• HB 1260 is the last sports betting bill standing in the Illinois legislature.
  • Amendment 1 comes with $10 million in licensing fees for brick-and-mortar and online betting.
  • Amendment 2 would charge even higher rates but limit retail licenses and online licenses statewide.

SPRINGFIELD, Ill. – The Illinois legislature has whittled its six sports wagering proposals down to a single bill. However, several aspects of the now-scuttled bills have found footing in HB 1260.

HB 1260, sponsored by Rep. Michael J. Madigan (D-22), started out as a proposal to expand bingo and other charitable gaming in the state. With sports wagering folded in, Rep. Michael Zalewski (D-23) is now considered the main sponsor.

Most of HB 1260 is roughly in line with what those following the industry expect. The bill would legalize statewide online betting as well as retail brick-and-mortar betting.

Where the bill stands apart from the rest of the states flirting with sports betting legalization is in its licensing fees.

Via amendment, Zalewski has added two licensing frameworks to HB 1260. These rival amendments show that Illinois is taking an unprecedented approach to sports betting.

The two amendments differ in how they apply license fees and taxes on sportsbook operators. However, either one (or any combination thereof) would constitute the most expensive such scheme in the US once enacted.

Both amendments also rename HB 1260 as the “Sporting Contest Safety and Integrity Act.”

HB 1260 Amendment 1 Details

Amendment 1 would allow legal sports betting to take place at all gambling venues. These include horse tracks, off-track betting (OTB) venues, video gambling retail shops, and via the state lottery.

Riverboat casinos would be able to host an on-site sportsbook. They could also operate either one online book (aka a “skin”) or a second brick-and-mortar book at any qualified location.

Horse tracks could host one on-site sportsbook and could operate either one online book or accept sports wagers at any three of its OTB locales.

Video gambling shops would be able to install sports wagering products in 10% of their retail locations and operate one online book.

Amendment 1’s licensing fees are set at the higher of either $10 million or five percent of the applicant’s gambling handle from the previous year.

Venues could renew their master licenses every five years at a rate of $1 million. The state would tax sportsbooks at 25 percent of gross revenue.

The Illinois Lottery would be able to offer parlay sports betting at its 2500 retail venues. The lottery’s sports betting partner would pay a one-time $30 million licensing fee. All revenues from the lottery’s sports betting would go to the state.

HB 1260 Amendment 2 Details

Amendment 2 would establish different rules for online operators and land-based operators.

The amendment would cap brick-and-mortar sportsbook licenses to seven. The state would award these licenses on a first-come, first-served basis. All current gambling operators would be eligible to apply.

Three online licenses would also be available, with the licensing fee set at $20 million. Any added online “skins” would cost $5 million each.

Under Amendment 2, the state would tax sports wagering at 25 percent of gross revenue.

The major US sports leagues would receive a 0.2 percent “integrity fee.” Leagues could also mandate the paid use of “official league data,” further driving costs up.

Amendment 2 would ban wagering on all NCAA contests taking place inside the state.

Are These Fees And Taxes Tenable?

In most states, both proposals would be comical nonstarters. However, Illinois has several dense population centers and is home to over one million active sports bettors.

The state also ranks twelfth in the nation in consumer gaming spending at $1.4 billion annually.

That said, the Illinois market is only half the size of Pennsylvania, its nearest analog when it comes to licensing fees and taxes. Pennsylvania charges a one-time bookmaker fee of $10 million and collects 36% of book revenue as tax.

Because Pennsylvania’s tax rate is higher, Illinois’ proposals are perhaps more palatable in the long term. Still, the barrier to entry will be very high for sportsbooks in the Prairie State. And that means rollout will be slow.

It took Pennsylvania the better part of a year to get most of its casino venues’ sportsbooks up and running. With greater up-front fees, you can expect it to take Illinois even longer to do so upon legalization.

If Illinois passes its sports betting legislation into law this year, you should expect to be able to bet at in-state venues no sooner than Q2 2020.

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