In Illinois, the Joint Committee on Revenue and Finance recently held its second hearing about expanded gambling, in anticipation of the 2019 legislative session. Focusing on sports betting, during the 4-hour session held in Springfield, legislators heard testimony from gaming representatives, local government officials, professional sports players’ associations, Major League Baseball and the Chicago White Sox, horsemen’s groups and racetracks and several people opposed to sports betting.
State Rep. Bob Rita, organized the two meetings. His bill, SB 7, introduced in 2017, has evolved into a comprehensive bill that addresses online gambling and daily fantasy sports, as well as sports betting.
Testifying at the hearing, state Rep. Lou Lang said, “I plan to propose my own legislation, I am on my third draft. I will not be introducing a bill until it’s been distributed to all of the stakeholders and we have taken comments. It will include internet sports and fantasy sports, as well. But I caution you to do this right, rather than quick. If you do it too fast, you make a real mess of this, as the state of Pennsylvania did. Their tax rate is far too high because they didn’t understand how different sports betting is from other kinds of betting.”
Lang noted when Pennsylvania legalized sports betting in October 2017, lawmakers set a 36 percent tax rate on gross revenue and a $10 million sports betting application fee. Out of the state’s 13 eligible licensees, only four have applied for a sports betting license.
Lang stated he has been visiting several U.S. cities to learn more about sports wagering. He said he conditionally supports an integrity fee, although no state that has legal sports betting currently pays fees to major professional sports leagues. However, Lang said, “I don’t have a problem giving major league sports a fee, but I want to give them a fee for something. I’ve told them that a fee should be for something we need, like data, photos, marketing data, that would help us market sports betting in Illinois. I don’t want to pay them for nothing.”
Lang said he’s working to address issues such as where sports wagering would be allowed, what the tax rate would be and how sports betting would affect casinos and horse racetracks. “People who want to gamble do gamble, will gamble and are gambling. Billions and billions of dollars are wagered illegally every year. We’re not going to be able to stop them from doing it.
He noted sports gambling revenue could help pay pension debt or part of a capital program. “In the end, I’ll have to take all the ideas, do the best negotiation I can, pull it all together and try to put a bill on the floor I think I can pass,” he stated.
State Rep. Mike Zalewski said sports betting in Illinois would raise millions for the state through taxes on bets lost by players. “If other states are going to allow for it, Illinois should allow for it too. We`re a state that desperately needs some cash infusion for either capital needs or we need it for a pension crisis or we need it for just general out bringing,” Zalewski said.
Fairmount Park spokesman Jon Sloane told lawmakers the East St. Louis racetrack supports sports betting. “Anything which will bring increased revenues to Fairmount Park we are in for, we`re absolutely for it. That will mean more jobs, more racing dates, more revenues for everybody,” Sloane said.
Also at the hearing, representatives of players’ associations for the National Football League, Major League Baseball and the National Basketball Association said they wanted protections for the athletes and also that sportsbooks be required to use official league data. MLB also would require that sports book operators pay a fee of 0.25 percent to MLB (and respective leagues) since the league is “creating a business here that is underpinned by our product.” Officials said the league also wants a “voice” in what types of bets may be allowed, plus a guarantee that sportsbooks will cooperate with leagues in case of investigations into questionable actions. In addition, MLB officials said mobile sports betting should be included.
In written testimony submitted to the committee, the NFL wrote, “In this post-PASPA environment, one of the most important aspects of protecting the integrity of our games and creating integrity in the new marketplace is the existence of a strong state regulatory body, such as the Illinois Gaming Board.” Unlike MLB, the NBA and the PGA Tour, the NFL has not called for an integrity fee.
Nevada bookmaker Vic Salerno also addressed the committee, representing Bet Chicago and Illinois Sports Gaming. He said, “The bookmakers have to pay for services, whether it’s geolocation or for data — win or lose, we have to pay. We retain about $2 out of every $100 and figure that with Nevada’s 6.75 tax rate, and if you go to 10 or 12 percent, then it’s $1 from every $100.”
In May, the Illinois Commission on Government Forecasting and Accountability told lawmakers sports gambling could bring in more than that $12 million adjusted gross revenue.
Illinois Church Action on Alcohol and Addiction Problems Executive Director Anita Bedell also spoke at the hearing, noting, “Anytime you legalize more forms of gambling and legalize and make it accessible 24 hours a day seven days a week, you are going to increase problem gamblers, addiction, you`re going to have underage gamblers.” Lang responded gambling addiction will occur whether sports betting is legalized or not, but it should be regulated and taxed.
