CHICAGO — As Illinois embarks on a massive gambling expansion of up to six new casinos and the addition of slot machines and table games at horse tracks, revenue from the state's 10 existing casinos last year dropped more than 3% , continuing a decadelong slide.
The loss in revenue from casinos, however, was more than offset by a continued increase in the state's take from video poker and slot machines at bars, restaurants and truck stops, according to a report out Thursday from the legislature's bipartisan Commission on Government Forecasting and Accountability.
Overall, the state brought in more than $1.4 billion in tax revenue from casinos, video gambling, horse racing and the lottery in the budget year that ended June 30, up 3.5% from the previous year, according to the report.
But the report, put out annually by the commission, raises concerns about whether new betting options authorized in the gambling expansion legislation Gov. J.B. Pritzker signed in June -- including new casinos in Chicago, Waukegan, the south suburbs, Rockford, Danville and southern Illinois -- will continue to draw revenue away from the existing casinos.
"Increased competition from video gaming continues to be a major factor for these declines," the commission's report says. "These declines at the existing casinos may be exacerbated due to the significant increase in competition soon to come from new Illinois casinos, racinos, and from new casinos in nearby states."
The commission's analysis echoes concerns raised by the state's casino industry, which until this spring had succeeded in fending off the creation of new licenses for about a decade.
Riverboat casinos surpassed the lottery as the state's primary source of gambling revenue in 2003, generating $554 million in taxes, compared to $540 million from lotto sales. State casino revenue peaked at $699 million in 2005 and generally has been trending downward ever since, hitting $269 million last year -- a nearly 62% decline.
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Revenue from video gambling, which came online in 2012 after a long delay, surpassed casinos for the first time in 2017. The lottery retook its place as the state's greatest source of gambling revenue in 2008 and last year generated $735 million -- a little more than half of the tax dollars the state took in from wagering.
Pritzker is counting on revenue from newly authorized gambling -- which also includes legalized sports betting, a new horse track in the south suburbs, and an expansion of video gambling -- to help pay for building projects as part of his six-year, $45 billion "Rebuild Illinois" infrastructure plan. When the legislation was signed, his administration estimated gambling package would generate $350 million in new annual revenue.
But problems already have emerged.
A study by an outside consultant for the Illinois Gaming Board and the city of Chicago determined that the law's proposed taxes on a city casino are so high that the project could fail to attract a developer. Mayor Lori Lightfoot has said she expected that outcome and plans to work with leaders in Springfield to find a find solution.
Meanwhile, Churchill Downs Inc., which owns Arlington International Racecourse and a majority stake in Rivers Casino in Des Plaines and hopes to win the Waukegan casino license, has said it won't add slot machines or table games at Arlington because the share of revenue dedicated to purses for horse owners is so high that the track couldn't compete with casinos.
And though Pritzker urged lawmakers this spring to legalize sports betting so that Illinois could be the first state in the Midwest offer it, sportsbooks in neighboring Iowa and Indiana already have opened while the Illinois Gaming Board is still drafting the rules.
A Pritzker spokeswoman did not respond immediately Thursday to a request for comment.