A U.S. Supreme Court ruling Monday that lifted a federal ban on sports betting could pave the way for some states to soon allow legal wagers, but Illinois gamblers should expect to stick with their bookies a while longer.
Several states had already passed laws clearing the way for sports betting in anticipation of Monday’s ruling in favor of the state of New Jersey, which had challenged the 1992 federal ban.
But in Illinois, sports betting proposals have been mired in the same stalemate that has blocked comprehensive gambling expansion efforts for years.
The question now is whether the money generated by sports betting could be the fresh ingredient that unlocks a broader deal between casino owners, communities that want to add more casinos, horseracing interests that want their own slot machines, the fast-growing video gambling industry and the next big thing — online and mobile gambling. Throw daily fantasy sports into the mix for good measure.
In a state so heavily invested in other forms of gambling, there are numerous obstacles to sports betting advancing on its own merits. A Rockford legislator has already tied his sports gambling proposal to that city’s long-running bid for its own casino.
But Sen. Napoleon Harris (D-Harvey), a former NFL linebacker who has sponsored legislation to legalize sports betting, says a stand-alone bill is exactly what he wants.
Harris’s proposal would allow Illinois casinos to offer in-person or online wagers on professional or college sports with the state taxing the proceeds.
Harris called it a “win-win situation” for the state and for sports fans who enjoy betting.
“You’ll have enough money to pay for a lot of things the state wants to pay for,” said Harris, while refusing to give an estimate of much revenue sports betting could generate.
Others question how heavily the state could tax sports gambling if it hopes to lure bettors away from an entrenched illegal gambling scene. Deutsche Bank Market Research estimates the potential legalized sports betting market in Illinois at $681 million annually.
Harris would impose a 12.5 percent tax on gross sports wagering revenue and a 1 percent fee that would go to pro sports leagues and the NCAA, both of which he said are open to negotiation.
The National Basketball Association and Major League Baseball have taken the lead in arguing they are entitled to such a payment.
They call it an “integrity fee ”— in recognition of the use of their intellectual property and the added cost of policing their sports to protect honest competition.
Harris said the timing of the Supreme Court’s ruling caught legislators by surprise.
They had not expected the court to issue its opinion before the Legislature’s scheduled adjournment date at the end of the month, which would have allowed legislators to negotiate the details of a bill over the summer.
Getting a deal done in the 16 legislative days remaining on the calendar will be difficult, he allowed.
As always, though, the biggest obstacle to legalized sports betting in Illinois won’t be gambling opponents so much as gambling industry competitors.
“By no means is this going to be simple and elegant,” said Rep. Mike Zalewski (D-Riverside), the House sponsor of Harris’ bill.
Zalewski warned there’s a possibility someone could try to step into the void created by the Supreme Court ruling and begin openly accepting sports bets in Illinois, challenging regulators to shut them down despite a state law that prohibits sports gambling.
That would be similar to the business model recently used by fantasy sports operators and market disrupters in other industries, he noted.
“We would be reckless if we didn’t try to get a law on the books as soon as possible,” Zalewski said.
One factor working in favor of legalized sports gambling is that none of the other players in the industry currently receive that revenue, he said.
With the political uncertainties of an election year, however, it’s unclear whether Gov. Bruce Rauner and legislative leaders will be in any big hurry to move a gambling bill.