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Illinois moves towards legal Internet gambling

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Last year, the Illinois state legislature introduced a bill that would legalize internet gambling with a committee approving the legislative proposal on a 10-4 vote.

The bill represents Illinois' second attempt at legalizing online gambling, which would enable residents to play poker and other games of chance online. State senator Terry Link, a Democrat, said the gambling expansion will generate between $400 million and $1 billion in new government revenue.

For 2012, the online poker industry totaled $33.8 billion around the world, according to industry insider Sam Shefrin in a recent interview with Investment Underground. "The U.S. Department of Justice indicted Full Tilt Poker, PokerStars and others in April of 2011 . . . . Online poker enthusiasts are hopeful that the U.S. can soon become like the U.K. and other countries where online poker is legal and regulated," said Shefrin.

If the measure is passed, online poker sites such as Pokerstars (which has bought Full Tilt) and 888 Poker could once again make its way to households, coffee shops, and offices throughout Illinois. Professional players, many of whom have since moved outside of the U.S. since the government shutdown in April 2011, will likely establish residences in Illinois in order to legally wager online.

In March 2012, Illinois became the first state in the United States to sell lottery tickets online after the United States Justice Department ruled that it would not prevent official state-sponsored lotteries from selling tickets on the Internet. In December 2011, the DOJ revised its opinion on the 1961 Wire Act and decided that the law only restricted wagering on sporting events.

As the saying goes, desperate times call for desperate measures.

Already faced with a weak U.S. economy, Illinois is struggling with its worst fiscal crisis in history. On Wednesday, Illinois governor Pat Quinn presented the state budget which proposed to slash $400 million from education in order to pay for skyrocketing public pensions. Next year, the state, which has long been a bedrock for public unions, expects a backlog of $2 billion in unpaid bills to vendors.

Legalizing Internet gambling would be a desperate source of revenue for a state struggling to pay its bills. Gov. Quinn has vetoed previous attempts at legalization but has also signaled that he would welcome any influx of cash to state coffers. In various interviews, Quinn said that under the right circumstances, he would approve gambling expansion in the state as long as the revenues are "dedicated to education" and possibly teacher's pensions.

According to Sen. Link, most of the gaming revenue would be directed towards the state's Education Assistance Fund after local communities receive a share of the profits.

Opponents, including conservative advocacy groups and some GOP lawmakers, argue that Illinois should fix its long-term fiscal crises by reducing unsustainable commitments to public unions, not by expanding gambling activities which would increase the number of personal bankruptcies in Illinois. Others see the revenue share for local communities as benefiting mostly voters of the Democrat base, and a self-interested vehicle for shoring up campaign financing for local Democratic candidates in future elections.

In his March 2013 budget address at the state assembly, Quinn added that "gaming expansion has to be done right. It must have tough ethical standards, a campaign contribution ban on casino operators, and no loopholes for mobsters."

The Illinois state legislature isn't just proposing the legalization of online poker and Internet gambling, its measure also allows for the construction of land-based casinos and the placement of slot machines throughout the state. The bill allows for one new casino in the city of Chicago and enables slot machines to be placed at airports and horse racing tracks.

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