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Examining Answers to Key Sports Betting Questions in Illinois

After hearing from a bevy of sports betting professionals, major professional leagues, players’ associations, and those opposed to sports betting, Illinois lawmakers continue slow and steady on their approach to legal sports wagering. While the state legislature has been considering different types of gaming for more than a decade, it has been slow to act. And it appears things will be no different when it comes to sports betting.

Illinois currently has 10 casinos and three active racetracks, and there has been discussion in the state legislature about approving additional venues, particularly in the city of Chicago. But politics and procedural questions have long slowed the process. Representative Bob Rita (D-District 28) organized and held two hearings on sports betting, the most recent in the state capitol of Springfield on Oct. 17. In the final analysis, the hearing may have provided more questions than answers:

• What will the tax rate be?;
• What will the mobile/internet component look like?;
• Will there be any kind of payout to the professional leagues? The players’ associations?;
• Where will the state’s cut of sports betting revenue go?; and
• Whose bill will make it to a vote?

Sports Betting Hearings Left IL Lawmakers With More Questions Than Answers, So Don’t Expect a Bill to Be Filed Until 2019. 

Rita said last week that he doesn’t expect sports betting to come before the Illinois general assembly until the new session begins in late January. The state does have a two-week “veto session” around Thanksgiving, but it’s highly unlikely that any legislation will be far enough through the pipeline to be considered at that point. There’s multiple sports betting bills floating around the general assembly, some to do with sports betting, others to do with daily fantasy sports and still others to do with iGaming. But none, according to Rita, address all the relevant issues, and none have made it to a full vote.

In addition, there is some question about whether to include sports betting in a bigger gaming bill or on its own. Historically, more inclusive gaming legislation hasn’t been successful in the state legislature. Rita pointed to video gaming legislation that passed on its own in 2012 — more than three years after it was first introduced.

But before lawmakers can worry about the best way to shepherd legislation through the general assembly, they must first answer the key questions about.

1. What will the tax rate be? Undetermined. There has been no consensus on a tax rate in any of the bills put forth to date. At the Oct. 17 hearing, there was little talk about a specific tax rate, though longtime bookmaker Vic Salerno indicated that the higher the rate, the tougher it is for sportsbooks to be successful. Rita characterizes the tax rate as “very important” and wants to continue exploring the rates at which other states are taxing gross sports betting revenue.

Interesting/humorous that at both Illinois and DC hearings on sports betting today, lawmakers from both called out Pennsylvania for its exporbitant taxes (36%) and fees (10M for license) on sportsbook operators as example of what they should NOT do.

— Sports Handle (@sports_handle) October 17, 2018

2. What will the mobile/internet component look like? That’s a very good question and one that was not extensively discussed at either of Rita’s two hearings. Mobile/internet sports betting has already proven to be a critical component of the pie. As an example, New Jersey’s September sports betting revenue numbers showed a $184 million total handle — $104.8 million of which was generated online. Geocomply’s Lindsey Slater shared information at the hearing about geolocating users to make sure they’re within state borders, so mobile and internet sports betting are being discussed.

3.  Will there be a payout to the professional leagues? The players’ associations? The answer to this question isn’t quite as clear cut as it has been in many states. Representative Lou Lang (D-District 16) is also promising to file a bill and said at the hearing that he “conditionally” supports a fee to the leagues — though he wants something in return. He doesn’t want the operators to pay the leagues a “royalty” or “integrity fee.”  Rita seems less inclined to pay a fee, but is still weighing the idea: The pro leagues “started out with the integrity fee, but are they looking for integrity itself or are they just looking for a way to generate more money?” Rita said. “So, on tax rate, how does this affect that? So, I think I still need to get more information.” No state so far to legalize sports betting has mandate any payment or fee to the leagues.

4. Where will the state’s cut of sports betting revenue go? In bills that have been filed previously, sports betting tax revenue has been earmarked for education, the state’s pension fund, or capital construction, Rita said. But as yet, there’s not definitive destination for (potential) sports betting revenue in Illinois.

5. Whose bill will make it to a vote? Lang told Sports Handle in an e-mail that that he’s still negotiating with stakeholders and doesn’t expect to file a bill until the new session, but there are also multiple sports betting or sports betting-related bills floating around. According to Rita, the goal is to bring all the stakeholders together and get a consensus on what sports betting should look like and then craft a passable bill. Depending on timing, that could mean amending a current bill that has already passed through some procedural checkpoints, rather than crafting a new one. Rita’s SB 7, which was introduced in 2017 and has been amended dozens of times, is still in play.

Next Step in IL Is to Rally Stakeholders to Common Ground and Keep the Crafting of a Sports Betting Bill Transparent.

Going forward, it appears Illinois, with Rita in the lead, will continue to be mindful and thoughtful on the topic of sports betting. On the senate side, both former NFL player Napoleon Harris (D-District 15) and Steve Stadelman (D-District 34) filed bills in 2018. Harris’ bill called for an integrity fee and died in committee. Stadelman’s bill, the “Sports Betting Consumer Protection Act,” is lingering in the Assignments Committee.

There will likely be little movement on any legislation in Illinois — or across the country, for that matter — in the coming week, as mid-term elections approach. Illinois is in the midst of a hotly contested governor’s race, and, of course, members of the general assembly are up for reelection.

But once the dust settles, Rita will keep his eye on the prize.

“I feel we got a bunch of good information and now we take that info and use that in crafting a path,” he said. “Did we get anything concrete out of the hearing? No. But one of the goals is to do this in an open way, rather than sitting in a back room and negotiating.”