There’s A Possible Problem For Illinois Online Sportsbooks Brewing

Posted By Matthew Kredell on August 17, 2020 - Last Updated on September 16, 2020

In Illinois, in-person registration for online sports betting accounts might not end exactly when everyone expects it to end.

Under the current statute, the in-person requirement only expires once the Illinois Gaming Board issues an online-only license.

The three online-only licenses aren’t available until 540 days after the first legal sports bet was placed in Illinois. That took place at BetRivers Sportsbook on March 9, meaning the in-person requirement would run until September 2021.

However, many of the major operators expected to apply for the online-only licenses have found other ways into the market. This sets up the possibility that no one applies for the online-only license — at least not immediately — potentially causing the in-person requirement to remain.

“I don’t view this as an 18-month penalty box,” said Jeremy Kudon, a lobbyist who represents DraftKings and FanDuel, two of the operators lawmakers expected to take online-only licenses.

“The reality is this could be forever. It could be indefinite. I think that’s going to be a major issue.”

Still, several industry sources indicated to PlayIllinois that they expected the licenses to be filled. It just might not immediately happen when it becomes possible, which could mean the in-person requirement could linger longer than intended.

Who will apply for online-only license in Illinois?

The delay for online-only licenses was meant as a compromise of a soft “penalty box” for DraftKings and FanDuel. The two companies offered daily fantasy sports in Illinois during a time of legal ambiguity.

But DraftKings partnered with Casino Queen and launched DraftKings Sportsbook in Illinois earlier this month.

FanDuel already obtained its master license, an indication that it plans to take a faster route into the market. PointsBet, partnered with Hawthorne Race Course, is preparing to launch soon.

That’s three prime candidates for an online-only license off the table. Industry sources don’t expect any of them to still go after this license. Entering the market years behind everyone else at the cost of $20 million isn’t an attractive option.

But Illinois is the sixth-largest state in the US by population, and market access matters for Wall Street.

Here are two companies industry sources could see going after an online-only license:

  • BetMGM: The second-most profitable casino company in the world doesn’t have a property in Illinois and can afford to enter the market this way.
  • Bet365: The world’s largest online sportsbook operator made its way overseas from the United Kingdom to make its mark in New Jersey and will soon be up in Colorado.

Legislative intervention needed

That the in-person registration requirement could stay in effect even longer than intended adds to why the legislature might want to change the law to address the reality of 2020.

Nine of the 10 casinos in the state hope to get the legislature to remove the requirement or shorten its time frame during the veto session in December. Only Rivers wants the requirement in place.

“This was all done with the idea that DraftKings and FanDuel would somehow be on the sidelines because of this,” Kudon said. “Now that’s not going to happen. And by getting rid of this limitation, we could really open up the market at a time that Illinois is desperate for tax revenue. That’s why I’m more optimistic that by December, there will be a push to remove onsite registration.”

Gov. JB Pritzker briefly suspended the requirement in June and July. The only online sportsbook up to take advantage of it, ironically, was BetRivers.

With the coronavirus situation in the state worsening, Pritzker could issue another suspension. But a legislative change would create a more lasting solution.

Difficulty of ending Illinois in-person registration

Comments made by Sen. Dave Syverson to PlayIllinois show that getting relief from the in-person requirement won’t be easy. A member of the Senate Subcommittee on Gaming, Syverson defended the in-person registration.

“If we do everything on the internet, then we destroy the brick-and-mortars and all the people around there,” Syverson said. “We wanted to get people to physically go in because that helps those locals at that brick and mortar.”

He didn’t think it was an issue to require people to go to a casino to register for an online account during the pandemic.

“Even though the media scares people, I think most of the public understands it’s safer in a socially distanced casino than at grocery stores, neighborhood parks where you’re interacting with large numbers of people, or using mass transit,” Syverson said. “I don’t think people who have been locked down so long mind driving to a casino.”

Kudon thinks the revenue numbers that operators show lawmakers at the end of the year will have them singing a different tune.

“If Illinois eliminates the in-person registration, I think the difference will be $6 (million) to $7 million a month in revenue,” Kudon said. “If they keep this requirement, what’s it going to make? Half a million a month? Ultimately, I think this is going to be about revenue and there’s definitely going to be interest in removing it.”

Matthew Kredell Avatar
Written by
Matthew Kredell

Matthew has covered efforts to legalize and regulate online gambling since 2007. His reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. A USC journalism alum, Matt started his career as a sportswriter at the Los Angeles Daily News and has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

View all posts by Matthew Kredell
Privacy Policy