- Illinois is in theory a great sports betting market but high taxes and fees are limiting competition.
- With an absurd licensing fee of $10 million only a few companies have shown interest in Illinois.
- PointsBet is the fourth wagering app available in Illinois.
Australia’s PointsBet opened a US office in 2019 and has been staking out a position in the burgeoning American sports betting marketplace. They’re already operational in New Jersey, Indiana and Iowa with several other states on deck. They’ve got a mobile app set to drop in the red hot Colorado market but they’ve also launched in the less red hot market of Illinois. The Illinois PointsBet app and website is live now and a retail sportsbook at Hawthorne Park near Chicago is in the works.
PointsBet should do well in Illinois and particularly with their Chicago area ‘brick & mortar’ sportsbook. Unfortunately, on a macro level the regulatory framework for sports betting in Illinois is a corrupt grease fire. Then again, so is everything else in the state.
PointsBet is only the fourth mobile app available in Illinois joining BetRivers, FanDuel and DraftKings. All four of these companies should make money in Illinois–a state that has gone out of their way to limit competition and has chosen to soak the few companies that do operate their rather than creating a viable industry.
We talked a great deal about the Illinois government a couple of weeks ago when FanDuel launched there:
As the fifth most populace state in the country and with a great fanbase for Chicago teams Illinois *should* be one of the best sports betting markets in the country. Of course you can forget about that given the state’s history of corruption and intractable bureaucracy. On February 20, it was a major news story that for the first time 4,488 days there were no former Illinois governors serving time in Federal prison. The Illinois gaming industry is just what you’d expect from a state government that has repeatedly been called a ‘dysfunctional mess’. A frequent topic of conversation in the financial and political media is whether or not Illinois will be the ‘first state to go bankrupt’ since it is ‘the poster child for a dysfunctional state fiscal policy’.
We also looked at the state’s horrific regulatory framework in greater detail:
Illinois allows retail sportsbooks in casinos and racetracks. There are 10 casino licensees but as of yet only a limited number of sportsbooks serving these. To be fair, the coronavirus pandemic played a part in this. The state’s horrific regulatory framework did the rest. There’s a DraftKings at the Casino Queen in scenic East St. Louis, Illinois–a town that has the dubious distinction of being the ‘murder capital of America’. There are sportsbooks at the Argosy Casino Alton, the Hollywood Joliet Casino and the Hollywood Aurora Casino. These are all Penn National owned properties meaning they’ll probably be rebranded under the Barstool Sports name at some point. The Rivers Casino in Des Plaines has–surprise, surprise–a BetRivers sportsbook. There’s also a William Hill Sportsbook at the Grand Victoria Casino.
License fees are $10 million for a casino owner but one of three mobile only licenses will cost $20 million. I’m serious. This gives Illinois claim on having the most usurious licensing fees in the country. Compare that to Nevada’s $750 licensing fee, Iowa’s $45,000 fee and New Jersey’s $100,000 fee. But what do these states know about having a successful gaming industry? The tax rate is 15% which sadly is nowhere near the worst in the country but significantly higher than the previously mentioned states (Nevada and Iowa have a 6.75% tax rate while New Jersey is 8.50%).
The sportsbook scene in Illinois will underperform badly due to the state’s shoddy regulations but the companies that are there will do just fine. They’re in a highly populated market with minimal competition. PointsBet just signed a deal with NBC and that won’t hurt either. The state will likely lose money on sports betting somehow despite the insanely high licensing fees because…well, that’s just the way things are done in Illinois.