Illinois Goes All-In On Sports Betting, Chicago Casino

A dramatic end to Illinois’ legislative session saw approval of the state’s most significant gaming expansion in almost three decades via a bill legalizing online and land-based sports betting and creating a license for a mega-casino in Chicago.

Rumblings of a massive gaming bill tying sports betting to casino expansion continued to persist during the final weeks of the 2019 legislative session, but a final proposal tallying almost 800 pages did not emerge until Friday afternoon.

The session was scheduled to end at midnight on Friday but ultimately continued through the weekend as leadership from both chambers and Governor J.B. Pritzker negotiated on a number of major items, including expanded gambling and sports betting.

Senate Bill 690 was swiftly passed by the state House on Saturday and the Senate on Sunday, both by significant margins. The bill now only awaits Pritzker’s signature, which is a virtual certainty given the governor’s stated support.

“Legalizing sports betting and expanding gaming will create jobs up and down the state, from Rockford to Chicago to Walker's Bluff, where communities hungry for employment will see 10,000 new jobs,” Pritzker said in a statement on Saturday night.

“After the Supreme Court legalized sports betting, I promised the people of Illinois that sports wagering would be a key element of my legislative agenda, so that we are competitive with our neighboring states and can create more revenue for communities around Illinois.”

As approved by the legislature, the bill legalizes sports betting at casinos and racetracks for an upfront license fee of up to $10m and a 15 to 17 percent tax on gross sports wagering revenue.

Racetracks are also allowed to accept bets at up to three off-track betting locations.

Mobile betting would immediately be permitted with that license, but each casino and racetrack would receive only one mobile skin, which must be casino-branded or use a brand owned by the casino or racetrack’s parent company.

The bill also creates three online-only licenses, but not until 18 months after the first sports-betting license is authorized for incumbent casinos and tracks.

The 18-month delay marks Illinois lawmakers’ attempt at a compromise of sorts after a bitter and increasingly public fight between Chicago-based Rush Street Gaming and daily fantasy operators DraftKings and FanDuel over proposed “bad actor” clauses that threatened to exclude the two fantasy companies from the Illinois market altogether. 

“While it is good to see sports betting bills passed, excluding DraftKings and FanDuel is like passing a ride sharing bill that excludes Uber and Lyft,” DraftKings CEO Jason Robins tweeted Sunday morning. “[It’s] very disappointing that Illinois customers will not have the best options available to them for 18 months.”

The three online licenses will be subject to a competitive bidding process and require a stiff upfront fee of $20m, but any winning bidder will be able to choose the brand it uses.

Until the first online-only license is awarded, all online and mobile betting conducted by casinos or racetracks will require in-person registration of player accounts at a gaming facility. After that point, all licensees will be permitted to accept remote registration. 

Lobbying Win For Leagues, Less So For Lottery

With its unique legislation, Illinois seems set to accelerate several emergent trends in U.S. sports-betting policy.

Following the lead of the District of Columbia, Illinois will allow up to seven professional sports arenas to obtain licenses to offer sports betting, either on-site or within a five-block radius of the facility. 

A sports facility license would also allow limited mobile betting within five blocks of the sports stadium or arena.

Meanwhile, the bill marks the biggest lobbying win to date for professional sports leagues by requiring all operators in Illinois to use official league data to settle in-play wagers and prop bets.

The provision marks leagues’ second lobbying victory in as many weeks, with Illinois joining Tennessee as only the second state to include such a requirement in legislation.

Unlike Tennessee, however, Illinois sought to monetize the data mandate by creating an official data provider license, which will require the likes of Sportradar, Genius Sports and Perform to pay a license fee of up to $500,000 every three years.

The bill also creates an avenue for lottery involvement in sports betting, albeit under terms that may ultimately prove to be unviable.

A central system operator contracted by the Illinois Lottery would have to pay an upfront fee of $20m after being selected through a competitive bid process to operate up to 2,500 retail lottery terminals in its first year of operation and an additional 2,500 the following year.

However, the lottery would be restricted to parlay wagers and the program is classified as a pilot program, requiring legislative reauthorization to continue beyond 2023.

Casino Expansion

The sports betting aspects included as part of a broader capital bill are only one part of the major gaming expansion Illinois will see in the coming years.

Elsewhere, the bill creates licenses for six new casinos in various parts of the state, including the city of Chicago.

Other cities permitted to host new casinos would be Danville, Waukegan and Rockford, as well as municipalities in Cook and Williamson counties.

The Chicago casino will be permitted to have up to 4,000 gaming positions, while the limit for all other casinos in the state increases from 1,200 to 2,000 positions.

Overall, the expansion creates almost 35,000 potential new gaming positions, although it is not clear if all of them will end up being used, amid concerns of market saturation.

Tom Swoik, executive director of the Illinois Casino Gaming Association, which represents the state’s existing casinos, spoke at a hearing Friday in opposition to the bill, arguing that other than Rivers Casino, a Rush Street property in Des Plaines, none of the other existing casinos would likely be interested in expanding beyond their existing limit of 1,200 machines.

“This bill is not going to generate the kind of funds people may think it is,” Swoik told the House Executive Committee Friday. “Doubling the number of gaming positions, you’re not doubling the number of gamblers.”

A company licensed to operate the Chicago casino will have to pay a $30,000 fee for each new gaming position, or up to $120m, while the other new casinos will have to pay $17,500 per position.

The Chicago casino operator would also be permitted to use some of its gaming positions to install slot machines at Chicago airports, including O’Hare International, the busiest airport in the United States, according to the Federal Aviation Administration.

In addition, Illinois three horse racetracks will be permitted to become racinos, ending a longstanding lobbying quest on the part of track owners. One new racetrack license is also created as part of the legislation.

Video gaming terminal (VGT) operators also came out a winner, especially as VGTs appeared to be under attack just a few months ago.

After Pritzker initially proposed to hike VGT taxes from 30 to 50 percent, the legislation passed on Sunday only raised the tax rate to 33 percent in the first year and 34 percent beyond that.

Bars and restaurants licensed to host VGTs will also permitted to expand from five to six machines, with the maximum bet increasing from $2 to $4 and maximum payouts rising from $500 to nearly $1,200.