Casino representative: 25% tax rate and $10m license fee will hinder sports betting in Illinois

By Matthew Enderby

Tom Swoik, Executive Director of the Illinois Casino Gaming Association discusses proposed amendments to Illinois sports betting legislation with Gambling Insider.

Can you tell me how the amendments to the sports betting bill were received?

Nobody was really in favour of either of the amendments in their totalities. First of all, we did not have a lot of time to look at them. They came out that morning between 10am and 11am and the hearing was scheduled for 2pm, although it didn’t get started until after 3pm.

There were two 75 page amendments and there are some significant differences between the two. I represent 9 out of 10 operating casinos in the state and some of the concerns that my members had were in both amendments; the $10m licensing fee and also a 25% tax.

Indiana and Iowa are two of our bordering states and have approved sports betting. One of their governors signed a bill the day of our hearing to pass sports betting legislation. Iowa’s tax rate ended up being about 6.7% and Indiana’s is around 9.5%. Their licensing fees are $100,000. So there is a significant difference in our bordering states.

One of the things I brought up at the hearing was that our legislature is always talking about trying to bring people back who are gambling in other states and here we are potentially passing a bill that is going to cost us hundreds times more what our neighbours will have to pay to license and two to three times more in taxes.

How else would the amendments restrict operations?

The second amendment had a limited number of land-based venue licenses, seven of those. It included an additional three internet licenses that could be given out to a business that didn’t even have a brick and mortar operation. So it had a very limited number of potential locations.

It also had some restrictions on businesses that had operated in the state in a way considered to be illegal. This includes some of the fantasy sports operators. They haven’t been found guilty of anything but there have been attorney general opinions and those kinds of things that said operations have been illegal.

That puts a restriction on using them for three years. I know that Caesars and the casino run by Boyd Gaming in Illinois did have agreements with some of those companies, DraftKings and FanDuel, so it wouldn’t even allow them to apply for a license in three years. This means, as there are so few licenses available, they would all be gone after those three years.

What is the general opinion from operators in Illinois around integrity fees?

My members don’t believe we should be making any required legislative payments to any of the leagues. Whether it be called an integrity fee, data fee or whatever else. We contend that if there are any agreements between the leagues and the sports betting operators, that those should be individual contracts between those entities and not something mandated by the state.

So far, none of the states that have passed a sports wagering bill in the US have required integrity or any kind of fee be paid to the leagues.

MGM and Caesars have agreements, mostly promotional type agreements, with some of the major leagues so we know it can be done through an individual contractual set-up.

Do you find either of the propositions more appealing than the other?

Nobody was enamoured with either one of the new amendments. Now we have seven amendments. One bill has five and now this bill has two. So there’s a lot of work to be done.

Would these amendments help or hinder sports betting in Illinois? Would business be lost to neighbouring states?

It sounds to us that they would hinder sports betting. In Illinois we are limited to 12,000 gaming positions, which means a seat at a table or at a slot machine. Since, 2012 we’ve added 30,000 video gaming terminals around the state that are in bars, restaurants, and truck stops. As the act was written so loose, we even have them in laundromats and scuba diving facilities and places like that.

The whole market in Illinois is changed. We’ve got three times more licensed gaming establishments here than Nevada. So, we believe that Illinois is pretty well saturated with what we would call regular gaming. We think the only two places for real market expansion, other than just moving money from one location to another, is sports wagering and internet gaming. We think that’s two untapped markets that could really benefit the state and the current operators. We’re just hoping we can come together to find something that works for everybody.

Have there been any developments since the subcommittee hearing last week?

No, I understand the senate house staff is working on the various things that were brought up and a trying to clean up the language. How detailed that is going to become, I don’t know yet.  

The thing that concerns me as much as anything is, I was hoping the language would be cleaner. Both Senate Houses cancelled Friday’s sessions and they cancelled today’s sessions, and the sessions are meant to be over on 31 May. So we’ve got around 18 days to try and get something done.

If it’s not passed in that time, when would it be addressed next?        

There’s two or three different ways it could be handled. They could call it back for a special session over the summer. On something like this, I doubt whether they would do that. Next would be the fall veto session. This is a non-election year so usually fall veto would be in the last week of October or the first week in November. So, nothing would be done until then, potentially.

We have a two-year legislative session, and we are currently in the first year of that. If nothing is done now or in the fall, then these same bills return in January and we move on from there.  

With all this considered it must be difficult to put a timeline on proceedings but when do you think we’ll see sports betting in Illinois?

They can get the bill passed in 18 days but the concern is that when they did the video gaming act in 2009, video gaming didn’t come in until 2011. But they rushed it through so quickly there were some things in there that nobody anticipated and they didn’t spend a lot of time on it.

So, we’re hoping that whatever they come out with is more acceptable and they really take everything into consideration. Getting that done within 18 days will be tough, but it can be done. They can literally pass a bill at both houses within a three of four day period if they needed.

The governor is in favour of sports wagering and he has revenue included in next year’s budget. So he is in favour of sports wagering.

The other big question now is, every year for the last 10 or 12 years, we’ve had a huge gaming expansion bill introduced. This includes additional casinos, slot machines, table games at racetracks, and various other components of gaming; we call it the Christmas tree bill. There’s still a lot of talk about having a large gaming expansion bill and there’s two ways of viewing that.

One group is saying they want everything in one bill, including sports wagering and the other wants to keep it separate. If a large gaming bill comes out either way, and sports wagering is still on the table, that’s when it will get bogged down.   


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