Which Governor Wants Sports Betting To Help With $1.1 Billion Budget?

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Gov. J.B. Pritzker has set high expectations for Illinois sports betting.

During his first budget speech on Wednesday, Pritzker asked for $1.1 billion in new revenue, $212 million of which from legalized sports betting.

“I’m calling on the legislature to take this up immediately so that Illinois can realize hundreds of millions of dollars, create new jobs and bring sports betting into a regulated environment that will protect citizens from bad actors,” Pritzker said.

“If we do it this year and become the first state in the Midwest to move on this initiative, we can realize more than $200 million from sports betting fees and taxes in FY 2020,” he said.

Iowa, Indiana, Michigan and Ohio are also looking to pass sports betting bills this year.

Major expectations

While Pritzker avoided discussion of a broader gambling expansion bill, which has been floating around Springfield for years, he did lay out some specifics on how the state could achieve its revenue goal.

  • Twenty interactive sports wagering licenses
  • $10 million sports betting licensing fee
  • Twenty percent tax on gross sports betting revenue
  • In-person and mobile wagering

From the outside, it appears Illinois is taking a page out of the Pennsylvania playbook. The 20 percent tax rate would be the second highest behind Pennsylvania (36 percent). Sports betting licenses in PA are also set at $10 million.

Thus far, only four sportsbooks have opened their doors in PA. Several properties are waiting for approval from the states gaming commission.

Here’s more from Pritzker’s budget proposal:

“Based on estimates from Oxford Economics, Illinois could generate between $384 million and $680 million in gross sports wagering revenues per year under full implementation. At the proposed 20 percent tax rate, this would generate tax revenues of between $77 million and $136 million per year.”

Big picture

From an operator perspective, a 20 percent tax rate is not ideal. Experts speculated that operators would not enter the PA sports betting market, or rather, find it hard to make a profit with such a high tax rate.

For perspective, Mississippi (12 percent) and West Virginia (10 percent) are states with the lowest sports betting tax rates.

In December, Pennsylvania’s first full month of operation, three sportsbooks collected $16.2 million in handle, according to figures released by the PA Gaming Control Board. Operators earned $2 million in revenue and paid $722,356 in taxes to the state.

West Virginia’s biggest month was also in December, when sportsbooks took in $42.6 million in handle flipping that for $5.5 million in revenue.

For an in-depth look at sports betting revenue numbers check out TheLines.

This is not to say Pritzker’s goal is unreachable, but lawmakers are in for lengthy discussions in Springfield before the first wager is placed.

The road to Illinois sports betting legalization

So far, a handful of sports wagering bills have been filed in Illinois.

Last year, a pair of meetings were held in Chicago to discuss Senate Bill 7, sponsored by state Rep. Robert Rita.

Introduced in January 2017, SB 7 and has been in legislative purgatory ever since. The bill contains legislation aimed at a number of gambling components including:

Rep. Mike Zalewski who has been pushing a daily fantasy sports bill for a number of years, told Legal Sports Report he plans on introducing his sports betting bill.

Here’s what Zalewski had to say:

“I think that, in respect to sports betting, the governor was forceful where he wants us to act, and that was reflected in his need for revenue upfront. That’s the core to what he needs out of the sports betting legislative process. Now it’s incumbent for the legislature to get him a bill he can sign that fulfills those criteria, and I think we’re ready to help him do that.”

Now that Democrats control a majority in both the House and Senate, plus the governor’s office, expectations of getting a sports betting package across the finish line are extremely high.

Nicholaus Garcia

About

Nick comes from West Texas where he graduated from Texas Tech University with a degree in psychology. After a five-year stint in Chicago, where he wrote about local politics and graduated with a master’s degree in journalism from Columbia College Chicago, he moved to Washington, D.C. to write about issues related to gambling policy, sports betting and responsible gaming.

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