Illinois Lawmakers Discuss Sports Betting

An Illinois Senate committee held a hearing in Chicago Tuesday to explore the possibility of legalizing sports wagering in the state.

The inquiry comes as observers await a U.S. Supreme Court ruling that is expected to upend the sports wagering industry across the country. Currently, a federal ban prevents sports betting in states besides Nevada plus a handful of states with sports lotteries. Because of this, an industry estimated by some to be worth in the billions of dollars has largely been relegated to the black market.

But if the court rules in favor of the plaintiffs in Murphy v. NCAA, the federal ban may be lifted and the door opened for other states to legalize sports betting.

"So far, I think almost 20 states have either considered bills or have passed bills that would legalize sports betting; and I think at this point, Illinois certainly needs to join that conversation," said state Sen. Steve Stadelman, D-Rockford.

Offering testimony were industry experts, state gaming interests, representatives from the major sports leagues and gambling opponents in what was a broad discussion on how a regulated industry would be structured, the amount of revenue that it could be expected to generate and problems to anticipate.

A regulated sports betting market housed at state casinos and racetracks could be worth more than $300 million annually, according to Chris Grove, managing director of industry research firm Eilers & Krejcik Gaming. If mobile devices and online gaming are included, that number jumps to just under $700 million.

But Grove warned the state would only reap the full benefits of legalized sports betting if the market is set up correctly, meaning it has be a viable alternative to the black market. Since black market operators pay little to no taxes and have no regulatory costs, overtaxing the legal market could backfire, he said.

"Eliminating the black market isn't realistic," Grove said. "But dramatically reducing the size and reach of the black market is possible and is in fact necessary for sports betting regulation to achieve the maximum benefits for the state, the industry, and most importantly, the consumers."

This may be a challenge, however, as major sports leagues - while for the most part dropping their long-standing opposition to the concept of legal sports wagering - are insisting on a 1 percent "integrity fee" on each handle. This, they argue, is a small price to pay given how "you could not have a sports betting industry without the underlying competitions," said NBA senior vice president and general counsel Dan Spillane.

"We think that if a company is taking bets on our games and using our games and our interests and our players as the whole backbone for their business, then it makes sense for us to be compensated for that, too," Spillane said.

The leagues also requested that any bill allow them to monitor betting lines and investigate "abnormal" activities. Plus, they requested limitations be placed on lower level leagues, where the pay is lower and risk of corruption higher.

But Grove and other industry professionals said that would only serve to hurt legal operators.

"It's hard for me at least to appreciate how legal sports books can be truly competitive with black market sports books under those conditions," Grove said.

Matt Stetz, the chief operating officer of Rush Street Interactive, which operates Rivers Casino in Des Plaines, said operators have an incentive to monitor activity themselves, telling the leagues they are on the same side.

"The more regulated sports betting, the more transparent information flow is," Stetz said. "And I want to point out as an operator, we are 100 percent in line in protecting the integrity of the game."

Stetz suggested creating an organization like ESSA, which is a sports betting integrity organization that includes the majority of the major European licensed on and offline private betting operators. He said the operators should be "the first line of defense."

Another issue lawmakers would have to juggle is the state's competing gaming interests, which would all insist on getting a cut of the gaming revenue sports betting could deliver.

After all, sports wagering is among the last untapped sources of gaming revenue. And with some experts saying Illinois has reached a saturation point with the advent of video gaming, it could provide revenue to corners of the industry that desperately need it.

Tony Petrillo, the general manager of Arlington Park, said the state's racing industry has suffered from the inability to compete with tracks in surrounding states and gaming facilities in state. He said sports betting should be added to Senate Bill 7, a massive gaming expansion bill that would create six new riverboat casinos and allow slots and table games to be played at race tracks.

"We feel that in creating a balance with SB 7, adding to our ability to conduct table game-type wagering in our facilities along with sports betting, would be an amenity that we would enjoy and be able to create a balance within this state to the competition that currently exists and the competition that exists in our neighboring states," Petrillo said.

Testifying in opposition to legalizing sports betting outright were University of Illinois professor John Kindt, who cited the economic and budgetary costs, and Anita Bedell of Illinois Church Action on Alcohol and Addiction Problems.

The Supreme Court is expected to issue its ruling in the next few months.

Contact Brenden Moore: 782-3095, [email protected], twitter.com/brendenmoore13.

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