No Penalty On The Play: DraftKings, FanDuel Avoid Wait For Illinois Licensure

Posted on July 20, 2020

When the Illinois Legislature drafted its latest gambling expansion law, it made a move to penalize companies like DraftKings and FanDuel. The move to limit online sports betting operators has failed that objective, however.

Both DraftKings and FanDuel have received permits to accept wagers online in the Prairie State. With two more national players entering Illinois, it makes you wonder what the delay on online-only licenses was all about.

DraftKings, FanDuel cleared for online sports betting in IL

On Friday, the Illinois Gaming Board (IGB) issued management services provider permits to both companies. Basically, it means both companies are good to operate sportsbooks on behalf of Illinois master license holders.

It’s unclear exactly how soon the two will begin doing so, either online or on a retail basis. Time may be of the essence for both operators to get online, however.

Currently, Gov. JB Pritzker‘s suspension of the in-person registration requirement for online wagering is still in effect. That means the sooner the sportsbooks can launch in the Land of Lincoln, the more time they have to accrue account registrations online.

While they may be able to get a desktop and mobile site up to speed for Illinoisans quickly, the process for Android and Apple applications may be a horse of a different color. State regulations for such apps can vary, meaning that companies often have to develop apps specific to each market.

Another market pressure on DraftKings and FanDuel is the mounting competition. The IGB gave a permit to PointsBet last Tuesday, and the company plans to go live in IL “very soon.”

However, the most interesting aspect of this story is the avoidance of the “penalty box.” Understanding that situation requires a bit of a history lesson.

Why did IL Legislature have it out for DraftKings and FanDuel?

In 2015, then-IL Attorney General Lisa Madigan issued an opinion that daily fantasy sports contests were illegal gambling. DraftKings and FanDuel didn’t blink, however.

Instead, they essentially called Madigan’s bluff. They continued to accept paid entries in IL, effectively betting that Madigan wouldn’t actually press any charges.

While DraftKings and FanDuel were right, their actions weren’t without consequences. That heavily influenced the gambling expansion law in 2019.

Essentially, lawmakers intended for online sportsbooks that wanted to go it alone in IL to wait for the better part of two years. They did so in a creative way.

The law allows for three online-only, standalone sports betting licenses. Those licensees won’t have to operate under the auspice of an IL master license holder. Those are casinos, off-track betting sites, racetracks, and sports stadiums in IL.

The IGB can’t issue any of those licenses until 540 days after the first retail sportsbooks started taking bets in IL, however. The clock began ticking on that time period on March 9, when Rivers Casino took the first legal wager in IL history.

That was the intended “penalty box” period for DraftKings and FanDuel. Both companies have potentially circumvented that now, however, by securing approval to manage sports betting for a master license holder.

DraftKings has already secured market access by negotiating a deal with the Casino Queen in East St. Louis. As of right now, FanDuel remains a free agent.

Soon, bettors will have an array of options for online wagering in IL. If the current trend continues, all the major online sports betting brands will already be in the state before those three online-only licenses become available.

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Derek Helling

Derek Helling is a freelance journalist who resides in Kansas City, Mo. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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