In his first budget address to a joint session of the state legislature, Illinois Governor J.B. Pritzker outlined his vision for sports betting, which he said could generate $200 million in licensing fees and revenue in 2020, to help address the $3.2 billion gap in next year’s state budget. Pritzker urged lawmakers to pass a standalone bill legalizing sports betting, noting Illinois could become the first Midwestern state to do that since the U.S. Supreme Court lifted the federal ban last year.
“Expansion of gambling is a perennial effort in this state, and often these proposals get bogged down in regional disputes and a Christmas tree approach. But in those instances, we were talking about adding more riverboats or adding into other regions. Sports betting is different. This is a new market created by a recent U.S. Supreme Court decision. Every day we argue about who’s in and who’s out is money that goes to other states and to the black market,” Pritzker said.
He added, “I am calling on the legislature to take this up immediately so that Illinois can realize hundreds of millions of dollars, create new jobs and bring sports betting into a regulated environment that will protect citizens from bad actors.”
Several placeholder bills are waiting to be fleshed out in the House, and SB 176 is in a Senate committee. That bill calls for online and mobile betting, which the governor said he wants. He also wants 20 total sports betting licenses at $10 million each, with a $5,000 annual renewal. Revenue would be taxed at 20 percent, which the administration estimates would generate $77-$136 million per year. Because of the time it will take to establish regulations and review license applications, the budget plan only is counting on $17 million in tax revenue from bets, with $5 million directed to administration.
The budget proposal states, “For the first five years of operation, sports wagering operators would be able to deduct a maximum of 90 percent of one-fifth of the initial license fee each year from the sports wagering tax. This license fee and tax credit proposal will allow the state to accelerate an estimated $200 million in future tax revenue into fiscal year 2020.”
Meanwhile, casinos, horseracing tracks and video gambling terminal operators, as well as lobbyists, professional sports leagues and players unions all are working to carve out a piece of the sports wagering pie. Pritzker’s spokeswoman Jordan Abudayyeh said exactly who would be eligible for a license has not been determined. However, assuming 20 sports betting licenses are available, as the governor has proposed, each of Illinois’ 10 casinos and three horse racetracks could be included. The Illinois Casino Gaming Association, which represents nine of the state’s casinos, has opposed licensing new casinos or allowing racinos. ICGA Executive Director Tom Swoik said, “My members are in favor of sports betting as long as the casinos can participate in it. We think that it’s one of the few markets left out there where expansion will help the industry and help the state, as opposed to additional casinos or slots at racetracks. That’s just going to shift money around.”
Swoik added the group’s members would prefer a standalone sports betting bill. “It wouldn’t bother us if it was part of a package deal, but on the other hand, we’d just as soon see sports betting separate with the potential of having internet sports wagering as part of that platform,” he said.
The state’s 7,000-plus video gambling locations also have expressed interest in offering sports betting. Illinois Gaming Machine Operators Association Executive Director Ivan Fernandez said his organization’s members should be allowed to offer sports betting, although that’s unlikely considering Pritzker’s proposal for 20 licenses. Fernandez added the group also supports online or app-based sports betting restricted by geographic location so gamblers only could place bets on laptops or smartphones at licensed establishments.
State Rep. Mike Zalewski, chair of the House Committee on Finance and Revenue, said, “We have to balance the amount of people interested in offering it versus concerns about oversaturation, and that’s a very tricky balance. It would be really early in the process to say, ‘Yes, a hundred percent, we can do whatever the stakeholders want,’ or ‘No, there’s no way we would allow any of these different interests to get what they want.’” Zalewski said he’s working with state Rep. Bob Rita to file a sports betting bill. “March and April will be used for hearings, and then come May, it will be time go, to start passing things. If we don’t get this done by June, it will be a failure of the legislature, because we have the momentum. I hope to have it up and running by the end of the year, but there are a lot of challenges.”
