DraftKings Seeking Early Entry to the Illinois Sports Betting Market

DraftKings is actively exploring ways to go around the time-out period legislators in Illinois imposed on it last year, when state legislature passed SB690 to legalize sports betting. An update on the website of the Illinois Gaming Board, the state gambling regulator, shows a certain company, Crown IL Gaming LLC, owned by Boston-based DraftKings, has applied for a sports betting management services license.

Penalized for Offering Fantasy Sports Contests

The bill legalizing sports betting in the state was passed into law last year, but with certain provisions to prevent online-only sports books into entering the market for the first 18 months. The reason behind the so-called bad actor clause was an opinion issued in December 2015 by Illinois Attorney General Lisa Madigan, who stated daily fantasy sports contests offered by DraftKings and FanDuel constituted illegal gambling.

The casino industry in the state gathered around this and started lobbying for a three-year ban, an idea met with fierce resistance from the two sports books operators. At one point DraftKings and FanDuel joined forces and launched a $1 million ad campaign against former owner of Rivers Casino Des Plaines, Neil Bluhm, but the personal intervention of St. Gov. J.B. Pritzker made them re-think and drop the campaign after its first day.

The voices of the local casino industry did not go unheard by Illinois legislators as they kept the initial time-out, albeit reduced to 18 months. Any player that wants to bet online must register in-person in a brick-and-mortar gaming facility, and online sports betting apps must be attached to physical sports books, both provisions making sure there is no easy entry for online competitors, at least for the first year and a half.

Partnership with Casino Required

According to SB690, there are only three online-only sports book licenses, each costing $20 million, and the decision which operators to be granted one lies in the hands of the Illinois Gaming Board, making it unwise for DraftKings and FanDuel to enter into a legal fight regarding the time-out period. Hence, both companies are actively exploring other ways to enter as early as possible the Illinois betting market.

An early entry will require a casino partner for DraftKings, while rival FanDuel already has one in place, after it signed a partnership deal with Boyd Gaming in 2018. The Las Vegas-based operator of Par-A-Dice Hotel Casino in East Peoria obtained in March a sports betting license.

The most viable option for DraftKings remains the Harrah’s Joliet Casino, which is operated by Caesars Entertainment, a company the daily fantasy and sports book operator has an agreement for the provision of market access for gaming products.

It is up to the Illinois Gaming Board to decide whether to allow the round manoeuvres of the pair to be successful or to find a way to force them remain on the sidelines for the complete 18-month time-out period.