Sports Leagues Want A Piece Of The Action In Legal Sports Betting Market

As Illinois considers legalizing sports betting, state and national sports leagues are asking for a share of the money. But not everyone is on board with the idea.

Lawmakers heard from industries that want to offer legal sports gambling in the state’s 10 casinos and three race tracks. Some oppose "integrity" (or royalty) fees that pro sports leagues want as compensation. Stakeholders testified in the House Revenue and Finance Committee Thursday morning. 

Tony Petrillo, president of Arlington International Race Course, said the fees are problematic because that's less money for the tracks and horsemen — a group that includes trainers, veterinarians and blacksmiths.  

“It doesn’t allow you to compete with some of the illegal sports betting that’s taking place; it’s going to put these legalized entities at a considerable disadvantage," he said. 

Tony Somone, executive director for the Illinois Harness Horsemen’s Association, said the additional money generated from a legal betting platform could support the labor side of horse racing. He said the groups the association represents contribute to the state’s agriculture economy, and sports betting is a way to add to that contribution. 

“The additional dollars that we can earn from this legislation is money that’s going to stay right in Illinois,” he said. “Horsemen live here, and what we’ll do is — we will buy more Illinois-bred horses, which will stimulate the breeding industry.”

Sports leagues want 25 cents for every $100 bet. No state that currently allows sports betting pays the leagues a fee. 

Dan Spillane, senior vice-president and assistant general counsel for the National Basketball Association, called the royalty fee “modest” and sees it as a way to help the leagues handle a new, regulated market that depends on their players.

“I can’t think of any other industry that builds its product on another business, that imposes risks on that other business, and forces that other business to spend more and do more to protect itself. But that’s what happens with sports betting,” he said. 

A group of Democratic lawmakers laid out four plans for a legal sports betting market — one of which includes integrity fees for sports leagues. Another plan would give full control to the state’s lottery department to handle and oversee sports gambling across the state. One approach takes after the “classical” New Jersey model, which grants sports betting licensesto race tracks and casinos, so that bettors can place bets in-person or online.  

State Rep. Mike Zalewski (D-Riverside), is leading the debate on the issue. He said stakeholders and all other negotiators will focus on the feedback, make changes, and hopefully come to one proposal. Zalewski said sports leagues and the integrity fee proposal should be considered. 

“They [sports leagues] certainly deserve a place at the table,” he said. “I think that the sports team — the sports leagues — what they have going for them is that they are community investors, we need to take advantage of that. We need to make sure that the community benefits from that.”

Governor J.B. Pritzker is counting on a legal sports betting market to balance the state’s budget. So far, the governor has only included $200 million from sports betting licenses into his plan, but some lawmakers say the tax revenue could be higher depending on the final structure.