UPDATE: Online Gambling Removed From Illinois Casino Bill

This article may be outdated. Get the latest news on Illinois here.

UPDATE April 26th: A final amendment was added to the bill before it passed out of the Senate. This amendment removed online gambling from the casino expansion bill. Online gambling is expected to re-emerge as a separate bill either this session or in the fall veto session.

Original story follows

UPDATE March 14th: A new amendment to the bill revises the bad actor clauses for operator and vendor license applicants (along with several other changes unrelated to online gambling).

UPDATE March 8th: A planned Senate vote on the bill was scuttled Thursday (3/7). Timing of the next legislative step remains unclear.

Only days after Illinois Gov. Pat Quinn vetoed a proposal to expand land-based gambling in the state, a revised bill seeking both land-based and online gambling expansion has emerged.

Illinois lawmakers were widely expected to quickly revisit the issue of land-based expansion. The inclusion of online gambling likely comes as a surprise to many (myself included).

The bill – SB 1739 – is backed by State Sen Terry Link (D-30th). You can read the full text of the amendment that adds online gambling here. The meat of the proposed online gambling regulations starts around page 78.

Illinois currently offers online lottery sales and previously flirted with regulating online gambling in 2012.

There’s a lot going on in this bill, and my following impressions are based on a very quick read. With that caveat out of the way …

The bill appears to address Gov. Quinn’s concerns

Quinn based his recent veto of expanded gambling on a few key objections. From the News-Gazette:

“This is a bad bill for the people of Illinois,” Quinn wrote in his veto message. “As I made clear when I vetoed Senate Bill 1849 last summer, I will not approve of any gaming legislation without strong ethical standards, comprehensive oversight and dedicated resources for education.”

I haven’t been able to line-by-line this new bill and the vetoed bill yet, but it does appear that Link has at least attempted to address Quinn’s core concerns with this new bill.

How online gambling would work in Illinois

The basics

Online gambling would be overseen by a new division – the Division of Internet Gaming – that would operate under the Illinois Department of Lottery. The DIG would have the power to issue licenses.

Not everyone can apply for a license. Excerpt:

Eligibility for application for an Internet gaming license shall be limited to the following: (i) any person or entity that holds a valid and unrevoked owners license issued pursuant to the Illinois Gambling Act; (ii) any person or entity that holds a valid and unrevoked electronic gaming license issued pursuant to the Illinois Gambling Act; and (iii) any person or entity that holds a valid and unrevoked advance deposit wagering license issued pursuant to the Illinois Horse Racing Act of 1975.

Minimum age to participate is 21. There are some other limitations on who can establish an online betting account in IL.

Bill seems to leave a lot of power in the DIG (much like Christie’s changes to NJ law put more power in the hands of their DGE).

No sports-related betting.

Licenses are good for 5 years. Applying costs $250k (non-refundable). If you’re approved, the license will set you back $20mm. Good news: the fee is an advance payment on your wagering taxes.

Said taxes are 20% for non-fee-based gross gaming revenue and 15% on fee-based gross gaming revenue. You get a small break on those rates for the first 5 year term.

What games are authorized?

The bill gives the DIG a wide berth to authorize a variety of online games. Poker is not specifically mentioned but seems obviously included in the scope described below:

“Internet game” means a fee-based or non-fee-based game of skill or chance that is offered by an Internet gaming licensee, as authorized by the Division. “Internet game” also includes gaming tournaments conducted via the Internet in which players compete against one another in one or more of the games authorized in this definition or by the Division or in approved variations or composites as authorized by the Division.

What about compacts?

Interstate – and even international – compacts would be allowed (under certain conditions).  Excerpt:

Further, notwithstanding any other provision of this Section, wagers may be accepted from persons who are not physically present in this State if the Division determines that such wagering is not inconsistent with federal law or the law of the jurisdiction, including any foreign nation, in which any such person is located, or such wagering is conducted pursuant to a multijurisdictional agreement that is not inconsistent with federal law to which this State is a party.

Could PokerStars or Party apply for an Illinois license?

While the bill originally contained language that would have (effectively) barred companies that accepted bets from the U.S., a recent amendment to the bill has severely curtailed that restriction. Now only companies that have been “convicted” of doing so are barred from application.

The bill appears to prohibit any company that took online bets from U.S. customers in the 10 years preceding the application date from applying for an online gambling license in Illinois. Obviously provisions like this are subject to challenge.

A similar prohibition exists for those seeking Internet gaming vendor licenses.

- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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