DraftKings Finds Loophole in Illinois Sports Betting Laws
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DraftKings has reached an agreement with Casino Queens in East St. Louis to launch a sportsbook at their location. The deal comes as a surprise with how Illinois sports betting laws are set up. Right now, mobile operators have to wait for 18-months before they can enter the market. However, DraftKings appears to have found a loophole and has partnered with an Illinois casino.
The deal was found in an SEC filing, which gives DraftKings the ability to set up a brick and mortar location in Illinois before attempting to launch mobile betting.
Casino Queens was one of seven casinos granted with a sports betting license when the Illinois Gaming Board met last month.
Illinois Sports Betting Laws
Illinois sports betting laws made it difficult for operators like DraftKings and FanDuel to enter the market. Industry experts believe the regulations were put in place to punish the two mobile giants when they focused on Daily Fantasy Sports. Former Illinois Attorney General, Lisa Madigan, interpreted that DFS was illegal in the state.
Thus, Illinois put a clause in SB690 making DraftKings and FanDuel wait for an 18-month “penalty box” period before they can enter the Illinois market. The “penalty box” would give brick and mortar retailers time to build a clientele and launch mobile betting. Also, mobile sports betting sites would have to pay a $20 million licensing fee if they wanted to set up shop in Illinois.
However, on June 4, Governor J.B. Pritzker filed an Executive Order suspending in-person registration for sports betting accounts. Players have been able to register for mobile betting accounts online since.
Then, the IGB gave out sports betting licenses to seven casinos, and BetRivers became the first online wagering operator in the state. DraftKings was able to take advantage of the opportunity to partner with Casino Queens as a brick and mortar sportsbook. Now, there’s a chance they can launch a mobile app sooner than people expected.
DraftKings and Casino Queens Deal
No announcement has officially happened between DraftKings and Casino Queens yet. However, according to the SEC filing, the deal will between 5-10 years and is exclusive to Illinois. Also, DraftKings will pay Casino Queens a fee based on a percentage of net gaming revenue generated by gaming activities in that state.
Under Illinois betting laws, mobile sportsbooks had to partner with local casinos to enter the market and had to operate under the local brand. DraftKings will most likely feature Casino Queens branding on their Illinois app.
DraftKings is using a loophole to get into Illinois. Now, they could find more loopholes to create clever marketing for the DraftKings brand. However, now that Illinois sees the DraftKings deal, they could make it more difficult for them to operate.
Will Other Mobile Operators Follow?
Other online sportsbooks could follow DraftKings into Illinois after their move. Daily Fantasy Sports competitor FanDuel has been working on buying Fairmount Park, a horse racing track in Collinsville, Illinois. Depending on negotiations, FanDuel could be the next mobile operator to get around the “penalty box” period.
Also, other mobile players like PointsBet and BetMGM could try to enter Illinois. BetMGM has an operation in Iowa, Indiana, and Michigan, and could move in on Illinois if they find a partner. Also, Bet365 is another mobile sportsbook capitalizing on the Midwest. Bet365 is running in Iowa and Michigan.
Similar to how BetRivers has been opening sportsbooks in midwest states, the next Illinois mobile operator will most likely be someone who is in the midwest. FanDuel feels like the most likely candidate to hop in next. Right now, they are the only sportsbook looking to get into Illinois.
However, other mobile retailers could take the DraftKings approach and try to slide into Illinois under the radar. Experts noticed when DraftKings was buying stock from shareholders to raise cash. The move was most likely to help themselves reach a deal with Casino Queens and set up operations in Illinois.
Overall, DraftKings took a risk, and it paid off with an unprecedented move. Illinois will most likely be open to any mobile sportsbook that wants to enter the market. They just need to find a local partner to do so.
