DraftKings Looks for Faster Illinois Entry With Services License Application

Posted on: May 22, 2020, 09:44h. 

Last updated on: May 22, 2020, 11:29h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

DraftKings is looking to skirt a cumbersome 18-month waiting period for online betting operators in Illinois and could use management services licenses to do just that.

DraftKings Seeks Illinois Loophole
DraftKings is looking to use a loophole to rapidly enter the Illinois betting market. (Image: Chicago Tribune)

When the Prairie State passed broader gaming expansion legislation last year, a provision was included in the bill prohibiting the entry of companies such as DraftKings and FanDuel into the market for 18 months, essentially giving land-based operators already established there a head start.

A loophole via a management services application could allow DraftKings faster entry into what is expected to become the sports betting capital of the Midwest. Applicant data from the most recent Illinois Gaming Board (IGB) meeting indicate an entity known as Crown IL Gaming LLC is pursuing a management services permit and applied for that license on April 28. That LLC does business as DraftKings, according to the IGB web site.

Companies applying for the management services provider permit must pay an application fee of $1 million and are subject to renewal every four years with a levy of $500,000.

The management services license differs from the Illinois master license, the latter of which allows a company to directly offer sports wagering services. Still, the services licensing process is intensive, with applicants required to provide IGB with an array of data and plans, including how the company is proposing to award procurement contracts to female- and minority-owned businesses.

There’s a Template

DraftKings doesn’t have to look far for inspiration on how to fast-track entry into the potentially lucrative Illinois market. Rival FanDuel is pursuing a similar strategy via a management services license. But in the case of that company, it’s looking to acquire Fairmount Park racetrack in Collinsville, Ill. IGB is considering three “organization license” applications from racetrack operators, one of which is Fairmount.

FanDuel also partners with Boyd Gaming, the operator of the Par-A-Dice in East Peoria, meaning that it’s not entirely shut out of the Land of Lincoln at the moment.

Boyd is one of several operators already approved by IGB to offer sports betting. Others include Eldorado Resorts, Penn National Gaming, and Rivers Casino.

For its part, DraftKings has a deal with Caesars Entertainment, which operates Harrah’s Joliet and Harrah’s Metropolis in the Prairie State. However, it’s not clear if that accord provides for sportsbook operations. When Eldorado wraps up its takeover of Caesars – likely next month – William Hill will take control of the combined company’s sportsbooks.

The Allure of Illinois

Illinois, the fifth-largest state by population, is dealing with some bad timing when it comes to sports wagering. The activity went live in the state in March, with politicians and operators hoping to catch a tailwind from NCAA Tournament betting.

Just days later, the US sports scene ground to a halt, as amateur and professional competitions and leagues were canceled or postponed because of the coronavirus.

Still, industry observers forecast that it will take just a few years for Illinois to become the third-largest sports betting state by handle, trailing only Nevada and New Jersey, explaining why operators such as DraftKings are eager to enter the market.