The market is robust enough, in fact, that it seems reasonable to wonder if even a mobile sportsbook-only license could be worth a price of tens of millions of dollars.
But after four years, the market clearly has spoken – that is, a $20 million price on such licenses, as prescribed by the 2019 law, is too high of a number.
Betway‘s recent request to state regulators to withdraw its bid for such a license means that none of the three “special licenses” has been awarded.
Not only does the price seem to be coming off as aggressive, another issue is that none of the mobile-only licenses could be approved until at least 18 months after the launch of legal sports betting in Illinois by sportsbook operators who had a partnership with a brick-and-mortar casino or racetrack. The price of those licenses, meanwhile, was just $10 million.
Illinois Gaming Board Administrator Marcus Fruchter announced the news about Betway at the board’s most recent meeting, as the board approved Betway’s request to withdraw.
“That’s all that we have to say about that at this time, but that process unfortunately comes to an end with no license to be issued at this time,” said Fruchter.
The comment seems to imply that no other mobile-only licenses are likely to be up for review anytime soon. Fruchter noted that the board also held a competitive bidding process for more Illinois sportsbook licenses in 2021 and 2022, ultimately to no avail.
Other Applications That Have Not Borne Fruit
The board received two applications earlier this year, including Betway’s. Fruchter said that the other bidder, who he did not name, withdrew before the board could begin any substantive review of that application. Betway, meanwhile, had achieved preliminary approval from the board in July.
“Being found qualified and identified as the winning bidder are neither a finding of suitability nor a grant of licensure,” Fruchter said at the time. “It’s simply a finding based on information presently known by the Gaming Board, that the applicant and its key persons meet the minimum suitability criteria.”
Interestingly, Betway had offered to raise its bid on a license to $22.5 million – which could have been relevant had there been more applicants than available licenses. Clearly its owners’ interest level cooled off considerably by the end of the summer.
According to filings with state regulators, the second applicant was video lottery terminal provider J&J Ventures. VLTs, similar in form to more well-known slot machines, are extremely popular in Illinois.
A previous application had been made more than a year ago by Tekkorp Digital Acquisition Corporation, but Tekkorp’s unsuccessful attempt to acquire Caliente Interactive of Mexico. Betway also applied in 2022 under its previous owners before withdrawing as well. British online gaming company SuperGroup subsequently acquired Betway.
Betway already is a participant in most of the largest mobile sports betting markets in the U.S., including Ohio, Indiana, Iowa, Pennsylvania, New Jersey, and Colorado.
The first wave of sportsbooks in Illinois launched in mid-2020, with daily fantasy sports giants FanDuel and DraftKings taking its first bets alongside Caesars, PointsBet, and BetRivers. Barstool followed in 2021, while BetMGM and Circa launched in 2023.
The next book coming likely will be Hard Rock, which recently gained initial approval from the gaming board for mobile betting and for wagering at its brick-and-mortar site in Rockford.
Hard Rock currently operates a temporary sportsbook during the building of its $310 million permanent facility that is targeted for an August or September 2024 grand opening after 24 months of construction.
Fanatics‘ takeover of PointsBet this year presumably means it will gain entry into the state without the need to pay the hefty tab for a mobile-only license, as PointsBet had a partner in Hawthorne Race Club and its off-track betting locations.
Online Casino Efforts Have Stalled
The lack of interest in the Illinois licenses likely means that the U.S. gaming industry is not sold on the likelihood of the state approving online casinos in Illinois anytime soon.
The latter business can generate up to double the revenue that sports betting does in some states, and with less volatility from month-to-month on the company ledgers.
Any sports bettor in a state with online casino play – particularly New Jersey, Pennsylvania, and Michigan – can expected to be bombarded with promotional enticements to sign up for that other sector as well.
If there was even a hint of online casino coming to Illinois, that $20 million asking price for a license suddenly would strike the mid-tier operators currently on the sidelines – and presumably Super Group as well – as a much more manageable number. Of course, that is assuming that the new online casino law will include mobile-only sportsbooks as candidates for such gambling.
The one ray of hope for would-be online casino operators is that a series of bills to legalize it have been introduced in the past two years, with promises from lawmakers to try again in 2024.
According to the gaming board, nearly $10 billion was wagered at the state’s sportsbooks in 2022 – with more than 95% of that activity taking place online. Adjusted gross revenues overall were $795 million – more than 50% above the same figure for 2021, the first full year of sportsbook operations in the state.
The majority of those revenues – as is typical in the U.S. marketplace – went into the pockets of FandDuel ($343 million) and DraftKings ($201 million).