The expansion of land-based gaming in two U.S. markets is impacting the sale of lottery tickets.
The Illinois Lottery is no longer the state’s top-grossing gaming vertical, ending an 18-year run for lottery sales as the top generator of gambling tax revenue in the Land of Lincoln.
According to a state report, the Illinois Lottery posted $3.76 billion in sales for the fiscal year that ended July 31. The lottery sales, which generated $789 million in tax revenue, finished behind the $871 million in sales posted by video lottery terminal (VLT) operations in the state. These VLTs are available to play in bars and taverns across the state.
In Illinois, revenue generated from lottery sales is allocated toward public education. Sales during the period were down roughly $100 million compared to the previous fiscal year.
Slot machines in Illinois surpassed lottery sales for the 2025 fiscal year, despite near-record results. The $3.76 billion in lottery sales was the second-highest sales year in state history.
Online lottery sales in Illinois reach record results
The results in FY2025 were spearheaded by record online sales. The Illinois Lottery, powered by European lottery firm Allwyn, reported $702 million in online sales.
“Online lottery play continues to be a growing segment of the Illinois Lottery’s offering,” said Allwyn North America General Manager Keith Horton. “Modern players expect convenience and choice to play in retail or online. The lottery’s suite of online offerings, including website, app and engaging game options, strengthens the lottery’s ability to generate funding for education.”
Total lottery sales during the fiscal year ended with more than $2.5 billion in prizes being awarded to players in Illinois behind the 109.5 million winning tickets sold in the state.
Of those winning tickets, nearly 100 players pocketed $1 million or more.
The tax revenue from lottery sales adds to the $380 million in tax revenue generated by Illinois sports betting operators and the $7 million in tax revenue from horse racing. Illinois has been a regulated online sports betting market since wagering went live in 2020.
Collectively, Illinois received $2.2 billion in tax revenue from regulated gaming for the fiscal year that ended July 31, marking a historic milestone for the state.
Nebraska’s lottery sales dwindle
Nebraska is also reporting slower results for state lottery sales.
According to data provided by State Auditor Mike Foley, Nebraska posted a $36 million decline in lottery ticket sales in the fiscal year ending July 1 compared to the year prior.
“The longer-term impact of new forms of gaming on future lottery proceeds seems ominous,” said Foley in a report. “The protracted course of lottery ticket sales is what matters most, and only time will tell if it experiences a significant ongoing decline.”
The 16% year-over-year decline resulted in the state missing out on $9.6 million in tax revenue, with lottery revenue distributed to funds including the Nebraska State Fair Fund, the Compulsive Gamblers Assistance Fund and funds that support education.
Lottery ticket sales in Nebraska declined with skill game machines available across the state. In some cases, the machines are available at retailers that also sell lottery tickets.
“They [skill game machines] are a direct competitor to the lottery, and that’s what’s been impacting their revenue,” WarHorse Casino Director of Government Relations Lynne McNally told the Nebraska Examiner.
Lawmakers in Nebraska consider online sports betting
Nebraska lottery sales could also be impacted by online sports betting as lawmakers in the state consider legislation. Earlier this year, Sen. Eliot Bostar introduced LR20CA as a measure that proposed authorizing a constitutional amendment that would have put online sports betting on the ballet for the state’s general election in 2026. Currently, Nebraska only offers retail wagering at licensed casinos after a lengthy approval process in 2023.
Bostar pulled LR20CA from this year’s legislative session after failing to garner enough Senate support after the measure was passed by Nebraska’s unicameral legislature by a 27-16 vote. Opponents of LR20CA included former Nebraska football coach and politician Tom Osborne and former Nebraska Gov. Kay Orr. LR20CA received pushback over problem gambling and social concerns, including bankruptcy and drug abuse. LR20CA will carry over into 2026, allowing Nebraska lawmakers to reconsider online sports betting.
“If I were a betting man, I’d lay odds that the increasing popularity of such online activities, some of which occur outside of the state of Nebraska’s authority, will result in ever more gambling dollars being siphoned away from the lottery and its intended beneficiary funds,” added Foley.
Nebraska and Illinois provided data indicating the impact of gaming expansion on lottery ticket sales. Lawmakers and key stakeholders nationwide will remain vigilant for old and emerging verticals that can impact tax revenue received by state and local governments.
