Illinois Sports Betting Debate Heats Up in House Committee

Illinois Sports Betting Debate Heats Up in House Committee
USA Today
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Derek Helling for Bookies.com

By Derek Helling | | 3 mins

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The debate over what legal sports betting in Illinois will look like heated up on Wednesday, as amendments to a standing bill were discussed by a myriad of interested parties.

The bill, H 1260, which has taken most of the focus in the state House Rules Committee over H 3308, became the subject of intense scrutiny Wednesday after the bill’s new sponsor filed two amendments to the bill. The amendments filed by Rep. Micheal Zalewski just ahead of Wednesday’s meeting of the committee represent two different potential frameworks for legal sports betting in the Land of Lincoln.

Amendment 1 Favors Treasury

The first amendment aims to satiate the desires of all the potential game operators in the state, but at a tremendous benefit to the state’s treasury.

In the current text the state’s land-based casinos, horse tracks, the lottery, off-track parlors and video game operators are all eligible to purchase licenses to offer legal wagering on single-event sports. Those license fees are among the most exorbitant in the nation, however.

Master licenses would cost $10 million or five percent of net terminal income, adjusted gross receipts or total handle. The greater of those options is what the operator would pay.

Skin licenses will cost operators $5 million, as will adding another brick and mortar location. The tax rate is what is going to draw even more ire from potential operators set at 25 percent. For reference, neighboring Indiana is taxing operators at a rate of 9.5 percent.

Potential online sportsbook operators like DraftKings and FanDuel, who are looking to start offering Illinois residents their sports betting products, are the subject of the second amendment.

Sports Leagues Benefit in Amendment 2

The framework laid out in the second amendment would not only let DraftKings and FanDuel operate sportsbooks in the state, but give professional sports leagues like MLB and the NBA what they have been clamoring for.

After a possible bad-actor delay as a penalty for DraftKings’ and FanDuel’s perceived violation of state law according to a state attorney general decision in 2015, they would be able to apply for two of three online licenses. Those would cost $20 million.

As far as physical sportsbooks go, seven licenses would be available on a first come, first serve basis between the state’s casinos, race tracks, off-track parlors and video game operators. The state’s lottery would not be integrated. Those seven licenses would cost $15 million.

The tax rate would be an identical 25 percent and skin licenses would also cost $5 million under this framework. Books would also pay a further 0.2 percent to professional sports leagues as a royalty and at the discretion of the leagues, be required to use official data to set their bets.

As discussion over these amendments move forward in committee and perhaps the full House and Senate floors, expect lobbyists and officials for the sports leagues to push hard for the second amendment. That framework provides new revenue sources, and allows leagues to partner with providers they’re already familiar with like DraftKings and FanDuel.

As much as MLB and the NBA will champion the second amendment, expect the state’s casinos and their lobbyists to rail against the license fees and tax rates in both amendments. They’ll argue the bills sets them at a competitive disadvantage in comparison to illegal books that aren’t paying the fees, forcing them to offer lower odds to entice consumers.

It’s questionable how much room for compromise there will be on the tax rate, however. The state’s governor, J.B. Pritzker, is already counting on at least $200 million in new revenue from sports betting to meet the demands of his current budget for the state.

The stakes in Illinois over legal sports betting have never been higher, thanks to recent amendments by Zalewski and the potential millions of dollars at stake for several parties. Springfield will be buzzing with activity in the coming days.

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