An Illinois amendment filed Tuesday and brought into play during Thursday’s sports betting hearing has daily fantasy and sports betting operators DraftKings and FanDuel up in arms. The hearing was initially built around four amendments filed to a sports betting shell bill and was designed to get feedback from stakeholders about what direction lawmakers should go in crafting passable legislation.
But early in the testimony, Midwest Entertainment and Casino representative Paul Gaynor used his public platform to rail against DraftKings and FanDuel, whom he referred to as “bad actors” guilty of “criminal conduct,” in both Illinois and New Jersey. Gaynor said that daily fantasy games are illegal in Illinois, but that the two DFS giants “flaunted” the law and don’t deserve to be rewarded with the opportunity to be sportsbook operators, should Illinois legalize sports betting. In his testimony, he pointed to a 2015 attorney general’s findings that “daily fantasy sports is illegal gambling that violates the state’s criminal laws.” However, this opinion does not carry the force of law.
A dialogue about the Illinois sports betting landscape
Though Amendment 5 was not in the package of bills Representative Mike Zalewski and other lawmakers filed late last week, he said they decided to file it early this week. Representative Bob Rita, who is among those in support of sports betting and is working with Zalewski to legalize it, filed the amendment.
“We thought it was worth filing because it creates a dialogue about the black market,” Zalewski told Sports Handle.
It definitely created dialogue.
“Amendment 5 is a blatant attempt to restrict competition and specifically box out potential operators they know will be major draws for consumers seeking out the best possible legal mobile sports betting experience,” DraftKings Director of Global Affairs James Chisholm told Sports Handle. “Establishing an artificial, restrictive market will only ensure that many Illinois residents will continue to bet through illegal offshore websites that offer no consumer protections, no responsible gaming measures and generate no revenue for the state.”
The amendment is designed to shut out internet/mobile sportsbook operators. From the amendment:
No sports wagering operator license or Internet sports wagering vendor license shall be granted to an applicant that has accepted, that has or had an affiliate that has accepted, or that has officers or directors who are or have been officers or directors of another party that accepted wagers through the Internet in contravention of any United States law, Illinois law, or any substantially similar laws of any other jurisdiction before the application date pursuant to a final determination of a court or an unequivocal official pronouncement from a government authority or chief law enforcement officer.
The amendment is clearly pointing to DraftKings and FanDuel, both of which have offered their daily fantasy products in Illinois. Gaynor made no bones about his company’s feelings about the two companies, naming them directly in his comments.
“Out of state companies DraftKings and FanDuel … have completely ignored [the AG’s] opinion and continued to operate,” he said. “DraftKings and FanDuel have continued to operate in Illinois with the goal of capturing market share, confident that [sports betting] will be legalized and they will have benefitted from their illegal conduct.
“This behavior should not be rewarded.”
FanDuel, like DraftKings, is also looking for the opportunity to compete in legal market in the sixth biggest state by population in the U.S.
“FanDuel has been operating openly and honestly offering fantasy sports contests in Illinois since we began operating,” Cory Fox, FanDuel’s counsel for policy and government affairs told Sports Handle. “And we now offer the best in class sports betting experience in New Jersey, and we think that Illinois users would love it as well, and we want the Illinois users to determine what the best experience is for them in a competitive, regulated, open mobile marketplace.”
In addition to angering DraftKings and FanDuel, Gaynor’s comments were not all that welcome at the hearing, which otherwise was a thoughtful collection of comments and critique on the amendments. Zalewski called it “silly” to be discussing the DFS issue at the hearing, and all but shut Gaynor down.
Moving forward, DraftKings and FanDuel will likely be active in lobbying for legalization with a state-wide mobile/internet component, and the opportunity to run stand-alone interactive sportsbooks. Stay tuned.