An amendment to the existing Illinois sports betting bill aims to bring exchange wagering to the state.
State representative Bob Rita, a man instrumental in legalizing Illinois sportsbooks, has introduced HB 1405. The bill, if signed into law, would allow for two licenses for exchange wagering.
Exchanges will be taxed at 15%:
“Taxes levied and collected from an exchange trade wagering licensee shall be the same as taxes levied and collected from a master sports wagering licensee. An exchange trade wagering license is limited to exchange trade wagering and may not be used to allow a licensee to participate in other types of gambling.”
It would cost $500,000 for the initial license fee that is valid for four years. License renewals would cost $100,000.
Explaining exchange wagering
Peer-to-peer betting is another name for exchange betting.
In simple terms, it is a bet between two individuals. The exchange would create a legal marketplace where bettors could offer their own bets in the hopes of attracting interest from another person.
Users set their own terms and odds. The exchange takes a small fee similar to what an Illinois online sportsbook would take in the form of vig.
Illinois would be the second state to offer exchange betting
New Jersey is the only state that currently allows exchange wagering. Prophet and Sporttrade both offer exchange betting.
The concept has yet to gain traction in the United States because the Wire Act prohibits gambling across state lines. That limits the size of betting pools since exchange wagering is less popular that traditional sports betting.
Plenty of Illinois sportsbook slots remain open
However, should the bill become law, it will provide two more slots for entry into the Illinois online gambling market.
As it is, as many as 14 sportsbook slots remain open.
Of the 11 operating retail Illinois casinos, only five have licensed online sportsbook partners:
- Rivers Casino in Des Plaines has partnered with BetRivers
- DraftKings at Casino Queen in East St. Louis with DraftKings
- Grand Victoria Casino in Elgin with Caesars
- Hollywood Casino Aurora with Barstool
- Par-a-Dice Hotel Casino in East Peoria with BetMGM online (and FanDuel retail).
Further, the state’s two operating horse racetracks — Hawthorne and the former Fairmount Park — are allowed to have online sportsbook partnerships, as opposed to licensed OSBs. Fairmount has partnered with FanDuel (and the track is now called FanDuel Sportsbook and Horse Racing). Hawthorne has partnered with PointsBet.
That leaves at least 14 open slots for an Illinois online sportsbook to enter the market and possibly a few more than that:
- Six via a tether with an existing licensed retail casino
- Five via a tether with new casino applicants
- Three via online-only sportsbook licenses
- Maybe as many as four connected to pro sports facilities (The Fanduel Sports Lounge at the United Center is already open, but needs approval to begin taking bets. A DraftKings Sportsbook at Wrigley Field is under construction and expected to open in 2023).
Online-only license slots re-opened
Then, there are three online-only sportsbook licenses available that do not require a tether to a retail casino. But, they do cost $20 million for a license.
Price clearly has been a disincentive to entry. Currently, there are no applicants for an online-only license. The Illinois Gaming Board has reopened those slots for bids. The window for bids closes on March 1, 2023.