A late amendment before Thursday’s subcommittee hearing on Illinois sports betting brought a bad-actor clause aimed at keeping out DraftKings and FanDuel.
Last week, House Revenue and Finance Committee Chairman Mike Zalewski told Legal Sports Report about four amendments that would be discussed as options to fill out his sports betting bill — H 3308.
Rep. Bob Rita, who chairs the Subcommittee on Sales, Amusement and Other Taxes in which the hearing was held, added a fifth Illinois sports betting amendment.
The amendment stipulates:
No sports wagering operator license or Internet sports wagering vendor license shall be granted to an applicant that has accepted, that has or had an affiliate that has accepted, or that has officers or directors who are or have been officers or directors of another party that accepted wagers through the Internet in contravention of any United States law, Illinois law, or any substantially similar laws of any other jurisdiction before the application date …
Casinos, horse racing support bad-actor language
Paul Gaynor, representing Rivers Casino, made it clear who the bad-actor IL sports betting language was targeting. He said after the Illinois attorney general found in 2015 that daily fantasy sports violated state law, DraftKings and FanDuel ignored the opinion and continued to operate.
“Without language barring bad actors from the licensing process, the proposed legislation would ignore DraftKings and (FanDuel’s) pattern of criminal conduct and reward bad actors who to this day refuse to comply with the laws,” Gaynor said.
He added that DraftKings Sportsbook and FanDuel Sportsbook are dominating the New Jersey market. The online sportsbooks are winning the market-share battle in the state, licensed through partnerships with a brick-and-mortar casino and racetrack.
All of the Illinois sports betting amendments, other than the lottery-only model, are asking for a $10 million license fee per operator, as requested by Gov. J.B. Pritzker in his budget proposal. Gaynor said that the remaining land-based casinos and racetracks aren’t going to pay $10 million per license for 10 to 20 percent of remaining market share.
“As a result of this lack of competition, Illinois will not achieve the maximum tax revenue collections it otherwise could have,” Gaynor said.
Zalewski frustrated that DFS part of hearing
After previously running into roadblocks in his attempts to get DFS regulated in Illinois, Zalewski expressed displeasure that the topic was taking over the sports betting discussion.
He pointed out that sports wagering will be a new market share for all gaming stakeholders, and asked that the conversation on DraftKings and FanDuel be left for another day.
“They have nothing to do with sports wagering, as far as I’m concerned – daily fantasy sports – they’re two separate things,” Zalewski said.
However, Mattias Stetz, representing Rush Street Interactive, spoke about the damage that enabling online-only operators could do to the state’s brick-and-mortar industry. The horse racing industry came out in support of the late Illinois sports betting amendment.
“We feel it’s very important that players in Illinois can bet within a safe and correctly regulated environment with operators that have a clean track record in the state of Illinois.
“… While it may be true that enabling online only operators in the market will generate some incremental online-only revenues for the state, it fails to consider that … the vast majority of gaming revenues in Illinois [come] from brick-and-mortar casinos.”
Dan Spillane of the NBA defended the DFS operators. FanDuel is an authorized gaming operator of the NBA.
“We have a partnership with FanDuel and they’re licensed in many states in the US right now, including New Jersey,” Spillane said. “I wouldn’t see any reason for them not to be similarly licensed in other states where they apply.”
What else is in the IL sports betting amendment
The new amendment earned support from the casino and horse racing stakeholders at the hearing. Rita has a history with sports betting; he introduced legislation in 2017 and held two informational hearings last year.
Other details of the amendment:
- A $10 million initial license fee, renewable every 10 years for $50,000
- A separate Internet sports wagering vendor license with a $100,000 fee, renewed every 10 years for $50,000
- One skin tied to a brick-and-mortar establishment
- A 10 percent tax on gross gaming revenues
- Sports wagering operators may accept wagers at a sports wagering lounge located within a sports facility if they enter an agreement with owners of such teams