Legal sports gambling in the Midwest is beginning to take root. The recent launches in Indiana and Iowa are proving there is a strong sports culture in the middle of the country and that Midwesterners like to put their money where their passion is.
The early success of these two states is just the tip of the corn stalk for the region.
Illinois: The Crown Jewel of the Midwest
With a population of nearly 13 million and a demographic of sports bettors that would make any operator salivate, it’s fair to say that Illinois will change the betting landscape in the Midwest — if not the entire country. Unfortunately, since the Sports Wagering Act was signed into law in June, there have been more questions than answers about its future, and that means the betting public in Illinois could be sitting on the sidelines for a while longer.
The difficulty started with how the law was passed. As a stand-alone measure, the sports betting bill could have gotten the individualized attention it needed. Instead, sports betting was a small part of an 816-page legislative behemoth aimed at raising $40 billion in revenue. Not surprisingly, in the final days leading up to the passage of this important funding bill, some of the details got lost as the sports betting section of the bill was changed, re-changed and then changed again. Many stakeholders didn’t even know what was in the bill, until after the vote.
This isn’t said to criticize the lawmakers and staff who worked exceedingly hard on sports betting, but rather to highlight a concern I’ve had for some time. When the primary purpose of gaming legislation is to create a means for tax revenue, perversely, the end product is a framework that makes it very difficult to deliver the promised revenue. Had the sports wagering bill stood on its own, there would have been a more transparent process to establish a system that benefits the state treasury and the consumer.
A Rare Second Chance to Get it Right
For now, Illinois sports betting appears to be on the injured reserve list, but there is a path to recovery, and it started this past week. On September 27th, the industry and public were invited by the Illinois Gaming Board (IGB) to file comments on the Sports Wagering Act. It’s not the standard game plan for a regulatory agency (in this case the IGB) to request comments on a statute rather than its own regulations. In doing so, the Board recognizes that provisions of this law will need mending, either through rulemaking or by the legislature, and the IGB should be applauded for seeking input.
Industry stakeholders, including the iDevelopment and Economic Association (iDEA), used the open comment period to reinforce how regulators should interpret the law and, if possible, improved by the legislature in a way that maximizes revenues and consumer protections. Issues like the in-person registration requirement for mobile betting, how sports data is used and shared, or even the cost of supplier licenses, will likely bubble to the top of many submitted observations. Soon, a full accounting of all the comments will be made public and we can analyze the viewpoints and determine where there is consensus and division.
It seems inevitable that there will be legislative action. Speculation is rampant in Springfield about how quick and deep lawmakers might go to re-examine sports betting. The soonest opportunity for legislative action is in the “veto-session” which is scheduled for six days in October and November. Typically, this would be a spot for technical amendments, not for addressing complex, and potentially controversial issues. There have been news reports that the veto session could be used to “fix” other parts of the Illinois gaming expansion law that passed alongside the Sports Wagering Act. For instance, correcting the terms of a new Chicago casino could suck all the gambling oxygen out of the capital, thereby pushing sports wagering discussions until 2020.
Stumbling Blocks Could Trip Up Efforts to Improve the Sports Betting Law
The IGB is also empowered to do its job and deliver rules and regulations that will govern sports betting – even with the possibility of the legislature reopening the Act. Their rulemaking power, however, does come with an additional layer of legislative review by the Joint Committee on Administrative Rules (JCAR). This special committee was established to ensure that the Illinois legislature has final input on how laws are implemented. So even if the IGB decides to press forward to shape rules around the Sports Wagering Act, they will need to pass JCAR muster.
The final piece to this jigsaw puzzle is, of course, Illinois Governor J.B. Pritzker. It was through his leadership that Illinois passed the $40 billion capital infrastructure plan and for it to succeed, gaming has to succeed. He and his team will have a watchful eye on the process to make sure that any changes to sports betting or the broader gaming package, delivers a vibrant gaming business, responsible consumer protections, and, most importantly for the state’s infrastructure future, needed tax revenues.
Before we know it, the industry will be spread out across state capitals advocating for new bills in new states. But I also expect a flurry of activity in Illinois that will demand attention. It is vital that Illinois launch a sports betting system built for long-term success that will be a bellwether for the Midwest.
John Pappas is the Founder and CEO of Corridor Consulting. He has been a federal and state advocate for the gaming industry for more than a dozen years.