SPRINGFIELD — Whether Illinois should enter the world of sports and fantasy betting will be on the table for a hearing to be held Wednesday in Springfield.
It is the second of two hearings held by House subcommittees to examine possible gambling expansion in Illinois. Lawmakers are considering a plan to add more casinos and allow slot machines at horse racing tracks in addition to sports and fantasy wagering.
The idea of legalizing sports betting in Illinois got a boost last spring when the U.S. Supreme Court struck down a law that effectively barred most states from allowing sports betting. Now, the door is open to any state to legalize it.
State Rep. Mike Zalewski, D-Riverside, chair of the House Revenue Committee, said adding sports betting to the mix of gambling expansion being considered by lawmakers makes sense.
"It can sort of be the tie that binds the different industries and the bricks and mortar to one unifying approach going forward," Zalewski said. "All of these things have the opportunity to bring the stakeholders together and figure out the best path forward."
That isn't always the case with gambling expansion. Existing casino owners fear additional casinos will further cannibalize the gaming market. They've also been opposed to the idea of racinos, where slot machines or other gambling devices are installed in horse racing tracks.
Cities such as Rockford and Danville, which are in line for casinos under the expansion bill, want them because they believe the casinos will provide an economic boost. And the horse racing tracks contend they will not survive without additional revenue from other forms of gambling.
In a recent report on wagering in Illinois, the legislature's Commission on Government Forecasting and Accountability included a brief section on fantasy, sports and internet wagering.
"While it is difficult to predict the revenue potential of these gaming ideas without knowing the final product and its tax structure, each of these formats would create a new revenue source for the State," the report said. "Of course, with each new format brings more competition for all of the gaming methods to compete for the limited gaming dollar."
New Jersey, which brought the lawsuit that led to the U.S. Supreme Court decision, released numbers Friday showing $24 million in revenue from sports betting for the month of September, which is also the start of football season. That revenue came out of $184 million in sports wagers.
Zalewski said that $184 million wagered "in a state like New Jersey as compared to Illinois presents real opportunity."
Zalewski said a key decision facing Illinois lawmakers is whether sports betting should be limited to brick-and-mortar locations or if the state would allow internet wagering. In the case of New Jersey, of the $184 million in sports wagers were made in September, $104 million came from either online or mobile wagering.
"If we added mobile, then you would talk about a real opportunity to have revenue affect the state of Illinois," he said.
At the same time, gambling opponents believe the convenience of online and mobile wagering will exacerbate the issue of problem gamblers.
There also is the question of how to deal with professional sports leagues whose products provide the basis for sports betting.
"There's a broader conversation going on in the country about what the leagues' role in these conversations will be," Zalewski said. "They've come forward and said basically you're going to be using our players, you're going to be using our stadia, you're going to be using our product to fund your activity and we'd like to have a place at the table."
However, Zalewski noted that sports betting has been going on in Nevada for years without the leagues demanding anything.
"If they didn't need it before, why should they need it now?" he said. "But given that this is going to proliferate rather quickly, I think we're going to have to reconcile the teams' and the leagues' role in this in a real way."
A sports betting proposal backed by Sen. Napoleon Harris, D-Chicago, would add a 1 percent "integrity fee" to a 12.5 percent state tax on wagers. Money from the fee would be sent to professional sports leagues.
All of this comes at an uncertain time for gambling in Illinois. The COGFA report found that while overall revenue from gambling increased in the last fiscal year, almost all of that was from the huge popularity of video gaming. Revenue from the lottery, casinos and horse racing was stagnant, the report said.
The report also said questions remain about whether video gaming can continue to expand and if so, will it continue to cut into casino revenues, whether a new manager for the lottery will be able to increase revenue and whether horse racing will need additional help if slot machines aren't allowed at tracks. All of them are questions without answers right now.