Illinois Will Have Plenty Of Sports Betting Competition From Neighboring States

Posted on March 6, 2020

Illinois has a problem; a three-state problem, to be exact.

As the Prairie State draws closer to launching retail sports wagering, its neighbors — Indiana, Iowa and Missouri —present a stiff challenge. Iowa and Indiana have 27 retail sportsbooks in operation and, this week, two members of the Missouri Legislature proposed bills that would legalize sports betting.

Iowa and Indiana are the biggest threats because of their mature retail sportsbook industry. Both states lure Illinois bettors, no doubt. However, the pair of sports betting bills before Missouri lawmakers indicates the Show Me state is hungry for sports betting, too.

 

Missouri: The upstart

Two different sports betting bills are moving through committees in Missouri’s state legislature.

Rep. Cody Smith proposed a bill that made it through a House committee Wednesday. The bill calls for retail, online and mobile sports betting.

Its most controversial provision is that it requires operators to use official league data for prop bets. In other words, pro sports leagues could demand a fee for their data. This is commonly known as an “integrity fee.”

The second bill, sponsored by Rep. Phil Christofanelli, allows for retail, mobile and online betting but does not contain an official data mandate.

Both bills passed through the Special Committee on Government Oversight. However, there are more hoops to jump through before making it to the House and Senate floors for a vote.

 

Iowa: The tip of the betting spear

As Illinois works its way through the regulatory thicket, Iowa’s 13 sportsbooks are churning profits for casinos and the state’s beneficiaries of sports wagering taxes.

And likely not lost on Illinois regulators is the fact that Iowa launched its first retail sportsbook in August 2019, just three months after legalizing sports betting in May 2019. That expediency made Iowa first-to-market in the Midwest.

 

Indiana: Ahead in mobile

Indiana legalized online and retail sports betting in May 2019 and launched its first sportsbook location last September.

The state’s fall launch meant that Illinois was sandwiched by two new sports betting markets: Iowa to the west and Indiana to the east.

The main difference between the two markets is that Iowa requires you to register for an online sports betting account by going to a casino in person. Indiana has no such rules.

 

Where does Illinois stand amid the competition?

Illinois’ competition is a mosaic of the best and what’s considered the worst of sports betting. Iowa’s in-person requirement and the proposed integrity fee in Missouri are drawbacks. Otherwise, Iowa and Indiana have enjoyed the proliferation of casino sportsbooks.

Either way, one thing is certain. Indiana and Iowa casinos are pulling in more than $60 million this year in combined revenue. Illinois is just now set to launch.

Indiana casinos have paid more than $4.06 million in taxes so far, while Iowa casinos have paid more than $1.3 million.

Aside from giving people sports wagering platforms, Illinois is losing out on valuable revenue they’ll generate from the 15% tax rate they’ll assess on sports betting revenue. While that tax rate benefits the state, it represents one of three main drawbacks to existing regulations:

  • The tax rate is high.
  • Bettors will have to sign up at casino properties to get online accounts.
  • Casinos could pay as much as $10 million for a sports betting license.

As standalone entities, these three drawbacks are bad enough. However, Illinois has to battle the curse of comparison.

Indiana’s tax rate is 9.5% and Iowa’s is 6.75%. One of the proposed Missouri sports wagering bills calls for a 9% tax rate.

Second, Illinois lawmakers chose to include an in-person sign-up rule for online betting. This provision will last at least 18 months, according to current legislation.

And, finally, both Indiana and Iowa chose to keep the cost of a sports wagering license below $100,000.

That being said, casinos and sports betting operators are willing to pay the price to operate. In most cases, sports betting proves profitable year-in and year-out. It’s a smart business move, which explains why seven casinos have the temporary license they need to open a sportsbook.

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