Illinois Gambling Expansion Expected to Focus on Sports Betting

On Oct. 17, Illinois legislators met at a hearing in Springfield to discuss the possibility of a gambling expansion in the state, and while there were many items on the agenda, the topic of sports betting legalization ultimately dominated the conversation. State-licensed betting on sports became a possibility this summer after the Supreme Court decision in the Murphy v. NCAA case, which ended the federal prohibition on this form of wagering activity.

About the Meeting

Last week’s hearing was the second such get-together called to explore the possibility of adding new forms of gambling to the existing menu in the Prairie State. The first meeting was held on Aug. 22 in Chicago and was centered around awarding more casino licenses, and allowing racetracks to install slot machines, as well as other brick-and-mortar gaming issues. By contrast, the meeting held on Oct. 17 dealt with daily fantasy sports, online gambling and, of course, sports betting.

Representatives of major gambling stakeholders were present to give testimony. They included lawmakers, casino executives, pro sports leagues, gaming technology professionals, anti-gambling activists and fantasy sports operators. State Representative Robert Rita (D), a longtime advocate of growing the Illinois gambling economy, was responsible for arranging the hearings. He explained the reasons why he felt they were necessary in a July 31 statement:

“As I have said from the beginning in working on this issue, gaming expansion presents many tremendous opportunities to create revenue, jobs and economic growth in Illinois. The gaming landscape has changed significantly since I took on this issue five years ago, and I want to use these hearings to understand how those changes present new opportunities for us to put the right package together as we look to meet budget needs and provide a spark for our economy.”

Representative Rita alluded to the state’s “budget needs,” which probably refers to its astoundingly high level of unfunded liabilities. Estimates of how bad this situation is vary considerably, but some put Illinois’ outstanding obligations at north of $400 billion. Therefore, any increase in gaming revenue would understandably be very welcome in Springfield.

Existing Illinois Gambling Scene

There’s already plenty of gambling within the borders of Illinois. Apart from bingo and other charitable gambling pastimes, Illinoisans can participate in the state lottery, enjoy games at 10 riverboat casinos and wager on video gaming terminals at more than 6,000 retail locations, like bars, restaurants and truck stops. Pari-mutuel wagering is also present at three racetracks and numerous off track betting facilities. Thus, residents of the state are already familiar with betting, and so any expansion would be unlikely to meet with a public outcry.

Legislative Background

There have been countless attempts over the past few years to revamp the Illinois gambling environment, but most of them haven’t led anywhere. However, Senate Bill 7, introduced in January 2017 by State Senator Terry Link (D), has proven to have some legs.

Originally intended to do little more than allow a new casino to be built in Chicago, it has been amended and altered countless times since then. It’s now more than 500 pages long and contains provisions calling for six new casinos, legalized online gambling, daily fantasy sports and more. Two different versions of SB7 were actually passed by the Illinois Senate on Feb. 28, 2017 and May 17, 2017, but it has languished in the House.
Undoubtedly, the information provided in the two recently held hearings will be instrumental in ironing out any modifications needed to SB7 in order to get it approved by the House.

Do It Right Rather Than Quick

Representative Rita began the Oct. 17 meeting by declaring sports betting to definitely be the main reason for the gathering. His colleague, State Representative Lou Lang (D), also spoke out in favor of legalized Illinois sports betting. However, Lang cautioned those present not to move too hastily in this direction, preferring to “do it right” rather than rushing in with poor planning. In this matter, he was echoed by Michael Pollock of the research firm Spectrum Gaming Group, who opined, “In the choice between doing it quickly and doing it right, please err on the side of doing it right.”

Lang pointed to Pennsylvania as an example of what to avoid. The Keystone State’s high tax rate on sports wagers (36%), he argued, would do little to encourage legitimate enterprises to transact in the state, leaving the black market to flourish.

Jim Ryan, the CEO of New Jersey online gambling provider Pala Interactive, continued the theme of offshore sites stealing business away from licensed entities. He detailed his own experience opening up an account at an unregulated site, which he described as being “shockingly easy.” Ryan strongly stated his belief that illegal operators are the main threat to licensed sports betting in Illinois.

Integrity Fees

Another contentious topic discussed was the integrity fees that major sports leagues are trying to add to betting legislation being debated in various states across the country. These fees would be paid by sportsbooks directly to the leagues to help them counteract collusion, match-fixing and other types of cheating allegedly promoted by betting on the games.

John Corvino of the Chicago White Sox urged lawmakers to consider measures for protecting the integrity of sport, and Josh Alkin, representing Major League Baseball, called for a fee to be paid by bookies to this effect, although he referred to it as a “royalty” rather than an “integrity fee.”

Representative Lang stated that he was not opposed to paying such a fee, but he didn’t want to pay the leagues “a fee for nothing.” Instead, he wanted to receive something in return, such as official game data or marketing resources to help promote the betting industry.

Nothing Expected Until 2019

All seats in the Illinois House of Representative as well as the governorship and 39 of the 59 State Senate seats are up for grabs in the upcoming November elections. Thus, most observers feel that it’s unlikely that legislators will be ready to tackle the subject of a gambling expansion until after the elections, with January 2019 probably being the earliest that lawmakers will revisit this topic. Given the amount of bargaining and horse-trading that will probably be necessary to craft a bill with a realistic chance of passage, this delay is not altogether unwelcome.