Because multiple states have legalized sports betting, sportsbook operators have choices of where they want to open up shop. The latest proposed Illinois sports betting rules make Iowa a superior option.
That could be true for those who want to place wagers as well as those looking to take them. If that is the case, that will alleviate Iowa operators’ fears about losing business to competitors across the Mississippi River.
What makes the Illinois sports betting rules so bad?
Illinois took a page from Iowa’s book of sports betting regulation mistakes and somehow made it worse. Like Iowa, Illinois proposes an in-person registration requirement for online sports betting.
In both states, that means people who wish to place bets using online sportsbooks must complete their registration at a brick-and-mortar sportsbook first. It has been sold as a security measure to ensure bettors’ age and identity. It’s really just a concession made to casinos.
It essentially forces bettors to visit casinos. The hope is that while they are there, they will deposit funds into their accounts or spend some cash in some other way.
Regardless of intent, the rule is a bit more complicated in Illinois than Iowa. In Iowa, the requirement expires on Jan. 1, 2021.
How the registration requirement rule differs in Illinois
In Illinois, it expires when the state approves the first “standalone” online sportsbook license (an internet sportsbook with no brick-and-mortar component). That could take almost two years, however.
The current rules state that the Illinois Gaming Board can’t issue such a license until 18 months after the first retail sportsbooks open. In addition, the state will only issue three of those licenses.
Thus starting on New Year’s Day 2021, Illinoisans will be able to cross the river and conduct all their sports betting completely online. In their home state, however, they will still have to make a trip to a casino.
While Chicago is a major metropolitan area, most of the rest of Illinois is just as sparsely populated as most of Iowa. That means this requirement is as likely to hinder growth for sportsbooks as it has those in Iowa.
That isn’t the only way in which Iowa could look more appetizing for the sports betting industry, however. The landscape could prove superior for sportsbook operators, as well.
Higher taxes and competitor sabotage could be problems
While having to wait over a year for licensure if they aren’t one of the first three operators approved is unattractive for sportsbooks, there is more that could make the Land of Lincoln unattractive to sportsbooks. It’s all about the money.
Illinois’ tax rate is more than twice that in Iowa, at 15%. Iowa’s is actually among the lowest in the country at 6.75%.
While Illinois could argue that its greater population makes up for that discrepancy, its rules have another interesting quirk that doesn’t exist in Iowa. It could become problematic.
Iowa law allows professional sports leagues to request the Iowa Racing and Gaming Commission bar legal sportsbooks from taking action on certain events. For example, MLB could ask the IRGC to not allow bets on spring training games.
Illinois has a similar provision but extends that ability to legal sportsbooks. To demonstrate why that’s a potential problem, suppose one sportsbook has been doing very well with bets on Chicago Fire matches.
One or multiple sportsbooks could ask the Illinois Gaming Board to put the kibosh on those bets. Instead of producing a better product for consumers, this would allow operators to kill off a segment of the market they aren’t competitive in.
For all these reasons, sportsbook operators may choose Iowa over Illinois. If that happens, that will result in more bettors making a similar choice.