Illinois appears poised to provide the first regulatory view of what the buzzphrase “commercially reasonable” means in sports betting.
The phrase “commercially reasonable” became a trendy yet vague part of sports betting legislation last year.
Professional sports leagues trying to profit directly from wagering on their games found some state legislatures willing to require that operators pay for official league data for in-play wagering. All included a provision requiring it to be offered on so-called commercially reasonable terms.
A second phase of emergency sports wagering rules issued Thursday by the Illinois Gaming Board (IGB) set guidelines for challenging the commercial reasonableness of official league data. That could make Illinois sports betting rules even more closely scrutinized than expected.
How Illinois addresses “commercially reasonable”
Under the section for commercial reasonableness, the IGB confirms that governing bodies or their vendors providing official league data must do so on commercially reasonable terms.
Operators may petition the board if they believe a contract or offer sheet does not comply. The data provider will then have 21 days to respond to the complaint.
The IGB will appoint an administrative law judge to conduct a hearing, with the losing party liable for the costs. The burden of proof is on the petitioner to “show by a preponderance of the evidence that terms of the contract or offer are not commercially reasonable.”
The following factors are provided for the judge and Board to consider when determining whether the terms of a contract or offer are commercially reasonable:
- Whether and to what extent the terms are anti-competitive in nature.
- Whether and to what extent the terms are economically feasible.
- Whether and to what extent the terms are against the public interest of the state of Illinois.
How this could affect other states
Legislators in Tennessee and Michigan also passed legislation requiring official league data when offered on commercially reasonable terms.
Legal Sports Report previously took a look at the legal history and lack of clarity around the phrase in other contexts.
The parameters established by the IGB surely will be noticed in Michigan, where regulators recently spoke to LSR about the task of defining “commercially reasonable.”
What else is in Illinois emergency rules?
The second round of emergency rules outlines application processes, prohibited wagering activity, and a number of internal controls and operating procedures for sports wagering licensees.
Here are some of the points of interest from the 66-page document:
- Betting will be limited to professional sports, motorsports and collegiate sports excluding those involving Illinois collegiate teams. This means no wagering on the Academy Awards.
- The ban on in-state college wagering does not apply to parlay bets.
- The 2% tax to Cook County in addition to the 15% to the state applies to all wagers made by a person physically located in the county, including online wagers.
- Sports stadiums and arenas may receive a license to offer sports betting only if all professional sports teams that play their home contests at the facility provide written authorization.
Next steps for sports betting in Illinois
Sports wagering got the governor’s approval in June, about a month and a half after Indiana and Iowa. But those neighboring states launched sports betting prior to the start of the NFL season.
Residents of Illinois who want to bet on the Super Bowl by legal means will need to cross a border. The IGB is in the process of accepting and reviewing applications for master sports wagering licenses.
Once approved with a temporary operating permit, even if not fully compliant with the rules, licensees may begin accepting wagers right away, IGB administrator Marcus Fruchter said in a statement.
When those first licenses may be issued, he has not clarified. Rep. Mike Zalewski told the Chicago Sun-Times that he thinks March Madness is a reasonable goal.
