor, Ford Heights, Glenwood, Harvey, Hazel Crest, Homewood, Lansing, Lynwood, Markham, Matteson, Midlothian, Monee, Oak Forest, Olympia Fields, Orland Hills, Orland Park, Palos Heights, Park
          Forest, Phoenix, Posen, Richton Park, Riverdale, Robbins, Sauk Village, South Chicago Heights, South Holland, Steger, Thornton, Tinley Park, University Park, and Worth pursuant to an agreed upon regional capital development plan or if no such plan exists equally amongst all of the listed towns.

Creation of Racinos

The Act also allows each existing horse race track throughout the State to operate slot machines and table games thus becoming Racinos. The Act further authorizes the creation of one additional racino which may be located in the following townships of Cook County: Bloom, Bremen, Calumet, Rich, Orland, Thornton, or Worth. Applications for the new racino licenses must be submitted by August 27, 2019. Some important provisions pertaining to racinos include:

    • Local Support—The law is silent as to the municipal involvement on racino applications.
    • Number of Gaming Positions—1,200 gaming positions are available to racinos in Cook County which would include Arlington Park, Hawthorne and the new Southern Cook County Racino. If any track in the State does not pay for and use its allotted positions, then the other racinos may bid for those surplus positions.
    • Temporary Casino— Each existing track and presumably the new racino can operate at a temporary facility for up to 24 months with the possibility of a 12 month extension while the actual casino is being constructed. Upon receiving a license the new racino inherits all powers of existing tracks.
    • Local Taxes/Revenue Sharing— The local share of taxes will mainly come in the form of a percentage of adjusted gross revenue and a portion of a $3 admissions tax. The apportionment and percentage varies by location. For example, the new South Suburban Racino local share will be as follows:
      • $1 for every person that enters the casino goes to the host municipality
      • 5% of adjusted gross revenue with the following distribution:
        • 2% to the host municipality
        • 3% distributed to the towns of Beecher, Blue Island, Burnham, Calumet City, Calumet Park, Chicago Heights, Country Club Hills, Crestwood, Crete, Dixmoor, Dolton, East Hazel Crest, Flossmoor, Ford Heights, Glenwood, Harvey, Hazel Crest, Homewood, Lansing, Lynwood, Markham, Matteson, Midlothian, Monee, Oak Forest, Olympia Fields, Orland Hills, Orland Park, Palos Heights, Park Forest, Phoenix, Posen, Richton Park, Riverdale, Robbins, Sauk Village, South Chicago Heights, South Holland, Steger, Thornton, Tinley Park, University Park, and Worth pursuant to an agreed upon regional capital development plan or if no such plan exists equally amongst all of the listed towns.

Sports Wagering

The Act also will allow wagering on professional and collegiate sporting events with the exception of contests involving an Illinois collegiate team or one involving participants K-12th grade. The state is currently engaged in what is likely to be a lengthy rule making process so the final form of sports wagering in Illinois is not yet known; however, the Act does provide that licenses may be issued to the following venues:

    • Any casino/riverboat – to accept wagers at its facility and by internet or mobile application.
    • Any Racino – to accept wagers at the racino, at up to 3 OTB facilities and by internet or mobile application.
    • A sports facility or its designee – up to 7 sports facilities having capacity of greater than 17,000 persons (e.g., Wrigley Field, Guaranteed Rate Field, Soldier Field, United Center, Allstate Arena, SeatGeek Stadium, Joliet Speedway, Gateway International, Metro East St. Louis Raceway, etc.) or their designees may accept wagers at or within a 5-block radius of the sports facility and by internet or mobile application. Any sports facility licensee must have an agreement with any team that plays at the sports facility.
    • An online only provider – up to 3 licensees may accept wagers by internet or mobile application only, provided that the Illinois Gaming Board (“IGB”) may accept applications for this type of license (by competitive bidding process) within 540 days (18 months) after the issuance of the first sports wagering license and the IGB shall announce the winning bidders within.

Video Gaming

The Act also brings an expansive amendment to Video Gaming. As municipalities are well aware the types of businesses seeking video gaming have broadened and now all licensed locations may operate a total of six (6) gaming terminals. Municipalities should review their codes to determine if an amendment is needed to allow for a sixth machine. The following is a summary of the further changes:

    • Increase of Maximum Wagers—Maximum wagers were increased from $2 to $4.
    • Increase in Maximum Winnings—The maximum cash award is $1,199 (increased from $500).
    • Progressive Jackpots— Progressive jackpot games are authorized. The IGB shall implement rules for these games within 90 days of the Bill becoming law (i.e., by September 26, 2019). The maximum jackpot is $10,000.
    • Increase in Tax. The tax imposed on net terminal income is increased from 30% to 33% beginning July 1, 2019, and to 34% beginning July 1, 2020.

Gambling in many forms previously unseen is coming to every corner of the State. It is imperative for municipalities that receive requests for any type of gambling facility to have a plan in place in terms of zoning and taxation as it may affect the licensing process for applicants.

Should you have any questions please don’t hesitate to contact Paul O’Grady or Patrick Connelly.