In his veto message, the governor said the state must not allow "loopholes for mobsters," adding it is "critically important that any expansion of gaming in Illinois be undertaken thoughtfully and carefully."
The Chicago Tribune said the veto sets up a possible clash with legislative proponents, who have pledged to try to override the veto.
Quinn has warned for months about what he said were problems with the bill. The governor contended it did not provide enough oversight of casino operators and other gambling interests, the Tribune reported.
He also said any gambling expansion should set aside a proper amount of money for education, the newspaper said.
For his part, Chicago Mayor Rahm Emanuel issued a statement saying it was time to stop the flow of jobs and money to northwest Indiana casinos.
The vetoed bill called for new casinos in Chicago, southern Cook County, Lake County, Rockford and Danville, and would have allowed slot machines at horse racing tracks.
Slots were included in an earlier bill last year that never made it to Quinn's desk after he threatened to veto it.
The state already has 10 casinos, but only one in Cook County.