The Three Illinois Sports Betting Bills And What Could Go Wrong

The Three Illinois Sports Betting Bills And What Could Go WrongThe Land of Lincoln isn’t going to let the East Coast claim all the excitement in the days before – or after – a possible revelation from the U.S. Supreme Court as to whether or not sports betting is legal nationwide.

In that spirit, the state legislature of Illinois, one of the major Midwest gambling market centers, is set to convene its Gaming Committee hearing on April 3 for the purpose of discussing three separate bills that aim to legalize sports betting, or at least to open the door for that possibility. However, these three proposed pieces of legislation – for all their strengths and good faith efforts to move the debate on sports betting forward toward full legalization in the Prairie State – each has a fairly significant problem or two that could stand in the way of their getting passed. We’ll take a quick look at each of these proposed Illinois sports betting bills and give an assessment of what elements of each prospective law that could pose difficulties in this tumultuous, if exciting time in the world of sports wagering enthusiasts.

First up, there is Senate Bill 2478, which has been proposed by bill sponsor Senator Steve Stadelman (D-Rockford), who actually chairs the Gaming Commission that will meet on April 3. For the record, that’s just one day after the U.S. Supreme Court will release its next round of constitutional decisions, among which could be the call to strike down the Professional and Amateur Sports Protection Act of 1992 (PASPA), so this is actually a fairly huge deal, or at least it could be. The bill Stadelman is proposing goes a long way toward creating a Sports betting Consumer Protection Act, but, as we will soon see, there are a few wishy washy elements of this proposed bill, though it is a laudable first effort by any stretch of the imagination.

The main issue with SB 2478 is that it doesn’t actually do a whole lot on its own, and it certainly doesn’t legalize sports betting in the absence of PASPA (whether it’s the U.S. Supreme Court justices or the lawmakers in the U.S. Congress that eventually put the last nail in largely toothless law’s coffin). Rather, Stadelman’s proposed bill, which kicks off the discussion in the Gaming Commission meeting next Tuesday, directs an indeterminate “Board” to authorize or ban sports betting at its own discretion. This could create a few difficulties if adopted as written, as there is no clear distinction as to whether Stadelman meant the Illinois Gaming Board – which takes care of casinos, slot machine parlors and the state lottery - or the Illinois Racing Board – which overseas horse racing and “racinos” – would have the final say. Then of course there is the really big deal: there is no guarantee that anybody would decide to legalize and regulate sports betting at all.

Next, there is Senate Bill 3125, which has been proposed by Sen. William Brady (R-Bloomington), and this one takes things a little bit further in the right direction by actually amending the Illinois Horse Racing Act of 1975. SB 3125 requires the Racing Board to adopt rules to authorize sports wagering at all licensed horse racing venues as well as off track betting locations, and it would be effective immediately upon the elimination of PASPA from the federal rolls. This particular proposed piece of legislation is a little better than the first one we looked at, but as it is probably already clear to the astute reader, it still lacks a lot to be desired as a piece of ideal pro-sports betting law to come from the Land of Lincoln.

The elephant in the room when it comes to SB 3125 is, of course, that it would place all the power to authorize the practice of sports betting exclusively in the hands of the Racing Board, which means that Illinois’ many casinos and their respective governing board don’t get a say. That will be a major hurdle for this bill going forward, as the Prairie State’s booming casino industry brings in millions of visitors and millions of dollars every year in the form of taxable revenues and other revenue streams related to tourism. We have a hard time believing that the Illinois Gaming Board doesn’t want to be included in the discussion about how to regulate sports betting, especially seeing as the number of casinos far outstrip the number of race tracks, although the Gaming and Racing Boards usually work together fairly closely.

Finally, the Gaming Committee will consider Senate Bill 3432, which is the project of Sen. Napolean Harris III (D-Harvey), a former active linebacker in the NFL. Perhaps expectedly of a dyed in the wool professional sportsman, Harris’ proposed piece of sports betting legislation hews closely to the established “blueprint” put forward by the lobbying arms directed by the NBA and MLB. SB 3432 therefore creates a so called Sports Wagering Act that includes many of the requests the leagues have in mind.

It’s in some of those requests – perhaps really these should be thought of as demands the state lawmakers will have to acquiesce to if they want the major sports leagues to support their effort to legalize sports betting – that the problems with Harris’ bill emerge. Just like the combined MLB and NBA sports betting legalization blueprint, SB 3432 would require the state of Illinois to asses a so-called “integrity fee” on sports wagering operators to be paid out to the leagues. These integrity fees – which come in at 1 percent of all handle taken in by the sportsbooks (really 20 percent of gross revenues) – are to be paid on top of a 12.5 percent tax to be paid to the state itself. With the sports betting industry’s (both the domestic one, primarily located in Nevada and the offshore one based at foreign-operated sportsbook websites) handle totaling in the hundreds of billions of dollars annually, we are talking about pretty significant money here.

These three proposed Illinois sports betting bills each have plenty of good to recommend themselves for future consideration, but, as we’ve demonstrated, there are equally strong reasons why they could use some work. The most likely scenario is not that any one of these prospective bills will be accepted and passed along through the committee process and make it all the way to the desk of Governor Bruce Rauner (who has been fairly quiet about his own opinions about sports wagering becoming more broadly legal). Instead, as we close in on the unveiling of the U.S. Supreme Court’s decision about whether or not PASPA will stick around or not what will probably happen is that Illinois lawmakers in the Senate and House will combine efforts to make the best compromise legalization bill they can from the pieces already available.

There are many worse ways that laws have been made than a reasoned argument about which governing board has the final say in regulating sports betting or about how much the professional sports leagues (which are by far the most popular subject for wagering) to be compensated. thinks these three proposed bills, or a combination of the best elements from all of them, even those not yet unveiled, represent probably the best chance Illinois has ever had to get a slice of the legal sports betting pie. We’ll keep following this story as it develops, but from the look of things it seems as though fast times are afoot in the Land of Lincoln and in the Supreme Court chambers as well, so we could see a huge shakeup sooner rather than later.

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