Less than 24 hours after the Illinois House approved a massive capital bill that includes sports betting, the Illinois Senate concurred Sunday, voting 46-10-2. During discussion ahead of the vote on SB 690, it was clear that daily fantasy and online sportsbook operators are not happy with what sports betting will look like in the biggest market state to legalize this year.
At issue is that Illinois lawmakers sought to give local casinos and gaming venues a “ramp up” to sports betting by allowing them to launch both physical and interactive sportsbooks ahead of stand-alone, online-only sportsbooks. In May, billionaire Neil Bluhm, owner of the Rivers Casino near Chicago, asked lawmakers to create a “penalty box” for online operators DraftKings and FanDuel because he believes they have been operating their daily fantasy sports businesses illegally in Illinois.
Both companies pushed back on the suggested three-year delay. In response, lawmakers shortened the delay to 18 months, and the legislation no longer calls out DraftKings and FanDuel specifically.
Make no mistake – this was not an accident. @PlaySugarHouse – aka Rivers Casino – was afraid to compete on a level playing field in Illinois and did everything possible to keep @DraftKings & @FanDuel out of the market thru unconstitutional legislation. #fail https://t.co/4f6AIDxsSf
— Jeremy Kudon (@JKudon) June 2, 2019
Online-only operators boxed out for 18 months
But the net result will be the same — neither DraftKings nor FanDuel, nor any other online-only operator, will be able to launch under their own brand until 18 months after physical locations. Beyond that, the bill caps the number of online licenses at three and sets the license fee at a whopping $20 mm.
To that end, state Senator John Curran (R-District 41) quizzed sponsor Terry Link (D-District 30) about the delay before the vote.
Curran: Is it true that DraftKings and FanDuel cannot use their brands?
Link: For the first 18 months, all will be prohibited from using branding.
Curran: So, if FanDuel partners with Paradise Casino, can (the branding) say ‘Paradise powered by FanDuel?’
Curran: If Rivers uses its own app, can it use its brand?
Curran: That gives Rivers a pretty big online advantage because the only way (an online-only operator) can use their own brand is to buy a casino or racetrack.
Link: We’re trying to promote Illinois businesses above all others. We’re trying to make a level playing field for all legitimate companies in Illinois.
Curran: How long does it take to gain approval to purchase a casino or racetrack?
Link: I have no idea.
Rush Street ‘excited’ about legalization
On the flip side, Rush Street Interactive, owners of the Rivers Casino, may not have gotten 100% of what it wanted, but the company is pleased with the law that will be sent to Pritzker.
“For the first time ever, Illinois sports fans will have access to legal, regulated and safe sports wagering platforms online and at casinos and race tracks throughout the state,” said Greg Carlin, CEO of Rush Street Interactive. “We thank the overwhelming majority of legislators who believed that Illinois should implement sports wagering with responsible gaming operators who have a track record of integrity, innovation and strict adherence to all of Illinois’ statutes and laws.”
The proposal would allow established online sports betting companies like DraftKings and FanDuel to operate 18 months after the first Illinois license is issued, so that the state’s existing gambling companies have time to ramp up their own sports betting operations.
— Dave McKinney (@davemckinney) June 2, 2019
For weeks, DraftKings and FanDuel have been lobbying and speaking out against any delay. Sunday morning DraftKings CEO and Co-Founder Jason Robbins tweeted:
“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. Very disappointing that Illinois customers will not have the best options available to them for 18 months.”
When a version of the bill that included a three-year delay for DraftKings and FanDuel was circulating, DraftKings was clear that it would seek legal action should that take effect.
“If this ‘penalty box’ is any part of the bill, we would strongly consider every legal action that we could take,” DraftKings Director of Global Public Affairs Jamie Chisholm told Sports Handle in May. “We’ll explore, and potentially pursue whatever legal avenues we can.”
Bill will raise many different taxes
The bill that is headed to Pritzker’s desk is far more than a gaming expansion or sports betting bill. With regards to sports betting, the bill calls for a 15% tax on adjusted gross revenue, prohibits betting on Illinois college teams regardless of whether they are playing in state or out, and mandates the use of official league data.
“The process that Illinois has gone through in the last couple of days of providing a Christmas Tree amendment to have revenue be the driver as opposed to sound policy is not the way to craft good sports betting legislation,” said Brendan Bussmann, director of government affairs for Global Market Advisors. “Many of the aspects of the bill throughout the debate on sports betting have been a race to the bottom. When you look at the neighboring states, they likely offer better sports betting policy determined by market forces and not trying to hit a number in a larger revenue package.”
According to comments by multiple lawmakers during Sunday’s Senate session, the capital bill has been two decades in the making and will raise $12 billion in tax revenue over the next few years through new or increased taxes on cigarettes, e-cigarettes, motor vehicle licensing and registration, and a bevy of other new taxes. The bill allow for six new casinos across the state, as well as allowing racetracks to get table games and slot machines. It also raises the tax on video poker and is heavy in requiring gaming and sports betting operators to make minority hires and be mindful of diversity in hiring.