Illinois Sports Betting Legislation Will Send DraftKings, FanDuel To The ‘Penalty Box’
The Illinois legislature worked into the weekend to pass a major funding bill that includes the legalization of Illinois online sports betting. While SB 690 authofrizes sports betting through various outlets such as online, casinos and race tracks, and even at sports venues like Wrigley Field and Soldier Field, not everyone is happy with the bill’s language that only awaits Governor J.B. Pritzker’s signature to become law.
Among the most controversial elements of the sports betting provisions is an imposed “penalty box” on online-only operators. The penalty box prevents operators such as DraftKings online sportsbook and FanDuel online sportsbook from entering the market for the first 18 months of legalization, giving local casinos a head start in the new space, online and as well as at retail locations. (It’s worth noting that there remains no law in Illinois legalizing daily fantasy sports.)
DraftKings CEO Jason Robin took issue with the bill on Twitter:
As with most things gambling, for every loser, there’s a winner. In particular, the winners here include local casinos and Illinois-based company Rush Street Interactive, which manages Rivers Casino just north of Chicago.
SB 690 will allow the company’s minority ownership of an already-existing brick and mortar to introduce its mobile platform to Illinois bettors while DraftKings and FanDuel wait on the sidelines. Most recently, Rush Street carried over their New Jersey partnership with SugarHouse Casino to launch the first online sportsbook in Pennsylvania.
One way DraftKings and FanDuel can participate prior to the 18-month wait period is by partnering with an existing casino, but the arrangement the Illinois law would allow appears to make it close to useless.
Caesars Entertainment inked a deal with DraftKings earlier this year to take an equity position in the DFS-turned online-sports betting operator. The agreement was made, in part, to help DraftKings expedite their roll-out process by gaining access to the 13 states where Caesars currently operates, which includes a Harrah’s Casino in southern Illinois. Even so, companies like DraftKings wouldn’t be able to participate using their own brand or “skin” under the existing law, but only under the Caesars umbrella, which means behind-the-scene risk-management, for example. It would be quasi-participation at best.
Robins had more to say about the efforts that created the penalty box in the first place:
The efforts began in May, when Rivers Casino owner, Neil Bluhm, initially asked legislators to consider a three-year “penalty box,” referring to DraftKings and FanDuel as “bad actors” and alleging that the DFS sites had operated in Illinois illegally following the former attorney general’s opinion in 2015 that, “It is my opinion that the daily fantasy sports contests offered by FanDuel and DraftKings clearly constitute gambling.” Meanwhile, litigation involving the two DFS operators remains ongoing.
The competitive advantage for local casinos doesn’t stop at the penalty box. Moreover, the state will give licenses to only three online operators, and they’ll come at a steep price: $20M.
Fortunately, the NBA and MLB didn’t successfully push through “integrity fees,” provisions that had been included in previous sports betting bills. The leagues didn’t strike out, however. Like Tennessee online sports betting, Illinois mandates the purchase of “official league data” for props and live-betting. Additionally, sports leagues can potentially restrict the types of bets sportsbooks are allowed to offer.
Some people shot back at critics of the bill. The implication being, given the circumstances and Illinois politics, the bill ought to be celebrated instead of critiqued.
It’s true, sports betting and sports bettors in Illinois are in a much better place than they were last week. However, as is the case in Tennessee, the bill isn’t perfect. Advocates for legalization can both rejoice when states pass sports betting legislation while simultaneously pointing out when and where lawmakers go wrong. In fact, with many states to go, and many more efforts from leagues, casinos, and other special interest groups to ensure benefits at the expense of consumers, it’s incumbent upon those paying attention to do just that.