Illinois making changes
Illinois has always been quick to make changes relating to the gambling sector. It was the first state in the US, for example, to allow the selling of lottery tickets online. It was also the first state that banned online gambling.
There has been a lot of talk about legalizing sports betting in Illinois since the ending of the federal ban in May 2018. Illinois does not want to fall behind its neighbors in this regard and is considering different proposals for legalization.
The latest sports betting bill in Illinois is unique in many ways. Democrat Representative Mike Zalewski is behind the bill, having presented five different amendments, not all of which are practical and thus got no support.
However, the plan was for the best aspects of these amendments to be softened and added together to form a more practical bill. However, the revision has only become more complicated.
Penalty box
Zalewski was pushing for a “penalty box” on FanDuel and DraftKings, due to allegedly pushing their daily fantasy sports offerings illegally in the state. This would see them not being able to offer sports betting in Illinois for a total of three years.
The two operators then threatened legal action, as well as starting an advertising campaign against such a penalty box.
As part of the amended bill, Zalewski is trying to now have all online sports betting being part of a penalty box. This would mean that there would be no online sports betting inside of 540 days of the bill passage.
Licensing proposals
Under the bill, there is the potential for all types of gambling stakeholders to get in on the sports betting action.
For casinos and racetracks, there would be 26 licenses up for grabs. These would cost $5m each, or they would pay 5% of their adjusted gross receipts. Those operating online would pay $25m for one of the two available licenses.
Sports facilities could pay $10m to obtain one of the seven available licenses. Finally, lottery retailers could obtain a license, with a central provider having to pay a license fee of $20m.
Each of these licenses would be valid for five years. The renewal cost would then be only $1m going forward.
The initial bill proposed a 0.25% integrity fee. This was dropped to 0.2% in the next amendment, but in-play betting providers would have to use official league data. The latest change sees no integrity fee and operators would need to use official league data for in-play sports betting only after the expiration of 540 days.
For sports betting operators, excluding the lottery, there would be a 20% tax based on adjusted gross receipts. No betting on college events involving Illinois teams or athletes will be allowable.
Support from sports teams
The major sports teams in the state will support legal sports betting if their demands are met. According to the Chicago Tribune: “All of Chicago’s major franchises — with the exception, so far, of the Bears — are backing a plan pushed by Major League Baseball, the National Basketball Association, and the PGA that would give professional leagues 25 cents of every $100 bet on their sports in the state.”
This type of fee is known as an integrity fee. No state to date has included an integrity fee as part of a final sports betting bill. This is mainly due to sportsbook already having tight margins, with such a fee potentially draining any semblance of profitability from the operators.