Illinois sportsbooks are soon moving to the next level of operation which is handicapping; the tricky nature of this exercise is the reason why betting operators have stalled in its adoption. Nevertheless, the Prairie State has plenty to offer prospective gambling customers. Among the items on the offer table include a sports-savvy populace of about 12.5 million which has made the state the second-biggest gambling market in the United States in terms of sportsbook revenue and third biggest in handle.
Even then, there are 14 license slots that are open for sportsbook operators looking to enter the market. This means that there are many options for investors that are looking to grab a section of the target market. Judging from the performance of already established operators and what the market is likely to offer, here are a few guesses as to the sportsbook operators eyeing Illinois.
Circa — the Nevada based brand already holds a deal with Full House’s American Place Casino in Waukegan. There are plans to set up a temporary casino is expected to open in December. For this reason, Circa is expected to rise up to the position of eighth live Illinois sports betting operator, once the Illinois Gaming Board has granted approval.
Bally Bet — Bally’s holds on to two obvious options through which to tether its online sportsbook to one of its retail casino locations; Bally’s Quad City Casino and Hotel in Rock Island or Bally’s Chicago mega-casino. In September, Bally’s made an application to the IGB for a sportsbook license, a reflection of obvious interest and intent.
bet365 — bet3 is a European gaming giant and is big enough to have a chance to grow its market share in Illinois to justify the cost of market entry. bet365 features on the current list of the most successful operators in Ontario’s crowded regulated market (has 39 operators and counting). bet365 also runs operations in New York, New Jersey, and Colorado.
WynnBet — In November 2021, WynnBet filed an application to the IGB for a Management Services Provider license, which is a requirement for an operator to provide mobile wagering services in the state. WynnBet runs operations in nine US states, but nothing much in terms of news updates is available on its plans for Illinois.
Unibet — this brand was initially thought to have partnered with the Argosy Casino in Alton, and the scarcity of news about Unibet coming to Illinois is no consolation. The European giant recently applied to the IGB for a license. That is a clear indication that they are serious about coming into the state. Unibet currently runs operations in Ontario, New Jersey, Pennsylvania, Virginia, Iowa, and Indiana.
There are obviously a lot of other casino brands like BetRivers casino that are eyeing this market at the same time, there are many more that would rather stay away. Why are casino operators reluctant to enter Illinois? Although the fact is that Illinois is a sea of opportunity for sportsbooks, the market bears some major disincentives.
What we cover
High cost of licenses
For a retail casino license holder that wants to add a sportsbook to their operations, the cost was 5% of the adjusted gross receipts — alternatively, the cost was a percentage of revenue handle like in the case of the two horse racing tracks. The exact price ranged between about $2.3 million and $10 million. If there is still a need to add a new track or casino operation, the cost is based on a fraction although the minimum amount payable is $5 million.
The cost of a license to run a sportsbook operation within a professional sports facility is $10 million. Only the blocks surrounding a particular betting facility have the legal right to operate an online based sportsbook. This means that such properties are of limited value that surpasses marketing exposure.
Considering the high number of betting brands that run betting operations in the Illinois market, it is a burden for an investor to have to cough up $5 million to enter the market; especially because sports betting margins are thin. All new market entrants must capture a large portion of the market share for their business to work. At any given time, the competition is against Barstool, Caesars, BetRivers, PointsBet, BetMGM, DraftKings, and FanDuel.
No room for online casinos
The biggest setback of the gambling industry in Illinois is an issue that other jurisdictions have capitalized on for great returns; online casinos. This is background upon which the states that offer online gambling such as Ontario, Michigan, Pennsylvania, and New Jersey have opened their doors to an endless list of operators.
Ontario has a population of 39 operators, Michigan has 15, New Jersey has 33 and Pennsylvania has 14. According to the Illinois Commission on Government Forecasting and Accountability, the estimated wagering income in 2021 would have been much higher if online casinos had been available when retail casinos operations shuttered during the COVID-19 pandemic:
Video Gaming Terminals rule in Illinois
It is interesting to note that the state of Illinois hosts the most profitable video gaming terminal industry in the entire country. The total number of VGT units in Illinois is 44,000 spread over 8,200 locations. The revenue raked in from this casino option is by far more than the revenue generated from casino establishments.
According to an Illinois lobbyist, Steve Brubaker,
“The VGT guys are the number one producers of revenue to the state of Illinois. They are by far, almost double, and so an online casino product would directly compete with the bars and restaurants. When this is done, you get pushback not just from the VGT companies, but from all those local restaurants and bars and mayors that the legislator is dependent on for getting reelected. That is the nut you have to figure out. What can we give the VGT operators… to get them to support online casino? More importantly, what can we give the mayors and the bar owners and the restaurant owners in those in those legislative districts to buy them in?”
Final Thoughts
The future of online casinos in Illinois appears to be almost uncertain, especially in the short term, and this is going to discourage the setup of dedicated sportsbooks in the state. Unless there is a change in prevailing market conditions, the one change broker will be a powerful operator that is willing to spend on promotional campaigns.
