* This is a very detailed, quote-filled account of yesterday’s House committee hearing on sports betting. I recommend you read the whole thing if you’re at all interested in this topic…
It would likely be fair to say that the only people who left Wednesday’s Illinois sports betting hearing truly happy were representatives of the professional sports leagues. And even they wanted more.
Three hours before the subcommittee hearing was set to start, torch-bearer Mike Zalewski (D-District 23) filed two amendments — both with a 25 percent tax rate on operator gross sports wagering revenue, and one decidedly professional league-friendly. Zalewski’s proposed Amendment 2 not only limits the number of sports betting licenses for both physical and online sportsbooks, it calls for a “royalty” to the professional leagues, mandates the purchase of official league data, and imposes a stunning $20 million licensing fee for online sportsbooks. Zalewski filed both as amendments to HB 1260, which appears will be the latest sports betting vehicle. The previous bill, HB 3308, wasn’t referenced.
Needless to say, stakeholders at the two-hour hearing pushed back hard while representatives from Major League Baseball and the National Basketball Association attempted to convince the room that only if the leagues are cut into profits, will sports betting reach its potential in Illinois, the sixth most populous state in the U.S. […]
“The tax rate is extremely high,” said Tom Swoik, executive director of the Illinois Casino Gaming Association. “And we are opposed to being forced to do something with the leagues.” […]
Swoik also pointed out that two of Illinois’ key border states, Indiana and Iowa, were on the cusp of legalizing — Indiana’s governor signed sports betting into law Wednesday, possibly during the hearing — both with tax rates below 10 percent, much more reasonable licensing fees and no nod to the professional leagues. Yet lawmakers pushed him and Paul Gaynor of Midwest Entertainment to admit that Illinois’ bigger market would mitigate the proposed high cost of doing business.
“If we’re paying four or five times the taxes, our odds aren’t going to be as good,” Swoik said. Zalewski went on to say that he felt it was wise to start with higher, rather than lower tax rate, but Seoul reminded him that taxes on casino gaming has been changed multiple times.
* This one is also pretty good and includes dot-points of the proposed amendments…
The professional sports leagues used to call their ask for a percentage of all bets placed on their games an integrity fee to be used to ensure the integrity of their games. They have long since changed the name to royalty.
At Wednesday’s hearing, they rebranded the royalty as a partnership that would give them a financial incentive to drive up the amount of money bet in Illinois. They also really like pie metaphors.
“I think there’s a lot we can do in terms of opening up the levers of marketing, helping consumers in Illinois understand what are legal sportsbooks versus illegal sportsbooks and encouraging them to bet legally,” said Bryan Seely of Major League Baseball. I think there’s a number of things we can do to try to grow the pie for everyone.”
Scott Kaufman-Ross, representing the NBA, warned that it’s better for all operators to be required to use official league data so that the league will have an incentive to grow revenue for everyone.
“If we were in a situation where we only had a partnership with one operator, then we’d only be incentivized to grow their revenue,” Kaufman-Ross said. “Having a royalty that applies to all sports betting in the state will incentivize the leagues to lean in and grow the pie for everyone.”
* Pro leagues to get royalties under proposed Illinois sports betting measure
* Should sports gambling become legal in Illinois, will you be able to wager on Illini, Wildcats or Huskies? Don’t bet on it.
* Gambling expansion, sports betting on collision course as end of Illinois’ legislative session nears