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COVID-19 craps out state gambling tax revenue by $200 million, but sports betting off to strong start

Overall, gambling tax revenue for the state fell by 13.4% to $1.2 billion last fiscal year. Officials will look to legal sports betting and other gaming revenue streams to help recover from pandemic losses.

Guests enter Rivers Casino in Des Plaines as it reopened with COVID-19 protocols in place July 1.
Guests enter Rivers Casino in Des Plaines as it reopened with COVID-19 protocols in place July 1.
Ashlee Rezin Garcia/Sun-Times

Illinois’ three-month COVID-19 shutdown left the state $200 million in the hole in terms of gambling tax revenue, as casino profits were slashed by nearly a third compared to last year.

And while the bright lights have been flipped back on at the state’s 10 casinos and 36,000-plus video gaming terminals, it’s no sure bet those revenues will jump back to normal anytime soon, according to a report released this week by the state’s bipartisan Commission on Government Forecasting and Accountability.

“Even with the resumption of wagering, it is expected that the ramifications of the pandemic on public confidence will persist for some time,” state analyst Eric Noggle said in the report.

Gaming was put on hold along with thousands of other businesses statewide for the duration of Gov. J.B. Pritzker’s pandemic stay-at-home order from March 16 through the end of June, which also marked the end of the state’s fiscal year.

Casinos raked in $943 million, plummeting 30% from the previous fiscal year’s haul of $1.4 billion — with the coronavirus shutdown putting a brutal exclamation mark on an eighth consecutive year of casino losses.

The state’s most lucrative gambling house, Rivers Casino in Des Plaines, suffered a 27% revenue loss of about $119 million.

“No one could predict COVID-19 and the impact it would have on the gaming industry and the entire economy,” Rivers general manager Corey Wise said, adding that “COVID protocols have been well received and successful” since reopening in July.

A security guard stationed at the front door gives a face mask to a guest before he can enter Rivers Casino in Des Plaines on the first day of reopening following July 1.
A security guard stationed at the front door gives a face mask to a guest before he can enter Rivers Casino in Des Plaines on the first day of reopening following July 1.
Ashlee Rezin Garcia/Sun-Times

Video gambling terminals not in casinos took a 23% hit, sucking down $1.2 billion of gamblers’ money compared to $1.6 billion the year prior.

On top of that, Illinois Lottery sales fell $173 million to $2.8 billion. That’s the lottery’s worst one-year decline since the 1970s, a 5.8% falloff that Noggle attributed to the pandemic because “customers were more likely to stay at home and some retailers may not have been open.”

Overall, gambling tax revenue for the state fell by 13.4% to $1.2 billion. That’s just another headache for Pritzker as he scrambles to make ends meet after the pandemic fired a $2.7 billion hole into his spending plan. The Democratic governor has ordered his cabinet directors to plan for a “nightmare scenario” of budget cuts of at least 5% this fiscal year and 10% in the next one.

But a new gaming revenue stream is showing promising early returns. Gamblers plunked down nearly $140 million in sports bets in August, Illinois’ second full month of legal sports betting.

Among the state’s seven sportsbooks, the house held about $7.2 million of that handle, pumping about $1.1 million into state coffers.

The state had hoped to see some of that money sooner, as the industry launched just days ahead of the COVID-19 shutdown. Just $12,224 was collected in sports betting tax revenue by the end of June.

But the proliferation of mobile sports betting options — and the return of most major American sports — have sent those numbers skyrocketing since July. Illinois bettors put down $52.5 million during that first full month of sports wagering.

Numbers are expected to keep ballooning with five online sportsbooks live statewide. Nearly 90% of the Illinois’ August sports betting handle was placed online.

State analysts are still hedging their bets though, with Noggle writing that “while these revenue amounts are sure to increase in FY 2021, the extent that this will occur remains uncertain due to the lingering impact of COVID-19 on sports events.”

The state is also counting on six new casinos authorized under last year’s gambling expansion law to eventually start generating cash.

“However, questions remain on the extent that gaming revenues will increase given the plethora of gaming opportunities that already exist and the potential ramifications of the virus on the economy and discretionary spending,” Noggle said.

The Illinois Gaming Board has until the end of the month to issue license decisions on casino applicants — but that appears on track to be delayed. The board isn’t scheduled to meet again until Nov. 5.