For $20 million, mobile-only sports betting operators can get a license to operate in Illinois. Only three such licenses are up for grabs. At least one company has decided that the money would be better spent on dirt.
Multiple sources have confirmed to Sports Handle that growing U.S. sports betting juggernaut FanDuel Group is in talks to purchase the Fairmount Park Racetrack in Collinsville, Ill., in the St. Louis metropolitan area. The reason? It’s a workaround for the application fee and would allow FanDuel, which would otherwise have an 18-month waiting period before it could launch its mobile sportsbook in Illinois, a chance to go live sooner under its own brand name.
The timeline for a purchase is unclear, but talks are well underway and FanDuel Group (Betfair Interactive US LLC) already applied for a management services provider license with the Illinois Gaming Board. The fee for this license is $1 million. Fairmount Park has applied for an organization license, which has a $10 million price tag.
A workaround to the IL sports betting ‘penalty box’
Unless FanDuel is planning to purchase a physical location for a sportsbook or partner with an existing casino, there would be no reason for it to have applied for a license at this time. FanDuel partners with Boyd Gaming, which has locations in Illinois. Similarly, competitor DraftKings partners with Caesars. It’s been an open question whether they would choose to run sportsbooks for their partners or bide their time and launch mobile-only on their own.
Under the new sports betting law, mobile-only platforms are subject to the “penalty box” built into the legislation. It was designed, in part, to punish FanDuel and DraftKings for operating daily fantasy sports contests in the state following a non-binding advisory opinion by the state’s attorney general in 2015 that “daily fantasy sports constitute illegal gambling under Illinois law.”
The new sports betting law prohibits the mobile-only platforms that obtain licensure from launching until 18 months after the first sportsbook license is issued. Mobile sportsbooks tethered to physical locations may launch both retail and digital sportsbooks as soon as they are licensed and get the go-ahead from the Illinois Gaming Control Board. Bettors must register in person for the first 18 months.
Rivers Casino took the first legal sports bet in Illinois on Monday, when former Chicago Blackhawks forward Eddie Olcyzk placed a $100 wager on the White Sox to win the World Series at the company’s physical location in Des Plaines.
Fairmount Racetrack offers thoroughbred flat racing and also owns four off-track betting facilities in Illinois. A call seeking comment from the racetrack on Friday was not immediately returned.
FanDuel’s move isn’t just about owning a retail location and avoiding a $20 million application fee. It would also allow the company to immediately, or upon a deal closing, offer retail and mobile sports betting under its own name.
According to the text of the law, only an operator that has a physical presence in the state can brand a sportsbook. For example, William Hill partners with the Eldorado Group’s Grand Victoria, which is about 40 miles west of Chicago. When the Grand Victoria opens its sportsbook, it would be branded something like this: “Grand Victoria Sportsbook powered by William Hill.” Think of it like the Rose Bowl presented by Northwestern Mutual vs. the Allstate Sugar Bowl or Chick-fil-A Peach Bowl.
Rush Street Gaming pushed for ban
The move on some level would negate the “penalty” that FanDuel and DraftKings were supposed to suffer as a kind of compromise after Rush Street Gaming owner Neil Bluhm lobbied to shut the pair out of the online market in Illinois for three years.
Bluhm and Chicago-based Rush Street, which operates the Rivers Casino in Des Plaines, contended that the daily fantasy companies gained an unfair business advantage in terms of signing up customers and should not be “rewarded” for doing so with sports betting licenses. Bluhm and others similarly situated ultimately succeeded in lobbying the “penalty box” into the bill and giving brick-and-mortar properties a head start online.
Lawmakers brokered a deal that cut the ban down to 18 months, during which time in-person registration is required and only digital books tethered to bricks-and-mortar locations can launch.
FanDuel currently operates retail and online sportsbooks in seven U.S. markets — Indiana, Iowa, Michigan, New Jersey, New York, Pennsylvania, and West Virginia. The company went live with its Michigan location at the Motor City Casino in Detroit on Thursday, one day after MGM Grand and the Greektown Casino took the first sports bets in the state.
Illinois’ new law calls for a 15% tax on gross gaming revenue, requires the use of “official league data,” and prohibits betting on Illinois-based collegiate athletic teams.