Bodega bookies: Lottery retailers poised to join Illinois sports betting action

Hankering for a chocolate bar? Craving a soda? Feeling good about picking the Bears on a parlay card?

Illinoisans will soon be able to indulge in all three impulses with a single trip to the corner store, thanks to a new sports-betting system that could launch at thousands of lottery retailers in the months ahead.

The so-called lottery sports wagering pilot program is easily lost in the shuffle of the state’s vast gambling expansion signed into law earlier this summer by Gov. J.B. Pritzker.

Not only did Springfield legislators open the door for sportsbooks at the state’s casinos, racetracks and stadiums, but gamblers 21 and up will eventually be able to get in on the action at up to 5,000 gas stations, convenience stores and other retailers — at least on a limited basis, as part of a program that’s among the first of its kind in the United States.

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“The department is working diligently to research and properly implement this program,” Illinois Lottery general counsel Cornell Wilson said at a recent meeting of the agency’s control board. “It’s a great opportunity for the lottery to grow and facilitate the state’s revenue.”

Just six pages of the state’s hefty new 816-page gambling law are devoted to the nascent lottery sports pilot. It’s limited to parlay wagers, meaning bettors pick the outcomes of multiple games as part of the same bet, and have to get each one right to win.

Such parlay cards were long illegal in most states outside Nevada — though ubiquitous in office pools, local taverns and with neighborhood bookies — until a U.S. Supreme Court decision last year opened the door to sports betting nationwide.

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In the Illinois version, gamblers will place their bets at electronic kiosks placed in up to 2,500 retailers that are authorized in the first year of the pilot. An additional 2,500 retailers will be eligible to join the action in the second year. If they all take part, that comes out to about two-thirds of the nearly 7,400 lottery retailers currently spread across the state.

Before any of that, the lottery will put a whopping $20 million master license out for competitive bids, for a company to install, operate and maintain the betting kiosks through a central network system.

Like the state’s traditional sports-betting industry — for which regulations are still being hammered out by the Illinois Gaming Board — lottery officials say they don’t have a timeline for when the pilot could launch. They still have to draft rules governing the sports that can be bet on, wager amounts and parlay sizes, among other things.

Wilson said the Illinois Lottery is “reaching out to other states, looking at their models that they’re doing, working to understand how they’ve written new regulations [and] modified their statutes.”

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Just a handful of other states offer — or are preparing to offer, after passing recent legislation — sports betting through their lotteries. And those have typically been straight betting systems launched in partnership with a brick-and-mortar casino sportsbook, not through convenience store kiosks.

Only Delaware has a comparable parlay-only, in-store lottery sports program, which has been operating since 2012 and has expanded to 102 retailers. It’s limited to college and NFL football, with a $2 minimum wager and parlays of at least three selections.

The program raked in just over $6 million for the state last year, according to the Delaware Lottery.

Illinois officials haven’t put a number on the pilot’s potential, but Pritzker’s office has estimated the sports-betting industry as a whole will eventually generate between $58 and $102 million annually to fund his statewide capital projects plan.

Dustin Gouker, lead analyst for the betting website PlayUSA.com, called the parlay-only model “a wild card” for Illinois that could be competitive off the bat as a novelty in the sports-betting market.

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“If it’s distributed enough, it might work out. But it has a lower ceiling than a true sports-betting product,” Gouker said.

As such, big casino interests won’t lose any sleep over the competition, because the serious bettors will skip the long-shot corner store parlays for better odds taking straight bets on single games at the sportsbook, Gouker said.

And given the massive $20 million license fee — which dwarfs fees in other states that typically range in the tens of thousands — it’ll likely take a corporate gambling giant to bid for control of the pilot program.

“It’ll have to be someone who accepts they’re going to lose money for several years,” Gouker said. “But someone will want a shot at it.”

The private operator will be motivated to get the pilot in the black quickly, as the law slates the program to expire Jan. 1, 2024.