The Illinois Gaming Board moved the state another step closer to entering the sports betting market when it released Phase II of its wagering rules January 14, according to SportsHandle.com.
The board released Phase I last month to launch the application process. Illinois Governor J.B. Pritzker signed sports betting into law in June as part of a massive gaming expansion bill that granted six new casino licenses and authorized up to four horse racetracks earmarked for casino licenses. There could be as many as 23 Master Sports Betting Licenses granted overall: 10 casinos, seven sports venues, three horse racetracks, and three non-tethered online/mobile operators.
The latest set of rules gives priority to bids that offer the most revenue to the state, considerations regarding the applicant’s character and also a commitment to ownership diversity and both training and employing minorities before providing provisional approval. The application period is open for 120 days starting with the posting on the board’s website, and the latest rules mandate applicants must have Tier 2 official league data to offer sports wagering.
“The Illinois Gaming Board has been working in an orderly and transparent way to enact gaming expansion that best serves Illinois and adheres to the Sports Wagering Act,” IGB Administrator Marcus Fruchter said in a statement released by the board. “Today’s release of Phase II rules is a continuation of that deliberate and thoughtful process, which will allow sports wagering to commence expeditiously and ethically across the state.”
Online betting triggered a controversy in the months leading up to the passage of the gaming bill, with potential online-only operators, such as FanDuel and DraftKings ordered to serve an 18-month “penalty box” delay after the first on-site license is issued. This stems from a 2015 decision by then-Attorney General Lisa Madigan ruling that daily fantasy operators constituted illegal gambling under state law when both companies offered play on their websites to state residents.
There is also an in-person requirement to register for an online account until the first mobile license is approved, which could put Illinois at a disadvantage against bordering states Indiana in the short-term and Iowa in the longer term. Online registration is important given the size of the Illinois market, which includes the third-largest city in the United States in Chicago—one of six sites also authorized in the bill to open a casino.
Remote registration helped Indiana expand its sports wagering market, and two of its three largest casinos in terms of in-person handle—Ameristar in East Chicago and Horseshoe in Hammond—are less than one hour’s drive from Chicago. The Indiana Gaming Commission has reported $429.6 million in sports betting between the first bet last September
through last month, and December’s report showed that more than 68 percent of its $161.8 million handle came via online betting. Ameristar and Horseshoe reported a combined $21.7 million in-person wagering during December.
With a hefty $20 million license fee for non-tethered online/mobile operators, the Illinois Gaming Board admitted the possibility it may not award all three licenses in the initial application period and added a provision to re-open the application process if needed.
The 15 percent tax rate on adjusted gross receipts will put Illinois in the middle range among states that offer sports betting, but Cook County, which includes Chicago, will be able to collect an additional two percent on all bets made where the patron is within the county when placing the wager.
The bill prohibits wagering on games involving in-state schools, which could be disappointing for some locals given that there are 13 Division I teams spread across eight conferences, including potential NCAA tourney teams like Illinois and DePaul.
In related news, Illinois may provide the first regulatory glimpse of what “commercially reasonable” means in sports betting. The phrase has become a trendy part of sports betting legislation last year, according to LegalSportsReport.com.
Professional sports leagues trying to profit directly from wagering on their games found some state legislatures willing to require that operators pay for official league data for in-play wagering. Such provisions require so-called commercially reasonable terms.
A second phase of wagering rules issued by the Illinois Gaming Board set guidelines for challenging the commercial reasonableness of official league data. That could make Illinois sports betting rules even more closely scrutinized than expected.
Operators may petition the board if they believe a contract or offer sheet does not comply. The data provider will then have 21 days to respond to the complaint. The gaming board will appoint an administrative law judge to conduct a hearing, with the losing party liable for the costs. The burden of proof is on the petitioner to “show by a preponderance of the evidence that terms of the contract are not commercially reasonable.”
The following factors are provided for the judge and board to consider:
- Whether and to what extent the terms are anti-competitive in nature.
- Whether and to what extent the terms are economically feasible.
- Whether and to what extent the terms are against the public interest of the state of Illinois.
The second round of emergency rules outlines application processes, prohibited wagering activity and a number of internal controls and operating procedures for sports wagering licensees. Here are some of the points of interest from the 66-page document:
- Betting will be limited to professional sports, motorsports and collegiate sports excluding those involving Illinois collegiate teams. Academy Awards? Nope.
- The ban on in-state college wagering does not apply to parlay bets.
- Sports stadiums and arenas may receive a license to offer sports betting only if all professional sports teams that play their home contests at the facility provide written authorization.
The gaming board is accepting and reviewing applications for licenses. Once approved with a temporary operating permit, even if not fully compliant with the rules, licensees may begin accepting bets, Fruchter said in a statement.
