It appears the legal devices designed by the state of Illinois to penalize DraftKings have mostly failed. A recently announced name change of Casino Queen has effectively completed DraftKings’ workaround of the restrictions.
The Casino Queen will rebrand to “DraftKings at Casino Queen.” The change may seem like a slight change in semantics, but it’s quite significant for the Illinois sport betting market.
Why the Casino Queen name change is such a big deal
To understand the significance, a bit of a history lesson is in order.
In 2015, then-IL Attorney General Lisa Madigan issued an opinion that online daily fantasy sports contests, like that which DraftKings offered to Illinoisans, constituted illegal gambling.
Regardless, DraftKings kept accepting paid entries from customers in Illinois. While none of the governing bodies in IL ever tried to prosecute any DraftKings’ executives, the state didn’t forget.
When the IL Legislature drafted the most recent gambling expansion law, it created a “penalty box” for DraftKings. It required DraftKings to make a choice: Partner with an IL brick-and-mortar gambling facility for sports betting or wait for the better part of three years to go it alone in the state.
The plan got a bit more complicated this past May.
The Illinois Gaming Board (IGB) drafted a rule that said online sports wagering platforms tethered to brick-and-mortar facilities have to display those facilities’ branding in a primary fashion.
The first part of the plan to penalize DraftKings did work to some degree. Instead of waiting to try to snag one of the state’s three online-only licenses, DraftKings partnered with the Casino Queen in East St. Louis.
The branding requirement was still an issue at that point, however. The way things stood, Casino Queen, not DraftKings, would be the primary brand of the IL sports betting app and website. That detracted from the value for DraftKings.
Incorporating DraftKings into the facility name sidesteps the issue. It will allow DraftKings to use its branding in a forthcoming IL app and website for sports betting.
The most pertinent question for most IL residents and visitors remains, however. That is when online and retail wagering under DraftKings’ umbrella will be available in the state.
Still no official timeline for DraftKings’ launch in IL
A press release announcing the name change provided no information about when either betting channel would open. Both partners in the deal have already checked items off their to-do lists, however.
The Casino Queen has already applied for a master license. It’s uncertain when the IGB will award it, however. Until that happens, DraftKings can’t look at taking either product live.
DraftKings may be able to fast-track when the IGB does approve the master license. The IGB approved DraftKings’ management service provider license earlier this month.
That gives DraftKings leave to operate sports betting for its partner in the state. The real genius may be in how DraftKings essentially gained access in IL for what may have been tremendous savings.
DraftKings may have saved millions of dollars
Illinois law sets the cost at $20 million for one of the three standalone, online-only licenses. A management services provider license, on the other hand, only runs $1 million.
Naturally, there are other expenses that DraftKings will incur in getting into IL. It may have to build out mobile applications specific to the state, for example. Additionally, it will likely bear some of the cost of the retail buildout.
On top of that, DraftKings will share the revenue with its facility partner. That may end up costing more than the $19 million difference, but DraftKings likely would have incurred many of the same costs of entry if it had waited to go it alone.
In the meantime, other brands would have grabbed large swaths of the valuable Chicago market as DraftKings waited. Because of its approach, DraftKings will be able to get into IL much sooner and at a lower cost.