Illinois Rep. Bob Rita has introduced an amendment to the state’s Sports Wagering Act that would allow sports wagering exchanges in the Land of Lincoln.
HB 1405 would allow the Illinois Gaming Board (IGB) to award up to two licenses for exchange trade wagering, defined in the bill “as the buying and selling of betting contracts at any time prior to the conclusion of an event based on a describable zero to 100 scale of probability and employing a recognized market surveillance technology used in United States financial markets that is capable of identifying wagering activities indicative of problem gambling, money laundering, and other actions detrimental to the integrity of sports wagering.”
If passed, the amendment would take effect immediately and make Illinois only the second U.S. state to permit exchange wagering, along with New Jersey, where Prophet and SportTrade currently conduct business. Rita’s bill calls for adjusted revenue from sports exchange trade wagering to be taxed at 15%, the same as sportsbook operators in the state.
Rita is the House’s point person when it comes to most aspects of gaming and was one of the primary players in legalizing sports wagering in Illinois in 2019. There is language in the 2019 bill that includes “exchange wagering” as part of the definition of sports wagering.
Illinois currently has 12 retail sportsbooks, including three at off-track horse betting locations through Hawthorne Race Course and seven operators conducting mobile wagering. It is the third-largest sports betting market for handle in the United States behind New York and New Jersey, accepting more than $8.7 billion in wagers through the first 11 months of 2022.
Another item on a crowded gaming plate?
The initial license fee would cost $500,000 and be valid for four years, with a license renewal costing $100,000. The license would also be restricted exclusively to exchange trade wagering and not permit a licensee to expand into other gaming disciplines.
Another licensee category for sports wagering could add to an already notable workload facing the IGB, which currently has two vacancies on its five-person board. Rita, though, did help streamline the licensing process in November 2021 when he helped pass HB 3136 during the veto session that year.
The IGB is currently reviewing five applications for Management Services Provider licenses, which allows operators to conduct mobile wagering, and the first of those applications was submitted in November 2020. 815 Entertainment, the license-holder for the Hard Rock Northern Illinois casino slated to open late this year, has submitted an application for a retail sports wagering license in addition to one for mobile betting. The IGB also is reviewing Betfair’s application to conduct wagering through FanDuel at the United Center — the first application for one of the state’s five sports facility sports wagering licenses.
Furthermore, the state agency is in an active period, running through March 1, for accepting applications for Illinois’ three online-only licenses. This supplemental process became necessary when Tekkorp Corp. withdrew its application in late October. The IGB deemed Tekkorp the only applicant to meet the “minimum qualifications for licensure” last April, with Betway withdrawing its application during the process and Fubo Sportsbook — since shuttered — being rejected due to key people not passing the rigors of the review process.
Lastly, but arguably most important to the state’s gaming industry, the IGB is also reviewing Bally’s casino application for a license to build its proposed $1.8 billion venue in downtown Chicago — an enormous undertaking given expectations that it will generate $800 million in annual revenue at full maturation. The 2019 gaming bill created six new casino licenses in the state, with Bally’s the last to move forward following Chicago City Council approval in May. The IGB has advanced applicants constructing venues at the other locations to “preliminary suitable” status, in addition to licensing 815 Entertainment.
