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Bad Actor Clause Added to Illinois Sports Betting Legislation

Summary: An amendment has been added to sports betting legislation in Illinois, set to affect such companies as FanDuel and DraftKings.

Sports betting legislation is being considered across the US as individual states want to get in on the action. Already more than eight states have started providing sports betting services and more are expected to get started in the future. Illinois is one state that currently considering legislation involving sports betting and a recent amendment was made that will not be pleasing to operators like FanDuel and DraftKings.

Bad Actor Cause

An amendment was made to a sports betting bill in Illinois last week that saw a bad-actor clause included in the legislation. The clause will stop such companies as FanDuel and DraftKings from taking part in the newly formed industry, if the bill is passed into law.

According to sources, Mike Zalewski, the Chairman of the House Revenue and Finance Committee, stated that four amendments would be up for consideration involving H 3308. Now, it seems a 5th amendment was added by Representative Bob Rita.

The amendment states that a vendor license or sports betting operator license will not be provided to any applicant that has or had an affiliation with a company that has accepted wagers online in contravention with any law of the United States, the state of Illinois or similar laws.

Essentially, the amendment would keep such operators as FanDuel and DraftKings out of the state as they offered daily fantasy sports contests and were found to be in violation of state laws back in 2015. Both companies ignored a ruling by the state’s attorney general and continue to offer their services in the state.

Right now, the majority of the models being considered for sports betting include a $10 million license fee for sports betting. for the most part, only DraftKings and FanDuel would be willing to pay this amount. Casinos that operate in the state may not be as willing if the two sports betting giants are able to operate in the state.

They already dominate in areas such as New Jersey, so other operators would most likely not be able to gain a larger market share. The small percentage of the market that other operators would be able to capture might not be appealing for the high licensing fee.

Some lawmakers feel that without the bad actor clause, the maximum tax revenue collections would not be met as they would without the competition from DraftKings and FanDuel.

The new amendment is supported by some lawmakers but also stakeholders in the horse racing industry and the casino industry. Other details included in the amendment are the $10 million initial licensing fee as mentioned plus a $50,000 fee every 10 years for renewal.

A vendor license for sports betting will cost $100,000 and must also be renewed every 10 years for $50,000. Sports betting operators will be able to accept wagers within a lounge located in a sports facility if an agreement can be reached with the owner of sports teams.

It will be interesting to see if this measure will be able to gain any ground with the changes made or if lawmakers will be back to the drawing board, trying to find common ground for everyone involved.