Published: February 18, 2018

New Illinois Sports Betting Bill Includes MLB, NBA’s ‘Integrity Fee’

llinois State Senator Napoleon Harris III introduced SB 3432 on Friday, which would allow legal sports betting in Illinois, contingent upon the elimination of the federal ban on sports wagering outside Nevada (PASPA).

Notably, the “Sports Wagering Act” includes an “integrity fee” provision that would pay sports leagues 1% of all wagers placed on their games. While 1% may sound innocuous — it’s a tax on the total sums wagered, not the amount a book keeps, resulting in an approximate 20% cut of a typical sportsbook’s revenue.

As the decision in the Supreme Court Sports Betting Case (Murphy v NCAA formerly called Christie v NCAA) nears, the MLB and NBA have unleashed a lobbying effort in 16 states with roughly 30 lobbyists, pushing this “integrity fee” as well provisions that would allow them to control data that a sportsbook uses, as well as the right to limit wagers that sportsbooks can offer.

Illinois Sports Betting SB 3432 Bill Sponsored By Former NFL Linebacker Napoleon Harris III, Includes ‘Integrity Fee’ Benefiting MLB, NBA

Illinois is now the second state in which a sports league has succeeded at influencing a piece of legislation that includes all of the leagues’ preferred components. The first was Indiana, where Rep. Alan Morrison introduced House Bill 1325, which is currently in the Indiana House Public Policy Committee.  A draft bill with the same language is circulating in the Missouri state senate. 

Now a Democratic senator representing the 15th district of Illinois, covering parts of Cook and Will counties south of Chicago, Napoleon Harris III is a former NFL linebacker drafted in the first round in 2002 by the Oakland Raiders. He spent seven years in the league from 2002-2009 and played with four teams. Sen. Harris won the 15th district seat in 2012 and took office in 2013.

What’s In The Bill?

The Harris III-sponsored bill would allow in-person and mobile gaming at licensed facilities or through licensed operators, an initial fee of $10,000, and would levy a 12.5% tax on gross sports wagering revenue for the state. That’s almost double the 6.75% rate in Nevada and a notch higher than the 10% rate in SB 415 advancing quickly in West Virginia.

But the most notable provision is the integrity fee that would handicap to-be operators for the benefit of the leagues, which claim to need it in order to bolster integrity monitoring procedures that they’re already conducting. West Virginia and Iowa have balked at the fee. According to Bloomberg Law, Illinois is the only state where only the MLB, but not the NBA, has a registered lobbyist.

[Hey there, would you go like us on Facebook and follow on Twitter? We’ll settle for one of two.]

Not the Only Illinois Sports Betting Bill!

Previously in Illinois on January 30, Sen. Steve Stadelman introduced the Sports Betting Consumer Protection Act, SB 2478 — a less comprehensive piece of legislation that would task a state agency with promulgating rules, regulations and licensure measures regarding sports wagering. That bill was assigned to the Gaming Committee on February 14. It contains no integrity fee or any of the other provisions the sports leagues are pushing.

In addition, Sen. William E. Brady (R-44th District) introduced a bill, SB 3125 on February 15. This one would allow the Illinois Racing Board to adopt rules authorizing sports wagering by organization licensees and inter-track wagering location licensees.

In addition to that (!), Rep. Tim Butler (R-87th District) introduced HB 5186 on Friday. Also dubbed the “Sports Wagering Act,” it would create the “Division of Sports Wagering within the Illinois Gaming Board to issue licenses under the Act.”

HB 5186 bill is over to the Rules Committee and does not contain the integrity fee or other league-friendly data restrictions. As for the tax rate, it’s not pretty for to-be land-based or mobile operators: “A tax of 30% is imposed on the adjusted gross receipts of sports wagering and shall be collected by the Board and deposited into the Capital Projects Fund.”

We’ll be following to see which of the Illinois bills, if any, will make it to the finish line. The decision in Murphy v. NCAA (formerly Christie v.  NCAA) and the fate of the federal ban is expected to come in April or May, but possibly as soon as March 5. Stay tuned!

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