Illinois gambling revenues surge, but Chicago casino trails

Temporary Bally's casino in Chicago
The temporary Bally’s casino location in Chicago opened in 2023. A permanent venue is slated to open next year.

Adobe Stock

Illinois’ tax revenues from gambling skyrocketed in fiscal year 2026, despite changes to the tax structure that cut the average effective tax rate, according to a new report from Illinois’ Commission on Government Forecasting and Accountability.

Processing Content

Casino, video gaming and sports gambling drove the nearly 20% year-over-year increase in gambling tax revenues in Illinois, according to the 2026 update released by CGFA this month. 

But the update calls into question whether the Bally’s casino under construction in Chicago will be able to deliver on its high expectations, regardless of favorable legislative changes, because of the intense gambling competition in Illinois and the Chicago area in particular.

CGFA projects the permanent Bally’s casino being built in Chicago will eventually bring in more revenue than the current leader, Rivers Casino in Des Plaines, 16 miles away near the O’Hare airport. Yet those projections rest on assumptions that may not bear out.

Results at the temporary Bally’s Chicago casino that opened in 2023 have been disappointing. Some gambling industry experts said expectations were set too high and Illinois already has too many casinos. 

Chicago officials spent years debating the terms for casino in the city, with the expectation that it would windfall.

September data from the Illinois Gaming Board shows Bally’s temporary Chicago location solidly in the middle of the pack among Illinois casinos. Its total adjusted gross receipts came in behind Grand Victoria Casino, Hard Rock Casino Rockford, Hollywood Casino Aurora, Hollywood Casino Joliet and Wind Creek as well as Rivers. It trailed Rivers’ total adjusted gross receipts by over $30 million.

Five of the six casinos ahead of Bally’s are less than 50 miles from the Chicago venue.

Bally’s has bickered with Chicago officials over Chicago’s December 2025 decision to legalize video gaming machines in the city, going so far as to slow or pause construction on non-gambling portions of the permanent casino development project such as the attached hotel. The casino is expected to open in 2027.

Video gambling dispute

In August, 27 Chicago aldermen sent a letter to Bally’s demanding the company resume construction of the full development and adhere to the Host Community Agreement, which requires city approval of material changes, such as cutting out any components of the development.

Under the HCA, “Final Completion also expressly depends upon substantial completion of the hotel, restaurants, retail, event space, exhibition space, greenspace, Riverwalk and other components — not merely opening the gaming floor,” the aldermen wrote.

The aldermen said that “Bally’s has suggested the slowdown is a response to the city council’s authorization of video gaming terminals.” 

The HCA did allow for the renegotiation of impact fees if video gaming terminals are shown to have an adverse impact on the casino.

However, “VGTs have been authorized, but they are not operating throughout Chicago and have not produced the adverse impact contemplated by the agreement,” the aldermen wrote in the letter. “Nothing in (the HCA) says that authorization alone permits Bally’s to slow construction of the hotel or other non-gaming portions of the development.”

The aldermen also noted the HCA requires a minimum capital investment from Bally’s of $1.34 billion. 

The contract approved by city council was for a $1.74 billion casino resort development. It calls for 3,400 slots and 173 table games as well as a 3,000-seat theater, 500 room hotel tower, and 10 different restaurants, according to CGFA.

Spokespersons for Bally’s did not respond to questions by press time.

CGFA said in its report that Bally’s still plans to open the casino in early 2027, and Bally’s Chairman Soo Kim said in September that construction on the casino continues, according to The Lines. 

State law changes

The Chicago casino back-and-forth is unfolding against the backdrop of changes to Illinois law that have led to less state tax revenue from gambling than would have come in under the previous rate structure. 

A 2019 law opened up six additional licenses for casino operations in Illinois.

A 2020 law deleted an additional tax instituted under the 2019 law that equaled about a third of the Chicago casino’s AGR, instead imposing a new privilege tax rate structure on the Chicago casino with separate rules for table games and slot machines.

The upshot of all the changes was that the average effective tax rate under the previous structure, 27.3% (based on fiscal year 2020 data), dropped to 20.8% in fiscal 2026.

The casinos that benefit most from these tax structure changes are higher revenue-generating casinos, especially ones with large amounts of adjusted gross receipts from table games, CGFA said. 

Rivers produced the highest adjusted gross receipts of any Illinois casino, including the most AGR for both table games and electronic gaming devices.

Bally’s temporary Chicago casino has the largest percentage of table games in its AGR composition, at 38%.

Saturation concern

Even with the favorable statutory changes, CGFA noted, the permanent Chicago casino will have to contend with five existing casinos in the Greater Chicago area, four casinos across the Indiana border and two new casinos, one in Chicago’s north suburbs and the other in the south suburbs. 

The Chicago casino will also open as the number of video gambling terminals in the Chicago metro area has grown to more than 20,000, before any terminals have been activated in Chicago. On average, about 39 new terminals were added per month in FY2026.

Net terminal income in Illinois hit a new record, $3.31 billion, in fiscal 2026, a 7.2% year-over-year increase. That generated $1.15 billion of tax revenue, $997.3 million of that going to the state and $161 million to local governments.

That’s compared to a surge in adjusted gross receipts for Illinois casinos in FY2026, to $2.05 billion from $1.81 billion, a 13% jump that brought the total above pre-pandemic levels and reversed a decade-long downward trend.

Casinos generated $557.4 million in total tax revenue in FY2026, with $430.3 million of that going to the state and $127.1 million going to local governments.

In the broader context of the Midwest, Indiana bested Illinois’ casino revenue in FY2026, bringing in $2.32 billion to Illinois’ $2.05 billion. But other Midwest casino-operating states, such as Missouri and Iowa, lagged Illinois, and FY2026 was a much higher-growth year for Illinois than for its casino-operating neighbors.

“Illinois has surged while the AGR totals of other Midwestern states have shown less growth or slumped,” CGFA said. “This is primarily due to the continued expansion of the casino industry in Illinois.”

CGFA said it expects growing gambling positions in the state. But that will generate only modest growth in gambling tax revenues, it said, given the changed tax structure, tax offsets, and “cannibalization and area saturation,” whereby new entrants siphon revenue from existing casinos rather than growing the pie. 

“Cannibalization at existing Illinois casinos is inevitable, especially those in the Chicago metropolitan area where the majority of the gaming expansion will take place,” CGFA said. 

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *