After legalising sports betting in March, Illinois has been reporting impressive figures, despite the setbacks associated with the COVID-19 pandemic that coincided with the market’s launch.
The latest figures released by the Illinois Gaming Board for September report a sports betting handle of $305.1m.
Rush Street Interactive’s Kambi-powered sportsbook at Illinois’ Rivers Casino Des Plaines booked the majority of the wagers at around $105m, followed by DraftKings at Casino Queen in downstate East St. Louis, which handled about $92m, and FanDuel at Par-A-Dice Casino in East Peoria with around $75m.
The exponential growth the state has seen since it legalised sports betting undoubtedly shows an appetite for the sportsbooks among the population, but it is unclear what it will take for operators to match their revenues to the heady handle figures.
It was unfortunate that Illinois launched in the very same month that COVID-19 started spreading like wildfire across the western world and retail sportsbooks were closed between March and June.
Despite this, the state managed to report a $53m handle in July, which went on to more than double to $140m in August. It then more than doubled again in September, its third full month of sports betting.
It makes Illinois one of the largest states by sports betting handle, trailing in fourth position just behind the giants: New Jersey ($748.6m), Nevada ($575.1m) and Pennsylvania ($463m).
Illinois Governor J. B. Pritzker suspended the requirement for in-person registration during the pandemic lockdown, which no doubt helped sports betting survive the crisis as online gambling was able to continue despite the closure of the state’s 10 casinos.
However, while Illinois lawmakers and those profiting from the 15% tax rate may well be rejoicing at the fledgling market’s rapid progress, the sportsbooks themselves will be more pragmatic.
Despite having one of the highest handle figures in September, Illinois’ hold percentage was relatively low at 2.39%. Compare this to New Jersey (6%), Nevada (5.7%) and Pennsylvania (4.8%) and it’s clear that, for the operators, the state is a delicate balance.
Illinois outperformed its Midwestern neighbour Indiana by $97m, yet the latter’s 6.9% hold left the sportsbooks with $14.3m in revenue. It also contributed $1.4m in state taxes – a touch higher than in Illinois.
Around $1m was generated in Illinois tax revenue with another $82,000 going to Cook County (Chicago) government.
Although 15% is not one of the highest tax rates among the U.S. states that have legalised sports betting, it is significantly more than Nevada’s 6.75%, for example.
What makes the market slightly more complicated are other quirks of its brand-new legislation. For example, while legislators did not enact the proposal to impose an integrity fee on operators, they did agree to the leagues’ calls for an official league data mandate – presumably pushing up the cost of the data for sportsbooks.
On top of this, limitations were placed on major players entering the market from outside the state. Illinois-based Rush Street protested the entrance of daily fantasy sports (DFS) giants DraftKings and FanDuel, for example. And with sight of their figures, who can blame Rush Street for attempting to fend them off?
Rush Street requested a three-year head start on the rival DFS duo, but were unsuccessful. Instead, Illinois lawmakers stipulated that sportsbooks could launch interactive platforms as soon as they were licensed, but they had to offer in-person registration and the online platform had to sit under the same brand as the retail operator.
Hence, DraftKings entering the market in partnership with Casino Queen and FanDuel with Par-A-Dice. Not only will these partnerships shave a percentage off the operators’ top line, but the cost of a sports betting licence in the state is a cool $10m for retail venues and $20m for those with an online presence.
Total sportsbook revenue for September in Illinois came to $6.8m, which was significantly behind New Jersey ($45.1m) and Nevada ($32.9m), but just a shade ahead of notoriously highly taxed Pennsylvania, where revenue was reported as $6.3m.
With Chicago the third-largest market in the U.S., Illinois still has the potential to make strides in gaming. William Hill and Barstool were not operational throughout September, but with their inclusion in future figures, the state is likely to continue to see handle rise. The question remains: Will the sportsbooks be able to squeeze their margins and give revenue a boost as well?
