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Entering Thursday’s second legislative hearing of the year on Illinois sports betting, Rep. Bob Rita has yet to hear any reason why the state can’t fulfill the governor’s request for $200 million upfront in licensing fees.
One surprise in last month’s hearing on IL sports betting was that none of the stakeholders spoke against the $10 million required per license.
“We think it’s possible to get 20 operators to pay $10 million for a license,” Rita said. “We haven’t heard otherwise. No one has come out in opposition of the licensing fee. No one has really touched on it yet.”
After Gov. J.B. Pritzker called for IL sports betting in his budget proposal, Rep. Mike Zalewski, chair of the House Revenue and Finance Committee, introduced a placeholder bill — H 3308.
Five amendments were proposed as possible directions for Illinois sports betting, and all but the lottery proposal follow the governor’s lead.
The state is counting on 20 licensees to fulfill the $200 million allotted in the budget from sports betting. Pennsylvania, the only other state to have an initial licensing fee of that amount, had eight operators pay the license fee with a ninth on the way.
However, the governor’s budget proposal specified that sports wagering operators would be able to deduct a maximum of 90% of one-fifth of the initial $10 million license fee each year for the first five years of operation.
This could effectively turn the $10 million fee into a much more manageable $1 million with advance payment on taxes, but that’s if their annual tax payment hits $2 million. Only four operators in New Jersey are at that pace this year.
The licensing fee could be an issue that comes up Thursday when Rita chairs a second hearing on sports betting in the House Sales, Amusement & Other Taxes Subcommittee at 10 a.m. local time.
Rita issued Amendment 5, which appeared to be the most popular among stakeholders at the last hearing. That stipulates the $10 million licensing fee shall constitute an advance payment of taxes but does not get into the details of how that would work.
Rita indicated that he left that area blank to work with the industry on what it would take to get the $200 million in upfront fees.
“The biggest part is getting the 20 operators to pay $10 million for a license,” Rita said. “How we get there is something we will work on with the casinos, racinos and other gaming entities.”
Thursday’s hearing is a second informational hearing on the proposed amendments. There will be no vote.
On the agenda to testify are local government officials, representatives from the United States eSports Federation, several sportsbook operators and the University of Illinois.
“We want to make sure everybody is heard as we get closer to working with Rep. Zalewski on crafting a sports betting bill,” Rita said.
Following the discussion, Rita believes that Zalewski will not decide to move forward with any one amendment but with some combination of language from each amendment.
The Illinois legislative session ends May 31.
“It doesn’t seem like a lot of time, but there’s still a lot of time to put something together,” Rita said. “What makes a difference is that we had Gov. Pritzker come out and say this is something he’s interested in. When the governor says he wants something, that changes the dynamics a lot. It makes me confident we will get this done.”