The latest proposal to expand gambling would include a subsidy to aid Illinois horse racing, and Gov. Rod Blagojevich signaled Wednesday that he is interested in the idea.

The proposal by Rep. Robert Molaro (D-Chicago) is similar to the plan Blagojevich suggested last month.

It would let existing casinos expand to include 3,000 slot machines and table games, up from the current limit of 1,200.

Casinos would pay the state $20,000 for each new space. No new casinos would be created.

Molaro estimated the state would get an additional $500 million to $600 million next year in additional taxes and one-time revenue from selling more gambling space to the casinos.

Unlike the Democratic governor, Molaro would give 3 percent of casinos' gross revenue to the racing industry. Molaro said the government-regulated industry creates thousands of jobs and should be protected from competition created by government action.

Molaro's plan also calls for the top tax rate on Illinois casinos to drop to 50 percent. Blagojevich wants to keep the tax rate at 70 percent.

But the governor's aides said the new proposal has possibilities. "It's certainly something we are interested in," said spokeswoman Rebecca Rausch.

Illinois racetracks and casinos hailed the proposal as a way to help both industries and generate more money for the state.

The plan is likely to get a chillier response from lawmakers who want to allow new casinos to open. In particular, Senate President Emil Jones wants to bring casinos to Chicago and two of its suburbs — an idea Blagojevich threatens to veto.