By Karen Pierog

CHICAGO (Reuters) - Illinois Governor Pat Quinn vowed on Monday to veto legislation to expand gambling in the state, calling on lawmakers to start over with a slimmed-down plan that includes more oversight.

The Democratic governor called for a much smaller, more balanced expansion that he said would prevent corruption and over-saturation.

"We have no interest in this state in becoming the Las Vegas of the Midwest," he told reporters.

The legislation, which passed both chambers of the Democrat-controlled General Assembly in late May, would add casinos, including a publicly owned one in Chicago, to the 10 currently licensed in Illinois.

The bill, which was expected to generate up to $1 billion a year for the cash-strapped state, would also bring slot machines to other venues like horse racing tracks and Chicago's two airports.

Under Quinn's framework, Illinois would add five geographically dispersed casinos in Chicago, Lake County, southern Cook County and in Rockford and Danville, while eliminating plans for slots at the airports and tracks and allowing video gambling only in communities that pass an ordinance in favor of the move.

His plan would give the Illinois Gaming Board oversight of the Chicago casino, prohibit campaign contributions by casino licensees and managers, increase the amount of revenue generated particularly for education by removing "unfair tax breaks," and speed up the time frame for one-time casino license payments.

Quinn hinted that a new bill using his framework could be done "in the near future." State lawmakers are due back into an abbreviated session next week.

Fear of a gubernatorial veto has kept the 409-page bill from arriving on Quinn's desk.

A spokeswoman for Senate President John Cullerton, a Chicago Democrat, said Quinn's recommendations will be folded into ongoing discussions on how to improve the legislation.

"Additionally, we will be evaluating the governor's framework in light of what is passable by both chambers of the General Assembly," said Rikeesha Phelon in a statement. "We look forward to developing the appropriate compromise with the governor and members of the House."

(Reporting by Karen Pierog; Editing by James Dalgleish)