Illinois Considers Banning DraftKings And FanDuel From Sportsbook Operations

• The Illinois legislature is allegedly considering banning DraftKings and FanDuel sportsbooks from the state.
• Amendment 5 of HB 3308 hints that the major DFS operators could be barred from operating sports betting in the state.

SPRINGFIELD, Ill. – Illinois is currently listening to informal proposals in their effort to craft passable sports wagering legislation. These proposals are not actual bills, instead coming as “informational” rubrics from various interested parties, like existing casino operators.

One such party, Midwest Gaming & Entertainment, LLC (owner of the Des Plaines-based Rivers Casino in northern Chicago), has submitted an argument asking lawmakers to expel DraftKings and FanDuel from the state.

Paul Gaynor, the MGE representative charged with this approach, has called his two biggest presumed competitors in the forthcoming sports betting space “bad actors.”

Why?

Because in 2015, the Illinois Attorney General wrote a non-legally-binding opinion that daily fantasy sports (DFS) contests are considered gambling.

However, because this opinion did not carry the weight of the law, DraftKings and FanDuel – the two largest DFS operators in the US – continued to offer their product to Illinois residents.

Essentially, Gaynor is asking the state to eliminate competition from the legal sports betting marketplace because the two operators poised to maximize that market broke no laws whatsoever. It is, at the very least, an interesting approach.

The Fifth Amendment

Sponsored by Rep. Bob Rita (D-28), the so-called fifth amendment to HB 3308 would cater to the wishes of Gaynor, though even this would be subject to the interpretation of the current Illinois administration. (Many view the amendment as ineffectual lip-service, and it may well be.)

The portion of this fifth amendment that could potentially prevent DraftKings and FanDuel from operating sportsbooks in the state is §25(i)(4):

“The Board may in its discretion refuse an Internet sports wagering vendor license to any person: … (4) who has received an unequivocal official pronouncement from government authorities in any state or foreign country that it has supplied platforms or accepted wagers in violation of that jurisdiction’s law…”

The Illinois Attorney General’s 2015 statement regarding the “opinion” that DFS constitutes illegal gambling could apply here.

However, this section is discretionary, and an opinion characterized as such may face logical hurdles in being recognized as an “unequivocal official pronouncement.”

Business As Usual?

Most insiders considering these new developments are skeptical that they amount to much more than business as usual, where interested and invested parties always fight tooth-and-nail for an advantage over their competitors.

DraftKings’ James Chisholm, the company’s director of global affairs, dismissed Gaynor’s proposal – and Rita’s amendment – to exclude his brand from the process.

“Amendment 5 is a blatant attempt to restrict competition and specifically box out potential operators [that other brands in the state] know will be major draws for consumers…  Establishing an artificial, restrictive market will only ensure that many Illinois residents will continue to bet through illegal offshore websites that … generate no revenue for the state.”

FanDuel’s take was much the same, though more concise. In a statement given to The Chicago Tribune, Cory Fox, legal council for the company, said simply that FanDuel has been “operating openly and honestly in Illinois since we began offering fantasy contests.”

The Illinois Gaming Market

Per the American Gaming Association, the Illinois gambling market is ranked 12th in the nation, with a gross gambling revenue of just over $1.4 billion. The state has also seen slight revenue declines over the last several years.

Legalized sports wagering at land-based and online venues could help reverse this trend and add crucially-needed tax revenue to state coffers. A 2017 GMA research paper projects Illinois sports betting revenue to generate up to $338 million in tax revenue by 2023, provided it is available at land-based venues and statewide over the Internet.

Still, in the effort to legalize sports wagering, the state has moved relatively slowly, though it hopes to make progress during this legislative session.

The first bill to get serious traction in the state was SB 176, which has since languished and been re-referred to Assignments per Senate rule 3-9(a).

As such, HB 3308 is now the primary piece of sports wagering legislation being considered. Other bills could potentially be introduced or modified this session, but such seems unlikely.

Whether or not the fifth amendment to this bill would actually prevent DraftKings or FanDuel from operating their sports wagering products in the state (online or offline) remains to be seen.

However, given the aforesaid discretionary nature of the amendment’s verbiage – and the fact that it does specifically exclude these two major brands from operating in the state – such an outcome seems unlikely.

News tags: DraftKings | FanDuel | IL HB 3308 | Illinois | Illinois sports betting