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Sports betting details

Thursday, May 9, 2019

* 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.”

* Related…

* 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

- Posted by Rich Miller        

21 Comments »
  1. - wordslinger - Thursday, May 9, 19 @ 10:02 am:

    –mandates the purchase of official league data, –

    That’s absurd; the government mandating purchase of information in the public domain?

    Looks like Jerry’s dog-and-pony show with Ozzie and Horace was quite effective.


  2. - Pick a Name - Thursday, May 9, 19 @ 10:10 am:

    I have no idea why they don’t legalize online poker and join with other states that currently have it. Illinois desperately needs revenue and a source is right in front of their eyes.


  3. - AndyIllini - Thursday, May 9, 19 @ 10:12 am:

    =I have no idea why they don’t legalize online poker and join with other states that currently have it.=

    It makes no sense.

    But if you ever take a step back and take a 30,000 foot view of all of Illinois’ gambling policies, none of it makes any sense.


  4. - Darcan - Thursday, May 9, 19 @ 10:19 am:

    The casinos want to push out Draft Kings and Fan Duel because they know how this industry works.But Rivers wants to have a monopoly. How much money does Neil Blume need?


  5. - OneMan - Thursday, May 9, 19 @ 10:25 am:

    It seems that when it comes to any sort of major gaming expansion the state views the revenue as the initial licesing fee.

    Also the law should say if you allow on prem sports betting in your town you have to allow video gaming as well.

    The vested intrests are right on this one, the fees are too damn high


  6. - Henry Francis - Thursday, May 9, 19 @ 10:27 am:

    Man, these billionaires never stop trying to get a bigger slice of the American pie. How much has Jerry paid in rent to the state for building him that stadium?

    The DC teams, Nationals, wizards and capitals, are getting close to having sports books in their own stadiums.


  7. - A guy - Thursday, May 9, 19 @ 10:30 am:

    == I recommend you read the whole thing if you’re at all interested in this topic…==

    I’m not. So I didn’t. But I appreciate your diligence in passing it along.


  8. - May soon be required - Thursday, May 9, 19 @ 10:39 am:

    Too many hands in the pot don’t make the “juice” worth the squeeze.


  9. - Name/Nickname - May soon be required - Thursday, May 9, 19 @ 10:40 am:

    I wonder what the hell Zalewski’s motivation is for this. Hmmm……..


  10. - City Zen - Thursday, May 9, 19 @ 10:50 am:

    ==will you be able to wager on Illini==

    How about against?


  11. - NoGifts - Thursday, May 9, 19 @ 10:56 am:

    Am I crazy? Aren’t we creating a conflict of interest where the league/owners have a stake in betting? Does this open the door to throwing games to increase interest or profits?


  12. - FormerILLobster - Thursday, May 9, 19 @ 11:04 am:

    Of course the Leagues reference their requested percentage as a “Royalty” or a “Partnership”. This is necessary because of their “not for profit” status. Calling the cut a “Royalty” keeps it federally tax exempt from “Unrelated Business Income Tax”


  13. - foster brooks - Thursday, May 9, 19 @ 11:26 am:

    why in the world would you let pro leagues in on this revenue? nobody else does it.


  14. - anon - Thursday, May 9, 19 @ 11:27 am:

    How will the NBA/MLB increase the amount of money bet in Illinois in comparison to every other state that cut them out? Will they run ads that tell everyone not to bet in Indiana or Vegas?


  15. - Fav human - Thursday, May 9, 19 @ 12:01 pm:

    What foster b. said. What official data do you need?? just the score??


  16. - Jose Abreu's Next Homerun - Thursday, May 9, 19 @ 12:55 pm:

    What are the consequences for telling the sports leagues no?


  17. - how it works - Thursday, May 9, 19 @ 1:11 pm:

    ==- Fav human - Thursday, May 9, 19 @ 12:01 pm:

    What foster b. said. What official data do you need?? just the score??==

    You have to understand sports betting and how it works to understand the need for official league data and why league involvement will maximize state revenues. It’s not about final scores. It’s about in-play betting and that’s where the real money is made. If you’re using multiple data points, one outlet may make one call and the other outlet calls it differently. You need one, consistent arbiter of the plays and the entity that does that is the league. The states that dont require it dont have to worry because the main players are Fan Duel and Draft Kings, and they only use official league data. Here in Illinois, you have casinos that want to create their own sports books and platforms. If you want to be sure everyone is playing on the same field, you have to make sure they’re all using the same data.


  18. - Not for Nothing - Thursday, May 9, 19 @ 1:46 pm:

    @Foster - Tennessee, that shining state on the hill that everyone says Illinois needs to be more like, just passed a bill with official league data. So, not nobody.


  19. - OneMan - Thursday, May 9, 19 @ 2:20 pm:

    What foster b. said. What official data do you need?? just the score??

    Actually, you need more than the score at the end of the game. Over 20% of sports betting in Nevada takes place during the game. In-game betting action has been growing and that growth is expected to continue.

    A sportsbook will offer bets during the game with the odds shifting during a game based off of score, who is playing and who isn’t etc.
    There have been instances where player changes (or other things) have not been reflected in the data used by some sports books vs others leading to not only arbitrage opportunities (book one knows the kicker is hurt but not a different sportsbook) but questions about why odds are so different. Since the in-game odds are often set in part by algorithms you want your algorithm to have the correct data. There is some value in everyone working off of the same data when setting odds.

    Admittedly this is being driven by the leagues wanting revenue, but there is a bit of an integrity argument here. You wouldn’t want people selling stock who didn’t have the official current price of the stock, it’s a bit of the same thing.
    https://sportshandle.com/nba-mlb-demands-data-fee-nv-sportsbooks/


  20. - wordslinger - Thursday, May 9, 19 @ 2:41 pm:

    MLB has come quite a ways since Kenesaw Mountain Landis.

    Bowie Kuhn banned from baseball the retired Willie Mays and Mickey Mantle because they had meet-and-greet gigs at casinos (Peter Ueberroth later lifted them).

    You know Pete Rose has to be working this angle in another attempt to vacate his lifetime ban.


  21. - DuPage Moderate - Thursday, May 9, 19 @ 7:48 pm:

    Yeah, fade the Illini and pound Northwestern in Big Ten Football play. We could pay down the pension deficient with that weekly parlay.


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