Illinois Gaming Board Approves Phase 2 Emergency Sports Wagering Rules

The Illinois Gaming Board unanimously approved Phase 2 Emergency Sports Wagering Rules at its meeting Thursday, continuing its recent accelerated pace in bringing sports betting to the Land of Lincoln.

The approval comes exactly one week after the IGB released the Phase 2 rules to the public, a move which allowed prospective licensees to submit applications. The board had previously released Phase 1 rules in December, which was six months after Illinois Governor J.B. Pritzker signed a massive gaming expansion bill into law.

As of Friday 4 p.m. CST, the Illinois Gaming Board website listed three applicants for a Master Sports Betting License — Midwest Gaming and Entertainment LLC, which runs Rivers Casino in Des Plaines, the Argosy Casino in Alton, and Elgin Riverboat Resort, which runs Grand Victoria Casino. All three were granted a temporary operating permit Friday but have yet to be approved for wagering.

Rivers Casino unveiled BetRivers SportsBar in anticipation of legal sports betting in mid-December, while Penn National can leverage its recent $163 mm purchase of 36% of Barstool Sports at the Argosy Casino. Grand Victoria Casino is owned by Eldorado Properties, which has a partnership with William Hill betting.

The Next Step and Applications Filed

The approval of the Phase II rules moved them from emergency provision to “permanent rules to go through the normal rule-making progress through JCAR (Joint Committee on Administrative Rules),” explained IGB administrator Marcus Fruchter. That committee will take up the Phase II rules in the state capital of Springfield on Feb. 18, having already been slotted in the agenda.

The accelerated pace offers the possibility sports wagering could be in place by the start of the NCAA Tournament in mid-March, which is one of the most popular sporting events to place bets. Bettors, however, cannot wager on in-state college teams, with Illinois currently the most likely of the 13 Division I schools to qualify for the 68-team field.

“We’ve designed these rules in such a way that we can be nimble and as reactive or as quick as our industry partners are ready to commence sports betting,” Fruchter said. “So when they’re ready, we’re ready for them to start.”

There could be as many as 23 Master Sports Betting licenses available as part of the gaming expansion bill which includes the 10 existing casinos in Illinois, the six new casino licenses authorized in the sports gaming bill, three licenses for racinos at horse tracks and as many as seven sporting venues. Additionally, there are three licenses available for non-tethered online/mobile operators.

The standard sports betting license is $10 mm, while the non-tethered online/mobile operators must pay $20 mm. The three online/mobile licensees also would not be able to accept bets until 18 months after the first casino license is issued.

“So the sports betting licenses you have to look at applicants in a number of different ways,” Fruchter said. “There are some applicants who are already operators and already licensed in Illinois, we already know them. So they were able to use the short form. The short form allows for temporary operating permits and that vetting looks at basically, ‘Who are you?’

“If we already know you, there’s one set of factors that we look at and there’s a different set of factors if we don’t know who you are. If we know you, then the application calls for, ‘Tell us what you’re going to do and how you’re going to do it,’ and we have a way to evaluate that, we have a way to evaluate how that’s different from what our rules require and what’s their plan for remediation to get their operations in sync with our rules.”

What is “commercially reasonable” for data providers?

While there are three applicants for a Master Sports Wagering license, the IGB website does not currently list any applicants for Supplier, Management Services Provider, and Tier 2 Official League Data Provider. The last category is mandated by law, and the term “commercially reasonable” has become a hot topic in sports wagering because leagues and data providers have pivoted from negotiating with state governments and towards operators as a means of getting a piece of the action.

According to the Phase 2 rules, an operator can petition the board “for a determination that the terms under which official league data is being provided are not commercially reasonable.” Should the petitioner and respondent satisfy all terms, the IGB would then appoint an Administrative Law judge to conduct a hearing, and the “burden of proof is on the petitioner to show by a preponderance of the evidence that terms of the contract or offer are not commercially reasonable.”