With only one week left in the spring legislative session, lawmakers are still trying to piece together a final sports betting proposal, but issues between daily fantasy sports company FanDuel and Rivers Casino chairman Neil Bluhm – could be holding up negotiations.
Bluhm has pushed for a so-called penalty box, which would prohibit certain companies from entering the sports betting market for three years if they have previously operated illegally in the state. This regulatory waiting period would apply to FanDuel and DraftKings who operated their sportsbooks in the state when then-Attorney General Lisa Madigan issued an advisory opinion in 2015, which said their operations were considered illegal.
But the companies say they have operated legally, calling the opinion “non-binding”.
Matt King, FanDuel CEO, said Bluhm is using this advisory opinion to try and keep competition out of Illinois. “And trying to restrict competition in a new, vibrant market like this is going to lead to a bunch of unintended consequences, and far less revenue and far less investment in the state,” he said. King said FanDuel would bring in 300 tech jobs to Chicago if sports betting is legalized and if the company is issued a mobile app license.
Paul Gaynor, who formerly worked for Attorney General Lisa Madigan in the office's public interest division, now represents Rivers Casino. He said FanDuel hasn’t invested in the state while Rivers Casino has created jobs. The waiting period, he said, would simply help level the playing field for companies who would be getting their start in a legal market.
“We just think that if someone has engaged in an illegal anti-competitive behavior, and hasn't benefited the state at all, and has thumbed their nose at the regulators, they shouldn't get the benefit of that illegal conduct,” Gaynor said.
FanDuel and DraftKings have been operating their sports betting apps in New Jersey and several other states with a legal sports betting market since the U.S. Supreme Court allowed states outside of Nevada to regulate it.
“We feel that we have the best product in the marketplace, and the best customer experience. And so, if Illinois is going to legalize sports betting, we want to be a part of it,” said King.
Gov. J.B Pritzker is counting on $212 million from sports betting licenses to help balance his budget. Lawmakers involved in negotiations have kept licensing fees close to what Pritzker is expecting in their own proposals. This means the cost for one license could still be in the millions, and only those like casino and video gaming operators can afford to buy a license and renew it.
The legalization of sports betting could be pulled into a larger gambling expansion proposal, that would include more casinos. Some gaming experts say this approach could weigh down a sports betting plan, which lawmakers originally said would be tackled separately from casino expansion. Added to that mix are several other stakeholders, like existing casinos, video gaming operators, professional sports leagues and those worried about gambling addiction --- all who want different things out of a final plan.
The General Assembly has until May 31 to figure out the details, not only for sports betting, but for a capital plan and recreational marijuana.
