Rather than filling out his Illinois sports betting placeholder bill, Rep. Michael Zalewski will offer his legislative colleagues a buffet of options — some that look tastier than others.
Today, Zalewski filed four amendments. The first three offer different takes on key issues such as tax rate, mobile wagering and integrity fee. The fourth is to have the state lottery run the whole sports betting operation.
The one constant in the three main amendments is a sky-high $10 million initial licensing fee. That comes from a request by Gov. J.B. Pritzker, who slotted $200 million in fees from 20 interactive sports wagering licenses in his state budget proposal.
Zalewski indicated that the options presented in the different amendments are starting points to show his colleagues various avenues. It’s intended to make them part of the process of developing the language for H 3308.
“My sense is it’s wise to let everyone know what the policy ideas look like,” Zalewski told Legal Sports Report. “So, I’m trying to put together a menu to gauge the comfort level of my colleagues.”
Read the full menu here.
Classical New Jersey Model amendment
Zalewski named the first Illinois sports betting amendment the “Classical New Jersey Model,” though it has some glaring differences in fees and tax rates compared to the successful model New Jersey sports betting implemented.
Key provisions include:
- Operator licenses allowed for all riverboats and licensees under the Horse Racing Act of 1975.
- Mobile and online wagering with two skins at an initial license cost of $1 million with $500,000 renewal every five years.
- A $10 million initial operator license renewed every five years for $250,000.
- A tiered 15 percent tax on brick-and-mortar revenue and 20 percent on mobile.
- Requires tracks to contract with horsemen’s groups before getting license and share in profits for purses.
- Overseen by the Illinois Gaming Board, which must implement within 90 days.
Mississippi Model amendment
Mississippi limited revenue potential by prohibiting mobile wagering anywhere but on-site at a casino. It’s not a model many states are looking to replicate, but you can probably guess what is coming:
- Enables sports betting at licensed OTBs, racetracks and casinos.
- Permits 10 online operators with a scope limited to casino properties.
- A $10 million initial license with a renewal fee of $500,000 every four years, management services fee of $250,000 and supplier fee of $100,000.
- Overseen by the Illinois Gaming Board, which must implement and regulate within six months.
- Requires tracks to contract with horsemen’s groups before getting license and share in profits for purses.
- A 0.20 percent royalty on handle to professional sports leagues if adopted by the Illinois Gaming Board. Requires official league data to be provided to licensees in exchange.
- State revenue from sports betting transferred in equal amounts to State Construction Account Fund, Pension Stabilization Fund and Common School Fund.
Professional Sports Leagues amendment
Earlier this year, Zalewski said sports teams in Illinois have a deeper involvement in politics than in other states.
He determined it was best to put forth the amendment the leagues want, let them defend and advocate for their ideas, and leave it up to the members of the House and Senate to decide.
“I don’t think we can have this conversation without bringing in teams and leagues and saying what are you looking for out of this process,” Zalewski said. “The leagues are going to be very much under the microscope of having to prove why they feel entitled to have a piece.”
Provisions requested by the leagues include:
- A 0.25 percent royalty on handle, distributed to sports governing bodies.
- Requires use of official league data for in-game bets.
- A $10 million initial license fee with a 12.5 percent tax rate.
- Permits mobile betting.
- Requires sports wagering operators to share anonymous betting data with leagues in real-time.
- Limits placement of gaming facilities at sports venues.
Lottery Oversight amendment
This could be called the Delaware or Rhode Island model, but there’s a big difference between those small states and Illinois. The main one is that established gaming stakeholders in Illinois would be livid if they were left out in favor of a lottery monopoly.
“I know there would be a lot of opponents to this idea, but we feel it’s worth having the lottery conversation because we can have one operator pay a large upfront fee,” Zalewski said. “That’s appealing enough to us to have a conversation on what it might look like.”
The stipulations:
- Give the Illinois Department of the Lottery jurisdiction over all sports wagering operations. All sports betting is conducted through the department, which determines the types of wagers and amounts that may be offered at lottery retailers.
- Require a single-operator model for the lottery.
- Provide an effective 50 percent tax on sports wagering revenue.
On the issue of mobile sports wagering
Two of the amendments would not allow for Illinois sports betting through mobile or online.
Zalewski believes any modern gaming platform should have a mobile presence, but that he also knows how colleagues can become concerned about the over-proliferation of gambling.
“I think there’s a concern in our caucuses on mobile as a policy idea,” Zalewski said. “We’ve never done it before. Where we have done it, with racetracks, if you want to place a bet on a horse race, you have to physically be at the racetrack.”
What’s next for Illinois sports betting?
The first hearing on the IL sports betting amendments could happen as soon as next Thursday, March 28, in the House Revenue and Finance Committee.
Zalewski indicated he doesn’t expect any of Illinois sports betting amendments to be voted on in the near-term.
“They are very much designed to be conversation starters,” Zalewski said. “We’ll let people react to the testimony and then go back to the drawing board to figure out what is best and start dwindling down the options.”
With the governor coming out strongly in favor of authorizing sports betting, Zalewski remains optimistic that the Illinois Legislature — usually hesitant to move on gambling issues — will make a concerted effort over the next two months to pass legal sports betting. The session ends May 31.
“The vibes in the capital are good on this issue,” Zalewski said. “People are all sort of waiting for the opportunity to dive in.”
