Illinois Legislators To Conduct Hearing On Sen. Harris Proposed Bill To Authorize Legal Sports Betting
Today is the day for Illinois State Senator Napoleon Harris, III. The Democratic Party lawmaker, a former NFL linebacker, will present his case for a proposed bill to legalize sports betting in the Land of Lincoln before a state Senate panel.
The purpose of the panel hearing is, according to Sen. Steve Stadelman (D-Rockford), who serves as chairman of the State Gaming Committee and has a proposed sports regulatory bill of his own on the books, to “address several lingering questions” relating to the possibilities of what shape legalized sports wagering would take in the state. Though no vote is scheduled for this afternoon’s scheduled Senate hearing, the details of the prospective bill put forward by Harris (D-Harvey) are interesting in that, of the three proposals for an Illinois Senate bill to legalize and regulate the practice of sports betting, Harris’ is the most fleshed out by far. Unlike the other two sports betting bills announced last week and scheduled for similar committee hearings of their own in the near future, SB3243 expressly legalizes sports betting in the Land of Lincoln rather than merely allows for it to be legalized.
The Harris bill would also explicitly allow Illinois casinos take action on amateur and collegiate sporting events as well as professional events, as well as making a provision for both in person sports betting at a physical sportsbook location and over the internet. This proposed bill would allow Illinois gambling operators to offer customers the use of online sportsbook sites and mobile sports wagering apps for smartphones and other mobile devices if they so desire, rather than mandating that all bets on sporting events must be placed in person at brick and mortar betting shops. However, the proposal – Senate Bill 3432 (SB3432) – also hews most closely to the so called “blueprint” put forward by the join lobbying arm of the NBA and Major League Baseball organizations in the 11 states in which the leagues are most heavily involved.
That means, for all its good points and well thought out positions, Harris’ proposed bill contains unpopular concessions to demands from the leagues, such as now infamous royalty payments known as “integrity fees” and broad league control of bettor metadata. SB3432 calls for a 1 percent skim off the top of all sports betting handle (that’s roughly 20 percent of adjusted gross revenues) to be paid to the leagues directly as a means of funding supposed efforts to keep pro sports free from fixing scandals and betting rackets. Those fees would be assessed on top of a 12.5 percent tax on gross sports wagering revenue to be paid to the state in order to fill the public coffers.
Elements like the integrity fees go along with – and are possibly offset by – common sense and widely agreed upon inclusions like an established legal minimum sports betting age verification process. Nevertheless, it remains to be seen how receptive states like Illinois, with its prosperous and growing casino and gambling industry to think of, will be with those fees and if such fees will survive after subsequent Senate hearing or later ammendments. Other states fighting to pass their own sports betting legalization legislation – namely New York, Kansas, Connecticut and West Virginia, which actually already passed a sports wagering law last week – have eschewed or slashed the integrity fees called for in the blueprint supplied by the NBA and MLB.
Inasmuch as Harris’ plan is basically (and admittedly) a slight modified version of the ideal (or idealized) version of a sports betting law friendliest of all to the pro sports leagues, it actually does make a fair bit of sense that the state would at least entertain the notion of courting the leagues. The major pro sports leagues, which as a bloc vehemently opposed all things sports betting as recently as 2014 and worked overtime to get the Professional and Amateur Sports Protection Act of 1992 (PASPA) passed, are still considered to be among the most significant stakeholders and therefore valuable allies. As a corollary, the leagues could also possibly be the staunchest opponents of any bill to legalize sports betting in Illinois and around the country if their requests (really more like concessions demanded for their support) are not met.
Working out a system in which there can be compromises between Illinois’ hopeful sports betting operators and the sports leagues will likely be a tightrope walk for lawmakers going forward. That said, examples like the one provided by West Virginia’s case have shown that league support it not a necessity if you have veto proof majorities in both houses of your state legislature. This is not to say that making a compromise between all concerned parties is not the best possible solution, but it does illustrate the point that there are many competing interest groups at play in a conversation as all encompassing as the one on the future legality of sports betting around the country.
Another brief aside: Harris’ proposed bill would still require PASPA to be struck down by the U.S. Supreme Court before it or any other similar legislation to come out of the Illinois statehouse could take effect. A decision on Murphy v. NCAA (the case brought before the SCOTUS by the New Jersey congressional delegation regarding the Constitutionality of PASPA) could have been handed down on April 2, but it was put off until April 17 at the earliest. Former Garden State Governor Chris Christie, whose name used to appear on the case before being replaced by that of current Gov. Phil Murphy, has said to look for a decision – and one in favor of a full repeal of the overreaching but largely toothless 26 year old law – by no later than this coming June.
As for what the voice of Illinois’ gambling operators think about Harris’ proposed SB3432, the Illinois Casino Gaming Association (ICGA) has already come out strongly in favor of allowing sports betting, so there is at least an early indication that a compromise is possible and even desirous. The position of the ICGA is that taxes and fees paid out to the leagues and even to the state must be kept relatively low, and for reasons not entirely related to ensuring the casino show runners get the biggest possible take home pay either. Rather, if the cost of doing sports betting business is too high for Illinois’ casinos, race track “racinos,” off track betting facilities and lottery offices, then business owners will have no choice but to pass that cost along to the bettors themselves in order to partially offset the expense.
If payouts are lower when bettors pick winners in sporting events due to the high taxes, royalties and fees the sportsbooks have to fork over to the state and the professional leagues, then there will likely be few compelling reasons for bettors to continue to use the legal domestic sports betting products. The much more probably outcome is that gamblers would let the money do the talking and continue to patronize offshore sports betting websites based in foreign countries where federal and state prohibitions don’t apply and prosecution under those laws is impossible.
SportsBettingIllinois.com wants you to know this this: the states clearly don’t want to lose out on the taxable revenues of an American sports betting industry worth an estimated $150 billion to $250 billion annually. If they want their slice of the pie – a market in which roughly 1 in 10 residents place wagers on sports and 40 percent of regular viewers bet on sports during televised games - then state lawmakers would do well not to stick too close to what the leagues want. Today’s discussion in the Illinois State Senate’s Gaming Committee should reveal a great deal about which way states in a similar position will go regarding the pro sport leagues’ “blueprints” for what they think makes good sports betting regulatory laws.
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