With March Madness in full swing and MLB’s opening day getting baseball fans revved up, Illinois legislators spent hours Thursday analyzing how the state may be able to reap new revenue from sports games, through betting.
A U.S. Supreme Court decision last year opened the door to state-authorized sports betting, and Illinois is hurrying to take advantage of it. In fact, Gov. J.B. Pritzker’s budget proposal relies on it.
There’s no sure bet it’s going to happen this spring, but odds are it will – if industry players are able to compromise. Every player in the industry wants in on the action, including Major League Baseball, the NBA, the PGA and local pro teams.
Each of the five main proposals would split the state’s share of revenue between infrastructure, pensions and education; most would charge an initial licensing fee of $10 million to brick-and-mortar operations, plus a tax on adjusted gross receipts of 15 percent for physical locations and 20 percent for online operators.
But just what physical locations that would be (Casinos? Horserace tracks? The bars, restaurants and American Legion halls that have video gaming terminals?) and even whether players could place bets on their computers and cellphones, is up for debate. And what sort of betting should be allowed? Should Illinois permit betting on collegiate sports, for example?
State university athletic directors will meet soon to try to formulate a collective opinion or strategy.
Industry insiders warn that Illinois will fail if it’s too restrictive, or too expensive.
“Any restriction on bet offers – for example, collegiate sports, or different profits or in-game betting – or high taxes or any other additional fees creates an un-level playing field so the black market operators can afford to offer materially better prices and products than the regulated ones,” said Mattis Stetz, the CEO of Rush Street Interactive, a division of Rush Street Gaming, which owns the Rivers casino in Des Plaines. “The biggest challenge for the regulated market is to channel the players from the black market into the regulated market. Hence, the regulated market needs to be competitive.”
Rivers and Illinois’ nine other casinos are lobbying for a bill that would grant them the right to win sports betting licenses, and to be the host of online betting programs; several of the viable packages would also give the state’s three horserace tracks similar treatment.
“We spend the time, the money to invest in sports betting. We bring people into our facilities and those people have a propensity to bet. They like and play sports betting they like to play the lines and they like to play and get involved in other forms of gaming and that’s where we see the transition of these new players, new customers, coming into our facilities and being able to wager,” said Arlington Park’s Tony Petrillo.
Track owners and horsemen see sports betting as an avenue to help revive their struggling industry, which they say would support thousands of agribusiness jobs, from breeders to trainers to blacksmiths.
Another proposal would cut out casinos and tracks as well as any prospect of mobile betting, by instead having the state lottery manage sports betting. Just as adults can buy lottery tickets from gas stations and convenience stores, they could buy sports-betting tickets.
Backers say it’s a route that would bring Illinois the most money up-front; detractors say that Illinois taxpayers shouldn’t take on the risk of something as volatile as sports betting.
“Take the last Super Bowl for example. Patriots won and some sports books lost as much as $2.5 million on that game. Image the headline if they were playing the Bears: ‘Bears win Super Bowl, and State Loses Millions in Education, Infrastructure and Pension Revenue.’ Traditional lotteries guarantee the state money; sports betting does not,” said Tom Swoik of the Illinois Casino Gaming Association.
Meanwhile, MLB and other professional sports leagues are pressing Illinois to do something that thus far other states have not: to give them a percent of the cut, and to give the leagues say over what data is used to help protect against insider trading and proxy betting, and over what sorts of bets are permissible.
“Sports leagues provide the foundation for sports betting while bearing the risks that sports betting imposes, even when regulated,” NBA attorney Dan Spillane told legislators. “I can’t think of any other industry that builds its product on another business that imposes risks on the other business and forces that other business to spend more and do more to protect itself. But that’s what happens with sports betting.
Spillane also said a royalty would incentivize pro teams and leagues to promote and market sports betting operations – a notion rebuffed by the would-be operators, who say that team owners will benefit if sports betting takes off by virtue of increased interest in games.
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