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A closer look at sports betting in Illinois

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Illinois

* Interesting points by Mark Brown on the US Supreme Court’s ruling allowing sports betting outside Nevada…

As always, though, the biggest obstacle to legalized sports betting in Illinois won’t be gambling opponents so much as gambling industry competitors.

“By no means is this going to be simple and elegant,” said Rep. Mike Zalewski (D-Riverside), the House sponsor of Harris’ bill.

Zalewski warned there’s a possibility someone could try to step into the void created by the Supreme Court ruling and begin openly accepting sports bets in Illinois, challenging regulators to shut them down despite a state law that prohibits sports gambling.

That would be similar to the business model recently used by fantasy sports operators and market disrupters in other industries, he noted.

* Complicating matters are things like this…

Arlington International Racecourse General Manager Tony Petrillo could not be reached for comment Monday, but in March he told the Daily Herald the track would want a casino along with sports betting.

* A bit of hyperbole from Barry Rozner…

The State Where Nothing Works will almost certainly butcher the opportunity to create instant revenue.

Never mind all the gambling bills in the past that could have saved Illinois racetracks, the ones that either didn’t pass or were vetoed by the previous governor.

Illinois should have had a bill ready Monday that allowed for casinos at race tracks with a full sports betting parlor.

New Jersey has its bill and Monmouth Park — a New Jersey racetrack — plans to have sports betting within two weeks. It will probably be two decades before Illinois takes advantage of the revenue opportunity.

New Jersey was at the center of the court case, so of course they were ready to go.

* And rushing into things could create more problems…

Democratic state Sen. Steve Stadelman of Loves Park, chairman of the gaming committee, said he expects the pace of the panel’s work to quicken. Sports gambling consultants and representatives from the professional sports leagues, along with assorted opponents and supporters, testified at a preliminary hearing on the issue last month.

Stadelman said it’s unlikely legislation will be up for a vote before the General Assembly adjourns May 31. Issues to be addressed include tax rates, online wagering and potential venues such as casinos and horse racing tracks. […]

Stadelman and Democratic state Rep. Lou Lang of Skokie said lawmakers can’t be hasty in putting together a final sports gambling bill to keep pace with other states. Lang said he conducted four days of research — at his personal expense — on a trip to Las Vegas by meeting with sports books, the Nevada Gaming Control Board and others.

“I learned quite a bit,” said Lang. “I learned that some states were so much in a hurry to pass a law on this that they screwed it up. We’re not going to screw it up. We’re going to do it right. And I’m not going to put a (House) bill together and get it out there for people to look at until I’m comfortable that it’s the right bill.”

* How much would it bring in? From a Tribune editorial…

Illinois could reap from $300 million to $681 million a year, according to Chris Grove of research firm Eilers & Krejcik Gaming, depending on whether it limited sports gambling to casinos and other physical sites or allowed it online as well.

Mark Brown…

Deutsche Bank Market Research estimates the potential legalized sports betting market in Illinois at $681 million annually.

Harris would impose a 12.5 percent tax on gross sports wagering revenue and a 1 percent fee that would go to pro sports leagues and the NCAA, both of which he said are open to negotiation.

So, Deutche Bank thinks the market is $681 million and Eilers & Krejcik believes Illinois government would reap up to that very same $681 million? Hmm.

* The governor was, as usual, clear as mud on the topic yesterday…

Gov. Bruce Rauner, speaking at a news conference Monday, did not take a position on sports betting.

“I’ve been clear on gaming: I personally don’t gamble,” he said. “I think that gambling is something that takes money away from folks who can least afford to lose their money.

“That said, people like to gamble; it’s here. I believe in local control. I personally support those communities that would like to see gaming expanded in their communities.”

posted by Rich Miller
Tuesday, May 15, 18 @ 11:29 am

Comments

“I personally don’t gamble …” said the hedge fund gambler, er investor. #Cmon

Comment by Anon Tuesday, May 15, 18 @ 11:38 am
===said the hedge fund===

He didn’t do hedge funds.

Comment by Rich Miller Tuesday, May 15, 18 @ 11:39 am
Hilarious that the sport leagues and NCAA want in on a cut.

Comment by Jose Abreu's next homer Tuesday, May 15, 18 @ 11:40 am
Between the estimates on sports betting and legalized marijuana Illinois could bring in almost $1B in new tax revenue.

Comment by Yup! Tuesday, May 15, 18 @ 11:46 am
==So, Deutche Bank thinks the market is $681 million and Eilers & Krejcik believes Illinois government would reap up to that very same $681 million? Hmm.== So you don’t think a 100% tax would work?

Comment by SAP Tuesday, May 15, 18 @ 11:48 am
My apologies. Remove “hedge fund” and replace “private equity.” Same concept.

Comment by Anon Tuesday, May 15, 18 @ 11:57 am
==Illinois could reap from $300 million to $681 million a year==

So they can only estimate to the hundred-millions on the low end but apparently have enough foresight to estimate to the millions on the high end.

Just say $700M and be done with it.

Comment by City Zen Tuesday, May 15, 18 @ 12:01 pm
Between sports betting and marijuana, I think we can solve the pension deficit without hammering the non-sinners.

Comment by Prairie State Sam Tuesday, May 15, 18 @ 12:06 pm
Anon, if you think private equity investing and hedge fund investing are the “same concept” and both are “gambling, you positively don’t have a clue. Keep your money in a a passbook savings, ok?

Comment by Arthur Andersen Tuesday, May 15, 18 @ 12:08 pm
And for added suspense, a minority owner of an NFL team is our Governor. Will he try to make the leagues’ request of an Integrity Fee to be included in a bill? Former NFL player now IL Senator Napoleon Harris already has.

Comment by Jose Abreu's next homer Tuesday, May 15, 18 @ 12:11 pm
Back to the Post, why give the casinos and dying racetracks another subsidy? Let the tracks have slots, the casinos whatever, and let people sports gamble from the comfort of their home.

Comment by Arthur Andersen Tuesday, May 15, 18 @ 12:12 pm
Any place that has slot machines could be wired for a sports betting machine.

Comment by Pieroge tirebiter Tuesday, May 15, 18 @ 12:17 pm
For what it is worth the margin in Nevada on the sports book is about 5%.
Let’s be really generous and say Illinois gets all of the net revenue, in order to get $681 million, there would have to be 13,620,000,000 bet in Illinois.

In 2017 about 4.9 billion was bet in Nevada sports books. With a resultant revenue for the book operators of about 250 million dollars.

So using the 681 million as the potential bet in Illinois each year (seems a bit more logical) that would leave about 34 million in profit to tax…

Not big money there..

http://gaming.unlv.edu/reports/NV_sportsbetting.pdf

Comment by OneMan Tuesday, May 15, 18 @ 12:30 pm
AA, if everything was starting from scratch, I’d agree. But assuming that you want whoever is operating the book to be licensed and all of the various checks into background and financials that go along with that, it would be faster to just allow existing licensees to operate it. Let them create a website/app and call it a day.

(Plus the politics of gaming expansion require that if it gets expanded beyond just sports gaming, it will end up dying under its own weight, which could end up happening anyways.)

Comment by Juice Tuesday, May 15, 18 @ 12:34 pm
–Never mind all the gambling bills in the past that could have saved Illinois racetracks, the ones that either didn’t pass or were vetoed by the previous governor..–

People actually wanting to go to the racetracks probably would have “saved” them, too.

You know, guys like Mr. D and the Bidwills they suffer greatly when the state can’t constantly bail out their dying businesses.

Comment by wordslinger Tuesday, May 15, 18 @ 12:53 pm
“Integrity fee” to the leagues for doing what they have to do out of their own self-interest is another disgusting example of corporate welfare. Illinois has no business giving away tax money for nothing.

Comment by Go Cats Tuesday, May 15, 18 @ 12:54 pm
===said the hedge fund===

“He didn’t do hedge funds,” Caot Fax gushed.
GovJunk makes his dough on highly leveraged investments that smash and grab profitably companies, pick it apart and dump. No gamblin’ there.

Comment by Annonin' Tuesday, May 15, 18 @ 12:57 pm
=You know, guys like Mr. D and the Bidwills they suffer greatly when the state can’t constantly bail out their dying businesses. =

Their dying business leaves less purse money for horses, which leaves less money for horse owners and all their employees, which leaves less money for the farmers raising crops for feed, straw, which leaves less money for….

It’s a big business. In the nineties, they used to brag that there were more horses in Illinois than Kentucky. That’s not even remotely the case anymore, Illinois isn’t even in the top ten.

Saving race tracks is about a lot more than the tracks themselves.

Comment by m Tuesday, May 15, 18 @ 1:57 pm
This is a great opportunity to use Illinois’ and Chicago’s advantages for a sports betting compliment to tourism and our other amenities. It should be fast-tracked to the extent possible in a bi-partisan manner. Let’s take the lead on this one instead of our usual delays and gain an advantage over other states.

Comment by No Raise Tuesday, May 15, 18 @ 2:10 pm
1) First let s get a business profitable before we estimate how much the state’s “take” will and who get other benefits in process.

2) Let’s be sure that no politician get any piece of this and all proceeds go to debt reduction

3) $681 millions seems very high

Comment by cannon649 Tuesday, May 15, 18 @ 2:24 pm
==1) First let s get a business profitable before we estimate how much the state’s “take” will and who get other benefits in process.==

The tax won’t be on business profits so I’m not sure how this makes sense. Rest assured, there are many profitable sports books operating in Illinois, they are just all under the table.

Comment by supplied_demand Tuesday, May 15, 18 @ 4:02 pm
It appears that California’s estimates on tax receipts from legalized pot were grossly overestimated. Seems the black market drug dealers are doing the bulk of the work. Me thinks this esti.ate of $650 million needs to be set at $25 million and let anything over that number be a budget surprise. I don’t think any office has pools and super bowl pools are going to be run they the state.

Comment by BlueDogDem Tuesday, May 15, 18 @ 4:57 pm
Gambling destroys families. IL should not legalize pro-sports gambling just because other states are doing it.

Comment by Mama Tuesday, May 15, 18 @ 5:41 pm
Hate to be the bearer of bad news @Mama, but people are already gambling through illegal bookies, off-shore accounts, the lottery, casinos and racing. Legalizing it just helps the state get in on the action.

Comment by Dee4Three Tuesday, May 15, 18 @ 6:12 pm
Lot of bookies are going do be out of work.

Comment by Anon35 Tuesday, May 15, 18 @ 6:13 pm
BlueDog, the main reason why sales in California in the black market are still occurring is because local governments in California are dragging their feet on approving retailers to open up after being approved by the state.

On gaming your bring up a good point. If NCAA office pools are included in the figure of illegal sports betting already occurring, those aren’t going to stop and the revenue potential is going to be pretty small. Doesn’t mean we shouldn’t do it, but shouldn’t hold out on it being a huge revenue generator.

Comment by Juice Tuesday, May 15, 18 @ 7:00 pm
===Lot of bookies are going do be out of work.===

With respect, you haven’t been around too many people who make book.

It’s about the “loaning” of money to make the bets, something legal gambling won’t allow.

Then there’s the vig, the high juice to bet with “loaned” money…

String out a bunch of people who can only gamble with loaned money, with street juice and a high vig… if anything, legalized gambling *might* allow more predatory street gambling.

It’s the loan sharking and chasing money on the street that hurts, the bets make those other things possible… and makes more money than winning on picked games.

Comment by Oswego Willy Tuesday, May 15, 18 @ 7:08 pm
M, I’m well aware of the sob story that taxpayers should subsidize the sport of kings, and billionaires because the money trickles down.

Used to be, whaling was big business, too.

Used to be, there was a lot less competition for the recreational dollar.

Used to be, a lot more folks went to the tracks because there were fewer options for their dollar.

Used to be, Blockbuster was a huge entertainment conglomerate.

For crying out loud, you want to give the corporate welfare to horse tracks?

It’s been done in Illinois. Arlington had to be torched — twice — before the state built Mr. D his palace.

Look it up.

Comment by wordslinger Wednesday, May 16, 18 @ 12:21 am