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There are dozens of active sports betting bills in statehouses across the country, sponsored by lawmakers from all backgrounds and persuasions.
Oftentimes, the sponsor is a relatively unimportant part of a bill. This is especially true with intricate issues like gambling. The name at the top of the page often masks the work of lobbyists and other stakeholders in the crafting of the actual language. Sponsors and co-sponsors drift onto and off of the bill as it’s revised, and it doesn’t really make much of a difference from the outside.
In Illinois, though, the sponsor of a new sports betting bill seems to be particularly relevant.
Sen. Napolean Harris is one of at least five Illinois lawmakers who’ve filed legislation on the topic in recent months. He’s the only one who used to play in the NFL, though.
After giving up his helmet in 2009, Harris entered politics representing his home district in Cook County. Now he’s trying to allow his fellow Chicagoland sports fans to bet on games.
His athletic background probably isn’t a coincidence, nor is the fact that his bill is the only one that shows signs of influence from league lobbyists in Illinois.
Like the other bills in his state, Harris’ would let Illinois casinos offer sports betting both in-person and electronically. It is a comprehensive bill, complete with a proposed structure for regulation and taxation.
That’s where we find the noteworthy bits.
Under Harris’ bill, the state would receive 12.5 percent of sportsbooks’ revenue. That rate is a middle-of-the-road number that would be pretty manageable for operators. It’s significantly lower than the tax on Pennsylvania sports betting, for example. But it’s also higher than the rates proposed by other lawmakers in Harris’ own state.
But wait, there’s more. Harris’ bill would also require sportsbooks to pay the so-called integrity fee sought by some pro sports leagues.
The NBA and Major League Baseball have lobbied for the inclusion of these fees, under which sportsbooks would give them one percent of the total money wagered. That’s handle, not revenue. In practice, one percent of handle would amount to somewhere between 10 and 25 percent of a book’s revenue, depending on whom you ask.
The leagues contend that the fees serve as a royalty and to help offset the costs of additional diligence in an expanded market. More bets and more bettors create more opportunities for sinister activity, they argue. So far, though, they’ve had trouble convincing lawmakers.
West Virginia, for example, is on the verge of passing a sports betting law that turned a deaf ear to league lobbyists. It does not include an integrity fee, nor do similar bills in Connecticut, Rhode Island, and several other places. Of the 40 or so bills we’re tracking in 17 states, five of them include the integrity fee.
Of course, this push for an integrity fee is a new thing from the leagues, as is their willingness even to support state-based sports betting regulation, a stance they’d long been on the other side of. They’ve recently begun to back bills in a handful of states, but only those that include the fees they’re seeking.
It’s widely presumed that the New Jersey sports betting decision will open the door for broad expansion around the country. Unless that changes, get used to seeing leagues pitching their blueprint to states with active legislation on the topic.
Harris provided some context for his bill on a recent episode of the Early Odds podcast with Joe Ostrowski. He talked about the condition of the state budget and the needs of the most vulnerable segments of Illinois’ population. He also argued that his background in sports gives him unique credentials to legislate on the topic.
“I think I’m the best-qualified guy to handle this particular bill because I’m the only professional athlete that’s in the General Assembly,” he said. “And just from my athletic background in sports, I think I have a distinct knowledge of how sports work with betting.”
To be frank, though, Harris did not come across as particularly knowledgeable about sports betting, at least in this interview. Sports? Extremely knowledgeable. But not so much on sports speculation.
During the interview, he had a hard time delineating daily fantasy sports and sports betting, for example. He grouped sports betting in with other forms of gambling in which there’s “really no strategy.”
“It’s more-so you’re placing a bet based on what you feel or what you think is going to happen,” he said. “It’s more of chance versus strategy.” Serious bettors would disagree, of course.
Picking on this point isn’t intended to undermine the gentleman from the 15th District. He’s clearly not a sports bettor, and he wasn’t permitted to engage in the activity during his seven-year career as a professional football player. And his intentions may be pure; he may truly be pitching this as a means to help Illinois residents.
At the same time, it also seems possible that the leagues have their hand up the back of Harris’ jacket.
“It’s their intellectual property,” he argued for them on the podcast. “They’re the creators. They have the ownership rights of that particular league.”
Before the host got around to asking about integrity fees, Harris’ was already approaching the idea. Look at this quote that led into the topic:
We want to make sure the integrity of the game is always intact. I know in my negotiations, I’ll be sitting down with the various commissioners of the leagues, talking about the integrity of the game, talking about how [to] keep the integrity of the game, setting aside resources to educate people on the integrity of the game.
Again, these may well be Harris’ own words, but they’re certainly the sort of words the leagues want to hear from lawmakers. Concerns over integrity dovetail nicely with their efforts to collect the associated fees.
As mentioned, the leagues have struggled for leverage so far. Although their language has appeared in a few bills, they’ve faced significant pushback from committees in each state where they’ve testified.
They may have a little extra leverage in Illinois, though. The leagues have an ally in the Senate, for starters, a politician who’s cut from their cloth. The state is also home to professional sports teams in each of the major leagues, including two MLB teams. It’s fair to say that sports drive a ton of revenue, and lawmakers strive to maintain a healthy relationship with the franchises that call their state home.
But the integrity fee is a big ask for the leagues, particularly in states that are struggling financially.
Part of the problem is that the leagues would be getting their cut off the top, while the state would receive its percentage of what’s left over. This is by necessity; the optics are bad for the leagues if they only take a share of the profit. But the 12.5 percent state tax would almost certainly amount to less than the leagues’ take in the end — maybe half as much.
That money is also guaranteed to the leagues, where it would not be for the state. Let’s say a sportsbook is particularly bad at line-making, or it takes a big bath on a high-stakes parlay. The book breaks even for the year, showing zero net revenue. Under Harris’ bill, the state would receive its share of zero. The leagues, however, would still receive one percent of the total money wagered.
It’s hard to quantify the numbers this early in the game without knowing how many states will even offer sports betting, let alone how many will include integrity fees in their laws. Connecticut lawmakers have tossed the number $2 billion out there if wagering is widely legalized thoug. League lawyers did not contest that math.
Harris’ Illinois sports betting bill was read for the first time on Feb. 16 and introduced into the Gaming Committee.