If Illinois enacts a sports betting law that seeks to exclude the daily fantasy sports companies FanDuel and DraftKings, the state will be quickly sued by both companies which will charge that the exclusion is unconstitutional.
An amendment to the state’s proposed sports betting bill seeks to block the two companies—which now offer online sportsbooks—to protect state casinos.
Lawyers for the two companies, said such an exclusion would not likely withstand a legal challenge.
“…As the amendment’s proponents have made abundantly clear in their committee testimony, the purpose of the amendment is not to seriously assess the suitability of potential operators, but instead to exclude two specific competitors who are leading the market in other states,” the attorneys for the fantasy sports sites wrote. “We believe FanDuel and DraftKings could make a strong claim that this selective targeting of winners and losers is not permitted by the Illinois or U.S. Constitutions.”
According to the Cook County Record, the report was authored by attorneys from the firm of Jenner & Block, of Chicago. The authors included Anton R. Valukas, a former U.S. Attorney for the Northern District of Illinois and former chairman of Jenner & Block; Ian H. Gershengorn, who served as Principal Deputy Solicitor General and Acting Solicitor General, under former President Barack Obama; Thomas J. Perrelli, who served as Associate U.S. Attorney General under Obama and now serves as chair of Jenner & Block’s Government Controversies and Public Policy Litigation Practice Group; and Clifford W. Berlow, a former Illinois Assistant Attorney General and is now a partner in Jenner & Block’s Appellate and Supreme Court Practice Group.
They said they had been hired by FanDuel “assess the constitutionality” of an amendment recently proposed by Illinois state lawmakers which would essentially block FanDuel and Draft Kings from participating in Illinois’ sports betting market for three years.
The Illinois Legislature is considering a number of proposals for sports betting. The exclusion amendment was added to a House version of the bill. It would basically ban FanDuel and DraftKings for having offered daily fantasy sports contests in the state at a time when the state’s attorney general issued an advisory opinion that DFS was illegal gambling under Illinois law.
In response to that opinion, the fantasy sites filed suit, asking the courts to declare they were not illegal gambling operations. After years of litigation, the state and fantasy sports sites settled the matter without a ruling, the Record reported.
The sites argue that supporters of the “bad actors” amendment are attempting to use the 2015 non-binding Attorney General’s opinion to give the opinion the force of law.
“In essence, the amendment would give legal effect to the Attorney General’s disputed advisory opinion after the fact and without judicial review, all to the benefit of and at the behest of particular in-state casinos,” the Jenner lawyers wrote.
But the bill is short on time.
As the Illinois legislative session winds down, state Rep. Mike Zalewski, chairman of the House Revenue and Finance Committee, said he plans to introduce a last-ditch sports betting amendment to H 1260 that would include the lottery, mandate the use of official league data for in-play wagers and lower the fees and taxes from two previous amendments.
The only issue that remains is a so-called “penalty box” for DraftKings Sportsbook and FanDuel Sportsbook, which is being negotiated with stakeholders, Zalewski said. “That remains the Number 1 issue to be decided upon and then I think we can file a final amendment. This issue consumes all the oxygen related to sports betting right now. We know we need to make a decision on whether to include a penalty box or not. We still haven’t reached a consensus way to move forward on this,” he stated.
Zalewski said he listened to stakeholders’ concerns and lowered the fees and taxes. However, he said the initial licensing fee per operator will remain at $10 million because Governor J.B. Pritzker’s proposed budget includes the revenue.
At the most recent hearing, Illinois Casino Gaming Association Executive Director Tom Swoik pointed out a previous amendment allowed sports betting at 2,500 retail locations. Swoik said it was unfair that casinos would have to pay $10 million for a sports betting license while it would be legal at so many other locations. Zalewski responded, “We think there’s room for a lottery pilot program. It’s a state asset so we think it’s important to see what they can do with sports betting.” He added, “We’ve heard feedback on the type of wagers lottery concessionaires could take, the number of locations, where the money would go. I think we solved those items.”
Despite the narrow time frame—the session ends May 31—Zalewski believes he can advance H 1260 through committee to the House floor soon after the amendment is introduced. “We’ve been working with the Senate. They know where we stand. This isn’t happening in a vacuum. I think there’s a desire to do sports betting in the governor’s office and two chambers,” Zalewski said.
Regarding the bill’s requirement that official league data be used for in-play wagers, Zalewski said Tennessee was the first state to pass a sports betting bill including that demand by professional leagues. “Tennessee going on official league data is indicative to us that we might not be the first state,” Zalewski said. However, he noted, “We could maybe survive that challenge.”
